A Samsung Biologics researcher examines the biopharmaceutical production facility. /Courtesy of Samsung Biologics

Samsung Biologics announced on the 22nd that it will establish 'Samsung Bioepis Holdings' through a simple spin-off method. The plan is to completely separate the contract development and manufacturing organization (CDMO) business from the biosimilars business to secure competitiveness.

Previously, Samsung Group established Samsung Biologics and Samsung Bioepis by partitioning the bio-chemical sector of Samsung Electronics. Samsung Bioepis was a joint venture co-founded by Samsung Biologics and U.S. biotechnology company Biogen in 2012, with Samsung Biologics holding an 85% stake and Biogen holding 15%. Later, Samsung Biologics acquired Biogen's entire stake in 2022, making Samsung Bioepis a wholly-owned subsidiary.

Through the spin-off, Samsung Biologics will become a specialized CDMO company, while the newly established Samsung Bioepis Holdings will fully integrate Samsung Bioepis, a biosimilars corporation, as a subsidiary.

Following the announcement, Samsung Biologics held an online briefing. It summarized a question-and-answer session with Yoo Seung-ho, Chief Financial Officer (CFO) of Samsung Biologics, and Kim Hyung-jun, CFO of Samsung Bioepis.

How will the spin-off be conducted?

The partitioning will be determined through procedures such as submitting the securities registration statement on July 29 and holding a shareholders’ meeting for partition approval on September 16. The planned founding date for Samsung Bioepis Holdings is October 1, and the partitioning will be completed by integrating Samsung Bioepis as a 100% subsidiary. The company intends to carry out the change listing for Samsung Biologics and the re-listing for the newly established Samsung Bioepis Holdings on October 29.

What is the background behind the decision for the spin-off?

Samsung Biologics and Samsung Bioepis had a parent-subsidiary relationship, leading clients to perceive both companies as a single entity, thereby raising concerns about potential conflicts of interest. Although efforts were made to resolve this issue, it was challenging to alleviate all concerns. The decision for the spin-off was made to dispel worries from clients and investors, ensure the complete evaluation of corporate value, and respond to changes in the increasingly competitive global order environment.

Was there no concern about conflicts of interest when acquiring all of Biogen's equity in 2022?

At the time of the acquisition, Samsung Bioepis was in the early stages of growth in the biosimilars business, so client concerns were not significant. However, as the business recently grew, client concerns increased, impacting order competitiveness, leading to the decision to spin off.

What is the relevance of the Samsung Group's governance restructuring?

This partitioning is unrelated to the group's governance restructuring. As stated earlier, it was necessary from a business perspective, and securing customer trust is a key background.

What are the goals and revenue models for the newly established holding company 'Samsung Bioepis Holdings'?

Samsung Bioepis Holdings aims to manage the existing Samsung Bioepis business along with new subsidiaries to be established in the future and to carry out new investments. Similar to other holding companies, Samsung Bioepis Holdings will be a pure holding company managing and supporting subsidiaries while generating revenue through new businesses.

In the future, plans are in place to generate revenue through consulting for domestic and international corporations, startup investment projects, and the discovery of new technologies. Revenue from dividends from subsidiaries is also expected, and we intend to operate through various funding channels.

What is the business direction of Samsung Bioepis Holdings' subsidiaries?

Samsung Bioepis is focused on the biosimilar business. The newly established subsidiaries are intended to focus on developing bio-technology platforms for future growth. Having dedicated 13 years to biosimilars, the necessity for technology development has increased to avoid lagging behind. Ultimately, the aim is to pursue the business in alignment with the foundational purpose of establishing Samsung Bioepis Holdings to enhance shareholder value.

What are the listing plans for Samsung Bioepis?

"This structural reorganization itself is a significant change, and there are currently no plans for a listing. At this time, discussions about a listing could create confusion among investors. Our priority will be to focus on establishing a transparent governance structure and enhancing shareholder value."

What benefits will investors gain from the spin-off?

Previously, investors in Samsung Biologics had no choice but to invest at once in the disparate two business sectors of CDMO and biosimilar development and commercialization. With this partitioning, it is believed that investors will be able to invest according to their preferences. The hidden value of Samsung Bioepis will also be highlighted, and it is anticipated that each business will be valued appropriately. Since this partitioning meets the criteria for a qualified partition, there will be no taxes such as corporate tax and income tax that existing shareholders of Samsung Biologics would have to bear.

What is the outlook for stock prices following the partitioning?

I expect that Samsung Biologics and Samsung Bioepis Holdings will be properly assessed for their corporate value.

What measures are in place to protect minority shareholders regarding share buyback rights?

According to legal review, since this is a spin-off, buyback rights will not be granted. We have confirmed through external consultation that there are no legal issues.

How will odd lot shares generated by the partitioning be handled?

The partitioning ratio is 0.65 for Samsung Biologics and 0.35 for Samsung Bioepis Holdings (if one share of Samsung Biologics is held, it will result in 0.65 shares of Biologics and 0.35 shares of Holdings). Odd lot shares will be acquired by each company as treasury stock and paid in cash converted at the share price on the first day of re-listing in November, with payment made in cash within five business days.