Celltrion to merge with Celltrion Healthcare, hopes to regain trust

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Celltrion to merge with Celltrion Healthcare, hopes to regain trust

Published: 17 Aug. 2023, 18:45

SARAH CHEA
chea.sarah@joongang.co.kr

Celltrion founder and chairman Seo Jung-jin announces his plan of merging Celltrion and Celltrion Healthcare during an online press conference on Thursday. [SCREEN CAPTURE]

Celltrion will merge with Celltrion Healthcare, scrapping its original plan of a three-way merger to secure funds for large-scale investment and regain its shareholders' trust.

Celltrion Pharm was excluded from the merger list for now but will be merged with the resulting company within six months at the earliest, according to Celltrion founder and chairman Seo Jung-jin.

"The merger will combine the two companies' assets for future large-size investment, as well as simplify the transaction structure to raise transparency and regain trust from shareholders," Seo said during an online press conference Thursday.

"A big merger and acquisition will be declared within the year."

Celltrion Healthcare is a marketing company that handles the overseas distribution of products developed by Celltrion, a biosimilar company that is currently Korea's 14th largest company by market capitalization. Celltrion Pharm handles the domestic sales for the products developed by Celltrion.

Celltrion's Yuflyma [CELLTRION]

Each share in Celltrion Healthcare Energy will be swapped for 0.4492620 shares in Celltrion, which will be the surviving entity. The largest shareholder of the resulting company will be Celltrion Holdings, with a 21.5 percent share.

Seo has a 98.1 percent share in Celltrion Holdings.

Celltrion will hold a shareholder meeting on Oct. 23 for the merger, which will be finalized by Dec. 28.

No restructuring will take place, Seo confirmed, meaning there will be no layoffs.

The merger comes around three and half years after Seo first announced his plans in January 2020. He retired in March 2021, 19 years after founding Celltrion, but returned to management in March.

Due to the delay, Celltrion shares more than halved from their peak, with shares of Celltrion Pharm and Celltrion Healthcare plunging by around 70 percent. A full 67 percent of Celltrion shareholders are retail investors.

"Celltrion will grow as a global big pharmaceutical company, expanding our portfolio from biosimilar to new drug development," Seo said. "We can say with certainty we will proceed with the three-way merger step by step to keep the promise we made with our shareholders."

Celltrion aims to expand its yearly revenues to 12 trillion won ($8.9 billion) by 2030, with sales from new drugs accounting for 40 percent.

It will also up its biosimilar pipeline by 22 by 2030.

Biosimilars, according to the U.S. Food and Drug Administration (FDA), are biological products that are approved based on proof that they are highly similar to other FDA-approved products. The drugs have no clinically meaningful difference in terms of safety or effectiveness from the reference product but cost less.

Celltrion shares closed 143,600 won on Thursday, down 1.44 percent compared to the previous trading day. Celltrion Healthcare slid 1.08 percent to 64,300 won.

BY SARAH CHEA [chea.sarah@joongang.co.kr]