The merger between Celltrion and Celltrion Pharm has been called off. South Korean pharmaceutical giant Celltrion Group said on August 16 that the boards of directors for both companies have decided not to proceed with the merger following a detailed review by a special committee.
Last year, Celltrion Group announced a two-stage merger plan to streamline its operations. The first stage, completed last year, was the merger between Celltrion, the group’s biopharmaceutical arm, and Celltrion Healthcare, which handles distribution. The second stage involved merging Celltrion with Celltrion Pharm, a subsidiary focused on the production and domestic sales of synthetic drugs. But the final step in the group’s merger plan has now fallen through.
The decision to halt the merger came after a survey revealed differing shareholder opinions. Only 8.7% of Celltrion shareholders supported the merger, 36.2% opposed it, and 55.1% abstained, according to a recent shareholder survey. Applying the principle of combining the majority opinion with the shares of major shareholders, the final opposition rate stood at 70.4%. Shareholders who opposed the merger cited dissatisfaction with the current merger ratio between the two companies, arguing that it was unfavorable for Celltrion. They also pointed out that reviewing the merger ratio should be a key prerequisite if the merger were to be pursued.
In contrast, 67.7% of Celltrion Pharm shareholders were in favor of the merger, with 9.8% opposed and 22.6% abstaining. Proponents of the merger believed it would help the company to grow into a comprehensive biotechnology research firm.
An evaluation by an external accounting firm also concluded that the timing of the merger was not optimal, citing increased financial risks associated with moving forward with the merger at this time. While the accounting firm assessed that Celltrion Pharm has future growth potential in areas such as antibody-drug sales, contract manufacturing (CMO), and antibody-drug conjugate (ADC) development, these prospects have yet to materialize. The firm suggested that a merger would be more justified once these growth avenues have been actualized and effectively communicated to the market.
“In light of the board’s decision not to proceed with the merger at this time, both companies will now focus on their core operations to drive growth and maximize synergies within the group,” said a Celltrion Group spokesperson. The spokesperson added that the possibility of revisiting the merger remains open should shareholders express renewed interest.
