Source: Bloomberg
Samsung Biologics Co. is seeking to raise as much as 2.25 trillion won ($2 billion) from a South Korean initial public offering, taking an important step toward its goal of becoming the world’s largest contract manufacturer of biological medicines.
The listing of the business, which makes complex drugs called biologics, will help the country’s largest conglomerate tap a new source of growth. With the smartphone market nearing saturation, Samsung Group, which controls more than 50 companies with interests from TVs to finance, has invested in areas such as pharmaceuticals.
Its drug-making arm will offer about 16.5 million shares at 113,000 won to 136,000 won apiece, according to a filing Tuesday. The proceeds of one of South Korea’s biggest IPOs will go toward capacity expansion, investment in new technologies as well as debt repayment, the company said. Samsung Biologics will gauge demand for the share sale from October 26 to 27 with a final price to be announced on Oct. 28.
“Samsung Biologics will use the proceeds to expand our manufacturing capacity and to further invest in research and development to aid in developing bio-medicines,” it said in its filing. “‘The proceeds will also be partly used in debt repayment to improve our financial structure.”
Korea Investment & Securities Co. and Citigroup Inc. are the IPO’s lead managers. NH Investment & Securities Co., JPMorgan Chase & Co. and Credit Suisse Group AG are helping arrange it.
Biologics are made up of organic substances such as hormones, antibodies and other proteins. They are more complex to research and manufacture than other drugs but can address treatable conditions with higher efficacy and fewer side effects. The global biologic medicines market is projected to exceed $390 billion by 2020, according to an IMS Consulting Group report funded by Novartis.
The offering will add to the $1.9 billion raised from first-time share sales in the country this year, down from $2.5 billion during the same period in 2015, data compiled by Bloomberg show. Seoul-based Doosan Bobcat Inc. is slated to take investor orders in October for an IPO of as much as 2.45 trillion won, potentially South Korea’s biggest in more than six years.
In December, Samsung Biologics began the construction of an 850 billion won plant, its third, saying it was aiming to become the world’s largest biologics contract manufacturing organization. It has announced production agreements with companies including Bristol-Myers Squibb Co. and a unit of Roche Holding AG. Once the plant is in operation, Samsung Biologics expects it will reach 1 trillion won in operating profit.
Samsung C&T Corp. and Samsung Electronics Co. are major shareholders in Samsung Biologics.
Samsung Electronics, the maker of Galaxy mobile phones, plans to sell 5.5 million Biologics shares in the IPO. The Suwon, South Korea-based company faces rising competition from new models of Apple Inc.’s iPhone. In September, it began a recall affecting millions of its Note 7 phones because of faulty batteries prone to overheating.