Seo Jung-jin "Even if the purchase claim limit exceeds 1 trillion, it will be unconditionally enforced"... Strong determination for merger

Celltrion Stock Recovers to 150,000 KRW Level... Approaching Exercise Price of 150,813 KRW
Expresses Determination to Complete Merger at Press Conference Following Extraordinary General Meeting

Ahead of the merger between Celltrion and Celltrion Healthcare, Chairman Seo Jung-jin of Celltrion is actively persuading shareholders. Following the Celltrion extraordinary general meeting on the 23rd, he presented the vision after the merger at a press conference on the 25th. As Chairman Seo showed strong determination to complete the merger, related uncertainties have decreased and the stock price has risen, increasing the likelihood of the merger.

Seo Jung-jin, Chairman of Celltrion, is speaking at the Celltrion Group 2023 Press Conference held on the 25th at Park One Tower in Yeouido-dong, Yeongdeungpo-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

On the morning of the same day, Chairman Seo held a press conference at the NH Securities headquarters' main conference room in Yeongdeungpo-gu, Seoul, stating, "We will prepare to ensure the corporate merger is completed smoothly within this year." He explained, "We expect sales of about 3.5 trillion won next year," adding, "We anticipate sales growth by adding biosimilars in 2024 and 2025, and we have received FDA approval for the new drug Zimpenetra." At the Celltrion extraordinary general meeting held on the 23rd, Chairman Seo also reassured shareholders by saying, "Even if the stock purchase claim rights exceed the limit of 1 trillion won, we will definitely enforce it."

Following the approval of the merger agenda at the shareholders' meeting and confirmation of Chairman Seo's commitment to the merger, Celltrion's stock price rose nearly 7% on the 24th, recovering to the 150,000 won level. The stock price also rose slightly that morning, surpassing the stock purchase claim exercise price of 150,813 won.

The Yeouido securities market observed that Celltrion is prepared to raise more than 1 trillion won, and as the gap between the stock purchase claim exercise price and Celltrion's stock price narrows, the possibility of a successful merger is high. Lee Dong-geon, a researcher at SK Securities, explained, "The announcement of a 550 billion won increase in short-term borrowings refers to the limit amount, not the actual borrowed amount," adding, "It is part of securing about 1 trillion won in funds to respond to the exercise of stock purchase claim rights." As of the end of the first half of this year, Celltrion held about 630 billion won in cash and cash equivalents.

Even if the current stock price level is maintained until the exercise deadline of the stock purchase claim rights on the 13th of next month, the probability that the National Pension Service, which holds 7.43% of Celltrion shares, will exercise the claim rights is low. Researcher Wi Hae-joo of Korea Investment & Securities analyzed, "(At the extraordinary general meeting) the National Pension Service's abstention on the merger is presumed to be because the Celltrion stock price at that time was lower than the stock purchase claim exercise price, rather than judging that the merger damages shareholder value." He added, "Looking at past cases of mergers between Mirae Asset Daewoo and Mirae Asset Securities, the National Pension Service opposed the merger but did not exercise the claim rights," noting, "The average stock price during the exercise period was about 2% lower than the exercise price."

The National Pension Service exercised stock purchase claim rights when Samsung Heavy Industries and Samsung Engineering attempted a merger in 2014. The claim amount from opposing shareholders including the National Pension Service exceeded 1.6 trillion won, causing the merger to fail. During the exercise period, the average stock prices of Samsung Heavy Industries and Samsung Engineering were 4.4% and 6.6% lower than the exercise price, respectively.

Individual shareholders who opposed the merger agenda at the shareholders' meeting are also expected to exercise their claim rights while watching the stock price. Some may have sold their shares when the stock price rose the previous day. Considering tax burdens, selling on the market is advantageous. A financial investment industry official said, "The payment is received within one month after the stock purchase claim exercise period ends," adding, "Considering capital gains tax burdens, individual shareholders will have significant concerns."

Exercising stock purchase claim rights to sell shares to the company is considered an over-the-counter transaction. A 22% capital gains tax must be paid on the capital gains, which is the difference between the transfer price and the acquisition cost plus transfer expenses. Additionally, a securities transaction tax of 0.35% of the transfer price must be paid.

Once uncertainties related to the merger disappear, whether performance improves is likely to determine the stock price direction. On the 23rd, Celltrion received FDA approval for the new drug sales of Zimpenetra, a subcutaneous (SC) formulation of the antibody biosimilar Remsima. A Celltrion official explained, "The approval of Zimpenetra means securing the first milestone for the integrated Celltrion to achieve 12 trillion won in sales by 2030," adding, "After the launch of Zimpenetra, annual sales of over 600 billion won and achieving 3 trillion won in sales within three years are also possible."

Researcher Lee Dong-geon said, "Attention should be paid to Zimpenetra," expressing expectations that "the estimated sales of 600 billion won for Zimpenetra next year will be easily achieved." He added, "Considering the expected sales of Remsima SC and Zimpenetra in Europe and the US next year, the current inventory of Remsima SC held by Celltrion Healthcare is expected to be depleted by mid-next year," and "This will quickly alleviate market concerns that synergies in cost competitiveness after the merger may not be significant."

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