Responding Strategy
With an arrest warrant of Lee Jae-Yong, vice chairman of Samsung Electronics by the Special Investigation Team dropped, Samsung decided to respond to Elliot Management’s demand to list Samsung Electronics after splitting up the electronics giant with a plan to list Bioepis on the NASDAQ. At present, even though the special investigation has partially halted Samsung’s reorganization and response to Elliot Management, but Samsung has set a long-term cause and a mid-term direction in a bigger picture.
"Elliot Management and the market demand Samsung's transparency. I think that it will be difficult to list Samsung Electronics on the NASDAQ after its split-up, and Bioepis has an appropriate size to be listed on the NASDAQ," a senior Samsung employee said on January 19. "The CEO of Biogen, the second-largest shareholder of Bioepis is well aware of the conditions of the company because he is a director of Bioepis," he said. "We expect the CEO of Biogen to explain to the board of directors about Bioepis’s listing on the NASDAQ well."
Discussions about the listing of Bioepis on the NASDAQ began in 2015, but Samsung Group’s decision that the group will list Bioepis on the NASDAQ instead of Samsung Electronics (the operation company after Samsung Electronics’s split-up) is meaningful in that the decision shows Elliot's will to give a boost to the group’s transparency while indirectly accepting the demand from Elliot Management. Although Samsung Electronics is a core affiliate of the group, Samsung C&T (a 43.4% stake) owns Samsung Biologics, the largest shareholder of Bioepis as a de-facto holding company. In particular, it became more likely that Samsung Electronics will not be listed on overseas stock markets, even if Samsung Electronics is split up.
In the industry, it is pointed out that since Samsung decided to list Bioepis on the NASDAQ instead of Samsung Electronics, it should be avoided to unreasonably investigate Samsung Biologics or hold a court of public opinions. Biogen, the second-largest shareholder of Bioepis, has an option to increase its Bioepis stocks to '50% - one share' by the end of 2018. Considering this and Elliot Management's demand, there is a possibility that Biogen will make a major decision about listing Bioepis this year or in the first half of next year. As of the end of October last year, Biogen held an 8.8% stake in Bioepis. Samsung Biologics, a pharmaceutical contract manufacturing organization (CMO), plans to decide whether to start the construction of its fourth plant this year.
With reference to this, a representative of Samsung Bioepis said, "Our financial conditions, domestic business conditions, and the US IPO market are currently defying our consideration of listing Bioepis on the NASDAQ."