Ahead of Merger, Celltrion Raises 1 Trillion Won for Stock Purchase Claims... Struggling to Boost Stock Price

Celltrion and Celltrion Healthcare Enter Merger Process
Cost Reduction and Strengthened Cost Competitiveness Seen as Positive Decision
"Stock Price Expected to Be Higher Than Stock Purchase Request Price"

As Celltrion and Celltrion Healthcare have entered the merger process, the direction of their stock prices is expected to be the key to the success of the merger.

According to the Korea Exchange on the 21st, on the day after the Celltrion Group announced its merger plan, on the 18th, Celltrion's stock price closed at 150,400 KRW, up 4.74% from the previous day. Celltrion Healthcare closed up 6.69%. Celltrion Pharm, which was excluded from this first merger, fell 5.54%.

In a disclosure on the 17th, the Celltrion Group announced that, following a board resolution, Celltrion and Celltrion Healthcare would begin the merger process. The first step is to merge the bio subsidiaries within the group, Celltrion and Celltrion Healthcare, and then to pursue a second merger between the integrated Celltrion and Celltrion Pharm to strengthen bio-chemical synergy effects and lay the foundation to establish themselves as a global comprehensive biotechnology company.

The merger announcement is expected to inevitably increase stock price volatility. Lee Dong-geon, a researcher at SK Securities, said, "Volatility in the stock prices of Celltrion and Celltrion Healthcare is expected to increase following this absorption-type merger announcement," adding, "Earlier this year, the return of Celltrion Group Chairman Seo Jung-jin and expectations for the merger of the three companies had already caused a short-term surge in stock prices."

There are also opinions that this merger decision could serve as a short-term stock price rally momentum. Lee Myung-sun, a researcher at DB Financial Investment, said, "In terms of cost reduction, strengthening cost competitiveness, and improving scale and profitability, this is a positive decision in the mid to long term," and analyzed, "(The merger decision) can act as a short-term momentum for stock price increases."

However, the synergy effects of the merger will need to be verified. Researcher Lee Myung-sun said, "There remain short-term profitability concerns after the merger due to over 3 trillion KRW in inventory assets of Celltrion and Celltrion Healthcare and amortization from purchase price allocation (PPA)," adding, "To resolve this, concrete disclosure of direct sales performance in the U.S. is necessary to demonstrate that the Uplyma has established a U.S. market and that Ramsima SC can achieve successful profitability."

Since the key to the merger's success lies in the stock purchase rights, future stock price movements are expected to be important. Ha Hyun-soo, a researcher at Yuanta Securities, said, "The success of the merger will be significantly influenced by the scale of stock purchase rights exercised by minority shareholders," and predicted, "The company has stated it can accommodate stock purchase rights up to about 1 trillion KRW, but if this is exceeded, the merger could face difficulties."

The exercise of stock purchase rights is expected to be influenced by stock price trends. If the stock price is below the stock purchase price, more minority shareholders will likely exercise their stock purchase rights. Conversely, if the stock price is higher, the scale of stock purchase rights exercised is expected to be small. On the 18th, Celltrion's closing price was 150,400 KRW, and Celltrion Healthcare's closing price was 68,600 KRW. Researcher Ha Hyun-soo said, "Since the stock prices are not far from the stock purchase right prices (Celltrion 150,813 KRW, Celltrion Healthcare 67,251 KRW) and considering short covering (buying back shorted stocks) following the merger announcement, stock prices are expected to be formed above the stock purchase right prices going forward."

Lee Ji-su, a researcher at Daol Investment & Securities, also said, "The success of the merger will be determined by stock price trends," adding, "If during the stock purchase rights exercise period the stock price is lower than the purchase price, shareholders are more likely to exercise their rights to oppose the merger, and if the scale of such stock purchase rights is excessive, the merger could be canceled." She added, "An increase in business transparency and announcements of stock price support measures to respond to stock purchase rights are expected to have a supply-demand effect, leading to a positive stock price trend."

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