Three Companies Rise After Merger Plan Announcement
Some Say It's Too Early to Judge Investment Direction
[Asia Economy Reporter Song Hwajeong] As Celltrion Group initiates the merger of Celltrion, Celltrion Healthcare, and Celltrion Pharm, their stock prices are also responding. All three companies have recently emerged from a slump and turned bullish. The market expects that investment directions will become clearer only after the merger ratios and other details are finalized.
As of 9:30 AM on the 28th, Celltrion Pharm was trading at 112,200 KRW, up 8.62% (8,900 KRW) from the previous day. Celltrion Healthcare rose 1.6%, and Celltrion increased by 0.19%. All three companies showed a weak trend for four consecutive days but turned bullish on the 25th and have continued to rise for two consecutive days.
The reason for the turnaround in the three Celltrion companies is interpreted as the announcement of their merger plan. After the market closed on the 25th, Celltrion Group announced through a disclosure the merger plan of these three companies and the establishment of Celltrion Healthcare Holdings. First, to separate ownership and management and strengthen governance, Chairman Seo Jung-jin, the largest shareholder of Celltrion Healthcare, contributed his shares in Celltrion Healthcare as an in-kind contribution to establish Celltrion Healthcare Holdings. Then, by the end of next year, Celltrion Group plans to establish a holding company system through the merger of Celltrion Holdings and Celltrion Healthcare Holdings. Along with this, the group intends to promptly proceed with the merger of Celltrion, Celltrion Healthcare, and Celltrion Pharm once the holding company activity restriction requirements under the Fair Trade Act are met.
The market evaluates the expected benefits after the merger of the three companies as resolving controversies over internal transactions, cost reduction through improved transaction structures, and a leap toward becoming a global integrated biotechnology company. Lee Dong-geon, a researcher at Shinhan Financial Investment, said, "The merger of the three companies will end the controversy related to internal transactions between Celltrion and Celltrion Healthcare," adding, "Synergies among the three companies are expected through the merger, especially cost efficiency." He further analyzed, "It is expected to grow into a global integrated biotechnology company responsible for the entire process from research and development to distribution and sales, so the corporate value of the merged entity will be greater than the simple sum of Celltrion and Celltrion Healthcare."
However, since specific merger ratios and other details have not yet been decided, some opinions suggest that it is premature to make an accurate investment direction judgment. Kim Ji-ha, a researcher at Meritz Securities, said, "The establishment of Celltrion Healthcare Holdings does not bring significant changes and is merely a process for the merger of the three companies," adding, "Since the merger entity and merger ratios have not been decided, it is difficult to determine investment directions." Kim also noted, "Considering the high proportion of internal transactions, the post-merger performance scale may be smaller than the simple sum, and since the proportion of minority shareholders is high, the approval of the shareholders' meeting during next year's merger will be important." The minority shareholder proportions are 60% for Celltrion, 52% for Celltrion Healthcare, and 45% for Celltrion Pharm.
Lee Dal-mi, a researcher at SK Securities, said, "Through this merger, it will be possible to handle development, production, distribution, and sales within a single company, so cost reduction through improved transaction structures and enhanced business transparency can be expected; however, since the merger methodology has not yet been presented, the impact on the stock prices of the three companies will be neutral."
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