Samsung Bioepis eyes Nasdaq amid merger controversy
CFO says Nasdaq offers a better chance of meeting target valuation than Seoul
Drugmaker Samsung Bioepis has revealed plans to list on Nasdaq, amid controversy over a proposed merger between two of its parent companies as part of a broader restructuring at South Korea’s Samsung group.
Yang Chul-bo, chief financial officer, said Bioepsis needed to float to fund its development of six biosimilar drugs — copycat versions of biological drugs derived from living cells — but that preparations would take at least a year.
He said Bioepis was focusing on a potential listing on Nasdaq, which offered a better chance than the South Korean market of meeting the company’s target valuation of at least $8 billion (Dh29.4 billion).
The company’s plans were first reported yesterday by the Korea Economic Daily.
Ninety per cent of Samsung Bioepis is held by Samsung Biologics, which is in turn owned by affiliates Samsung Electronics and Cheil Industries — each with a 46 per cent stake — and construction group Samsung C & T, with 6 per cent.
Last month Samsung C & T’s board approved the company’s acquisition by Cheil in an all-share deal that has been seen as part of the group’s efforts to transfer control to a new generation of the founding family. However, the proposed transaction has been engulfed by controversy over the terms.
US hedge fund Elliott Associates is pursuing legal action against Samsung C & T’s board, alleging that the deal was timed to maximise a disparity between the two companies’ market valuations, resulting in Samsung C & T shareholders losing out to those of Cheil — principally, Samsung’s founding Lee family.
Samsung C & T denies this, saying shareholders will benefit from synergies produced by the merger.
Michael Na, an analyst at Nomura, said the revelation of Samsung Bioepis’ listing plans would focus attention on one of the most valuable assets in Cheil Industries’ eclectic portfolio, which ranges from fashion to catering and construction.
“A lot of people have been saying that Cheil Industries is just a shell, with the exception of [a 19 per cent holding in Samsung Life Insurance],” he said. “Everybody is asking why it should trade at more than 100 times earnings. If they do list Bioepis on Nasdaq, it could reinvigorate the momentum in the stock.”
Shares in Cheil Industries rose 2 per cent yesterday before retreating to trade 0.3 per cent higher. South Korea’s Kospi Composite was down 1.4 per cent.
Samsung Bioepis is widely seen as one of the leading players in the emerging field of biosimilars, which is poised for rapid growth as patents expire on the first generation of biologic drugs.
The company expects to put two biosimilars on sale next year and to become profitable by 2019, having recorded an operating loss of 25 billion won (Dh81.8 million, $22 million) last year, Yang said.