Celltrion Group announced Friday it has established Celltrion Healthcare Holdings as a first step of its plan to merge three affiliates by the end of 2021.
The creation of the holding company is required to materialize the merger plan in compliance with the legal standards for Monopoly Regulation and Fair Trade Act. The merger of Celltrion, Celltrion Pharma and Celltrion Healthcare has been widely expected since early this year.
It will be a merger of the existing Celltrion Holdings, comprising Celltrion and Celltrion Pharma, and Celltrion Healthcare Holdings. Through the merger of the two holdings companies, Celltrion Group will be able to streamline its business structure, reduce costs and boost transparency.
The expansive scope of businesses the new, single entity will achieve will enable Celltrion to become a blockbuster global life sciences engineering firm, Celltrion Group said.
There will be a convention of board members and a shareholders meeting prior to the merger.
Previously, Celltrion managed the manufacturing and clinical tests of biologics drugs, and its subsidiary Celltrion Pharma manufactured chemical drugs. Celltrion Healthcare, an independent legal entity, had marketed and distributed Celltrion’s biologics drugs overseas.
By becoming one, the internal transaction structures will realign, making way for reduced costs and increased business transparency.
It will also separate the company’s ownership from the management, which will pave the way for a management specialist to head the company and prepare Celltrion Chairman Seo Jung-jin’s planned exit.
Since 2019, Seo has made clear on multiple occasions that he plans to retire by end-2020, while remaining the majority shareholder.
He has also hinted at the three-way merger since January, speaking at the annual JP Morgan Healthcare Conference in San Francisco.
As per the announcement Friday, Seo, the largest shareholder of Celltrion Healthcare, took out a portion of his shares and invested it to create Celltrion Healthcare Holdings. Celltrion Healthcare’s biggest shareholder has now changed names to Celltrion Healthcare Holdings, with a 38.04 percent stake.
Seo’s formerly 35.54 percent ownership of Celltrion Healthcare has on paper gone down to 11.21 percent.
Stock prices of Celltrion, Celltrion Healthcare and Celltrion Pharma are expected to be in for a turbulent ride when markets reopen Monday at 9 a.m.
By Lim Jeong-yeo (email@example.com)