Celltrion secures $730 mn to buy biosimilar unit shares, pursue M&A

Celltrion Holdings Co. has secured 1 trillion won ($732 million) in fresh funding and plans to spend half of it this year to buy shares in its biosimilar unit Celltrion Inc.

The holding firm said on Friday it will acquire the shares on the market in two rounds starting in August to support the subsidiary’s share price and increase dividend income from the shareholdings.

The share purchase will lift its stake in South Korea’s largest biosimilar company, which has underperformed the broader Kospi index this year, to 23.53%.

The remaining 500 billion won may be used for mergers and acquisitions, or to buy additional Celltrion shares. It did not specify the source of the new funding.

“If the share price remains undervalued, we may spend the remaining 500 billion won to buy more shares (in Celltrion),” it said in a statement.

The holding company will retain the shares it buys starting in August for at least one year.

“Any potential sale of the shares will be done in a way that limits the impact on its share price,” Celltrion said.

The share purchase follows Celltrion’s acquisition of 124.2 billion won of Celltrion shares on the market between May and June.

The holding company said in the statement that it will keep its existing Celltrion shares for longer.

“With the 1 trillion won in fresh funding, we can manage capital and invest efficiently to reorganize our holding company’s business and improve its profitability, while boosting the shareholder value of our key subsidiary Celltrion,” the official said.

It expects the dividend income from the biosimilar developer to rise on prospects of its growth potential and higher dividend payout ratio, contributing to the holding firm's profits.

The share purchase price is based on the biosimilar company’s closing price of 172,000 on Thursday.

On Friday, Celltrion shares closed up 3.25% at 177,900 won, bucking a 2.02% decline in the Kospi index, following the holding company's announcement of plans to buy its additional shares. 

Year to date, the share price of Celltrion has advanced 2.67%, underperforming the Kospi's 27.27% surge.

Write to Yeonhee Kim at yhkim@hankyung.com