By Kim Yoo-chul
The ongoing saga between top financial regulators and Samsung BioLogics is on the verge of a major turning point after the unit's business partner in the United States said it had exercised its option to buy additional shares of Samsung Bioepis.
Samsung Bioepis is a joint venture established in 2012 between Samsung's biotechnology affiliate and Biogen. The Nasdaq-listed Biogen confirmed Friday (KST) it had exercised a call option to boost its existing stake in the joint venture from 5.4 percent to 49.9 percent.
Under the terms of the agreement, Biogen is planning to make a $700 million payment to Samsung BioLogics, it said. The deal will likely be completed in the second half of the year.
"We are very pleased with the progress made to date at Samsung Bioepis and believe exercising this option is an opportunity to create meaningful value for our shareholders," Biogen CEO Michel Vounatsos said in a statement. "This option allows us to increase our share in a leading biosimilar company at what we believe are attractive terms. We look forward to building an important relationship with Samsung BioLogics."
Samsung BioLogics spokesman Seo Hae-su said the company has been notified about the call option plan. "Samsung BioLogics will hand over 9,226,068 of its ordinary shares. Samsung Bioepis will be operated by the two parties as Samsung BioLogics agreed with the U.S. investment partner to have equal voting rights," Seo said.
The Biogen announcement is regarded by many as a plus for Samsung BioLogics, according to market watchers, as the country's financial regulators allege the Samsung unit broke accounting rules by "intentionally inflating" net profits of Samsung Bioepis ahead of its 2016 initial public offering (IPO).
In response to the suspicions, Samsung BioLogics said it had simply switched the valuation method to being based on fair market value instead of book value. At that time it was Biogen's plan to possibly exercise its call option.
Samsung BioLogic's valuation of Samsung Bioepis jumped 18 times to about $4.5 billion in 2015 after the switch. Samsung BioLogics said the change was approved by major accounting firms.
A joint team from the Financial Services Commission and the Financial Supervisory Service (FSS) is investigating the matter.
"Because Samsung Bioepis is unlisted, if Biogen exits the venture, then Samsung affiliates will buy the remaining shares. The key issue is Biogen's commitment to the venture. An exit plan from the joint venture will strengthen the regulators' position and vice versa," said an official at the FSS.
Samsung Bioepis has received a series of approvals in Europe, the United States and other countries to sell its biosimilar drugs. The approved drugs include alternative versions of blockbuster rheumatoid arthritis treatments such as Humira.
The ongoing saga between top financial regulators and Samsung BioLogics is on the verge of a major turning point after the unit's business partner in the United States said it had exercised its option to buy additional shares of Samsung Bioepis.
Samsung Bioepis is a joint venture established in 2012 between Samsung's biotechnology affiliate and Biogen. The Nasdaq-listed Biogen confirmed Friday (KST) it had exercised a call option to boost its existing stake in the joint venture from 5.4 percent to 49.9 percent.
Under the terms of the agreement, Biogen is planning to make a $700 million payment to Samsung BioLogics, it said. The deal will likely be completed in the second half of the year.
"We are very pleased with the progress made to date at Samsung Bioepis and believe exercising this option is an opportunity to create meaningful value for our shareholders," Biogen CEO Michel Vounatsos said in a statement. "This option allows us to increase our share in a leading biosimilar company at what we believe are attractive terms. We look forward to building an important relationship with Samsung BioLogics."
Samsung BioLogics spokesman Seo Hae-su said the company has been notified about the call option plan. "Samsung BioLogics will hand over 9,226,068 of its ordinary shares. Samsung Bioepis will be operated by the two parties as Samsung BioLogics agreed with the U.S. investment partner to have equal voting rights," Seo said.
The Biogen announcement is regarded by many as a plus for Samsung BioLogics, according to market watchers, as the country's financial regulators allege the Samsung unit broke accounting rules by "intentionally inflating" net profits of Samsung Bioepis ahead of its 2016 initial public offering (IPO).
In response to the suspicions, Samsung BioLogics said it had simply switched the valuation method to being based on fair market value instead of book value. At that time it was Biogen's plan to possibly exercise its call option.
Samsung BioLogic's valuation of Samsung Bioepis jumped 18 times to about $4.5 billion in 2015 after the switch. Samsung BioLogics said the change was approved by major accounting firms.
A joint team from the Financial Services Commission and the Financial Supervisory Service (FSS) is investigating the matter.
"Because Samsung Bioepis is unlisted, if Biogen exits the venture, then Samsung affiliates will buy the remaining shares. The key issue is Biogen's commitment to the venture. An exit plan from the joint venture will strengthen the regulators' position and vice versa," said an official at the FSS.
Samsung Bioepis has received a series of approvals in Europe, the United States and other countries to sell its biosimilar drugs. The approved drugs include alternative versions of blockbuster rheumatoid arthritis treatments such as Humira.
