Samsung Biologics (207940) shares fell after the company announced a 3 trillion won ($2.2 billion) rights offering, as investors weighed the dilution of existing stakes from the new share issuance.
As of 10:11 a.m. on the 28th, the stock traded at 1.527 million won, down 4.20% from the previous session, according to the Korea Exchange. Selling pressure persisted in early trading after the company said it would raise about 3 trillion won to fund its acquisition of PolyPeptide Group, a global peptide contract development and manufacturing organization, and to expand its second bio campus in Songdo, Incheon.
The board approved the offering, valued at 3.0000009 trillion won, in a regulatory filing the same day. The company will issue 2.27 million new shares at 1.322 million won each, a 15% discount to the reference price. The issuance amounts to 4.904% of outstanding shares.
Of the proceeds, 2.7062 trillion won will go toward the PolyPeptide Group acquisition, with the remaining 294.8 billion won funding the Songdo expansion. In July, Samsung Biologics agreed to buy PolyPeptide Group, a producer of peptides used as a key ingredient in obesity and diabetes treatments, for 1.46 billion Swiss francs, or about 2.7 trillion won. The deal is the largest merger and acquisition in South Korea's pharmaceutical and biotech industry.
The company plans to close the acquisition this year and extend its business beyond antibody drugs, messenger RNA and antibody-drug conjugates into peptides. It will also gain PolyPeptide Group's production sites in Europe, the United States and India, building a global manufacturing network that includes South Korea.
Samsung Biologics will build plants 6 through 8, with a combined capacity of 180,000 liters, in phases at the second bio campus. Including plant 5, completed last year, the second campus will have total capacity of 720,000 liters. Once the expansion is finished, the company's overall antibody drug capacity will rise to 1.385 million liters.
The offering will be allocated to existing shareholders first, with any unclaimed shares offered to the public. Employees will receive 20% of the new shares through the employee stock ownership association, with the rest offered to existing shareholders in proportion to their holdings. The record date for share allocation is Oct. 6, subscription for existing shareholders runs Nov. 9-10, and the new shares are scheduled to list on Nov. 30.
"We will carry out the PolyPeptide Group acquisition and the second bio campus expansion without setbacks to raise corporate value," Samsung Biologics CEO John Rim said.
