On November 22, the stock price of Samsung Biologics, which went public on November 10, closed at 171,000 won (US$153) and its market cap totaled 11.3142 trillion won (US$10.126 billion). The company’s stock price and market cap increased by approximately 26% in less than two weeks.
This is quite significant in that the biotech division of Samsung C&T was in the middle of controversies during the merger between Samsung C&T and Cheil Industries in July last year. At that time, the ratio of merger was 0.35:1. Then, Elliott Management and Institutional Shareholder Services expressed their opposition to the merger, claiming that the ratio was inappropriate. Specifically, Institutional Shareholder Services said Samsung C&T was undervalued by 50% and Cheil Industries was overvalued by 41%. On the contrary, the National Pension Service was in favor of the merger, mentioning that the synergy effect of the merger would be capable of offsetting Samsung C&T’s disadvantage. Those on the other side retorted that the biotech division of Cheil Industries had no high business value.
At that time, Cheil Industries had 46.3% of Samsung Biologics shares. Samsung Biologics has 91.2% of drug developer Samsung Bioepis. In other words, Cheil Industries was leading the biotech business of the entire Samsung Group. Before the merger, Samsung C&T represented only 4.9% of Samsung Biologics. Securities companies estimated the value of the biotech division of Cheil Industries at 5.842 trillion won (US$5.22 billion) to 9.9 trillion won (US$8.86 billion). In contrast, Institutional Shareholder Services estimated it at 1.5 trillion won (US$1.34 billion) to 2.021 trillion won (US$1.80 billion).
16 months have passed and now the aggregate market value of Samsung Biologics is 11.3142 trillion won (US$10.12 billion). The equity value of Samsung Biologics is 4.915 trillion won (US$4.39 billion), much greater than the result of the calculation by Institutional Shareholder Services, given that Samsung C&T takes up 43.44% in the company. The equity value of the biotech arm of Samsung C&T is likely to further increase in view of the listing of Samsung Bioepis in the future.