LabGenomics, Management Rights Sale Nears Completion... Uncertainty Resolved

Change of Management Rights Transfer Contract to 122.6 Billion KRW
Securing 30% Stake Including Delegation... Management Rights Stabilized
Opening US Market Entry with CliaLab Acquisition

[Asia Economy Reporter Jang Hyowon] A green light has been turned on for the sale of management rights of LabGenomics, a molecular diagnostics specialist company. The buyer reduced the investment scale slightly to resolve uncertainties, marking the completion of the deal. Additionally, by receiving the delegation of voting rights for the remaining shares held by CEO Jin Seung-hyun, stable management rights have also been secured.

According to the Financial Supervisory Service's electronic disclosure on the 13th, LabGenomics corrected its announcement to change the largest shareholder's share and management rights transfer contract with healthcare-focused private equity fund Luha Private Equity (Luha PE) to 122.6 billion KRW. Previously, CEO Jin Seung-hyun of LabGenomics and Luha PE had signed a management rights transfer contract in August last year.

Luha PE plans to acquire 2.87 million shares (9%) held by CEO Jin Seung-hyun for 60 billion KRW and invest 22.7 billion KRW through a third-party allotment paid-in capital increase and 40 billion KRW via convertible bonds (CB) into LabGenomics. Upon completion of this investment, Luha PE will secure a 26% stake in LabGenomics.

Furthermore, the voting rights for the remaining 1.44 million shares (4%) held by CEO Jin Seung-hyun will also be delegated to Luha PE. As originally planned, Luha PE is expected to secure approximately 30% control, enabling a stable acquisition of management rights.

Accordingly, the acquisition of the U.S. Clinical Laboratory Improvement Amendments (CLIA) lab, which Luha PE is pursuing, is expected to proceed without any setbacks.

Recently, domestic diagnostic companies have been acquiring CLIA labs to enter the U.S. market. CLIA is a certification system granted by the U.S. Food and Drug Administration (FDA) to laboratories conducting clinical tests for disease diagnosis, prevention, and treatment purposes. Utilizing CLIA labs allows companies to provide diagnostic and other services in the U.S. market without FDA approval, enabling faster market entry for domestic products.

LabGenomics plans to use CLIA labs to supply not only its own products but also those of various domestic diagnostic companies, establishing a foothold for the 'K-Diagnostics' entry into the U.S. market. To this end, LabGenomics has signed memorandums of understanding (MOUs) with companies such as NGENBIO, Geninus, and DExom.

A Luha PE representative stated, "With the secured new funds, we will acquire a U.S. CLIA lab and penetrate the U.S. molecular diagnostics market in the short term. Through this, we plan to achieve stable sales growth even after the COVID-19 endemic."

In the long term, LabGenomics also intends to target the digital healthcare market. Digital healthcare is a data-utilizing market where data can be collected and analyzed during the diagnostic process. The plan is to preoccupy markets such as personalized health functional foods and customized cosmetics based on personal genetic diagnosis.

The Luha PE representative added, "This contract amendment will serve as an opportunity to resolve uncertainties regarding the change in LabGenomics' management rights. Although the investment and largest shareholder change contract scale has been reduced, there is no problem with entering the U.S. market." They continued, "We have completed the review of the CLIA lab to be acquired and plan to accelerate new business after acquiring management rights."

An investment banking (IB) industry official said, "It appears that institutional investors who highly evaluated Luha PE's strategy and LabGenomics' growth potential participated in the deal amid the rapidly deteriorating financial market environment. The reduction in acquisition scale is a positive factor that reduces uncertainty from the perspective of deal completion."

This content was produced with the assistance of AI translation services.