Samsung Makes First Foray Into U.S. Stock Market
The listing of Samsung Bioepis Co. on the Nasdaq Stock Market would help it fund its heavy investment in research and development and production facilities to tap into the fast-emerging field of biosimilars. Biosimilars are biotechnology drugs analogous to generic drugs.
For the Samsung Group, which was founded in 1938 and consists of more than 60 companies, the Samsung Bioepis offering represents its first U.S. public stock listing—a bid to fetch a richer valuation on an exchange already populated with biotechnology companies.
Samsung Electronics Co. , the smartphones-and-semiconductor giant that is the crown jewel of the Samsung conglomerate, holds 46% of Samsung BioLogics Co., which in turn owns 90% of Bioepis.
Samsung Bioepis is devoted to developing generic versions of biotechnology drugs whose patents are expiring. The company has six products under development, and in 2013 agreed to develop and commercialize biosimilars with Merck & Co. Inc. and Biogen Idec Inc.
About five years ago, Samsung identified health care, and biosimilar drugs in particular, as a new growth area for the conglomerate, whose interests span construction, life insurance, washing machines and memory chips.
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Lee Jae-yong, Samsung’s third-generation heir apparent, has taken a personal interest in developing Samsung’s biopharmaceuticals business, according to people familiar with the matter.
The company set up a major production facility near South Korea’s main airport, and is expected to have the third-largest capacity of any global biosimilar contract manufacturer by the end of this year, analysts say. That operation is housed under Samsung BioLogics.
Samsung signaled in June that it was seeking a listing for Samsung Bioepis on Nasdaq with a market valuation of about eight trillion won ($6.76 billion).
The company has hired Citigroup Inc. and Goldman Sachs Group Inc. as lead managers for the deal, according to people familiar with the matter.
Analysts estimate Samsung Bioepis will raise more than $1 billion through the listing. Samsung hasn’t said how much money it would seek to raise or when it intends to list.
Bioepis executives have said they plan to sell their first biosimilar product next year. It isn’t unusual for biotechnology companies to go public before they generate significant revenue.
Meanwhile, Samsung Bioepis and Samsung Biologics have set a combined revenue target of 1.8 trillion won for 2020.
“Internally, we think the company will need to raise a significant amount through the listing,” Yang Chul-bo, Samsung Bioepis’s chief financial officer, said at the June analyst conference, without providing a specific figure. But Mr. Yang suggested that the company views a valuation of about $7 billion as attainable.
Mr. Yang said the company was seeking an equity listing in part because of the difficulty of securing bank loans, given a lack of assets that Samsung Bioepis could use as collateral.
The company has been financing its capital-intensive investment plans with help from Samsung Electronics and other affiliates, though that money will likely be discontinued this month, Mr. Yang said.
Last month, shareholders of Samsung’s de facto holding company, Cheil Industries Inc., and construction-and-trading arm Samsung C&T Corp. approved an $8 billion merger that will take effect on Sept. 1. The new merged company, 16.5% owned by Mr. Lee, will own 51% of Samsung BioLogics.
Updated Aug. 20, 2015 8:42 p.m. ET
Write to Jonathan Cheng at [email protected] and Min-Jeong Lee at [email protected]
Source: Wall Street Journal Health
