Dongwon Industries, the holding company of Dongwon Group, said it has started its process to acquire Boryung Biopharma. Dongwon Industries, founded in April 1969, focuses on seafood products including tuna cans. 

Established in 1991, Boryung Biopharma is an affiliate of Boryung Group developing vaccines and new drugs. 

Boryung Biopharma is known for developing Korea's first oral typhoid vaccine, and the company recorded sales and operating profits of 139.1 billion and 19.8 billion won ($107.2 million and 15.2 million) in 2021.

Dongwon Industries said in a public filing on Thursday that it signed a memorandum of understanding (MOU) with Boryung Partners, the largest stakeholder of Boryung Biopharma, to acquire the latter. 

Dongwon plans to acquire a 100 percent stake in Boryung Biopharma including shares held by Boryung Partners (69.29 percent), Boryung CEO Jay Kim (1.78 percent), and all other stakes held by investors such as Shinhan Investment & Securities and Mirae Asset Securities.

IB industry watchers said Dongwon Industries could start the due diligence process soon and sign the main deal in mid-to-late March at the earliest.

If the acquisition is finalized, Dongwon will proceed with the payment of funds within the third quarter. Dongwon Industries is also reviewing plans to attract financial investors, such as private equity funds, prior to the final takeover, the company said.

At the end of last year, Boryung Group selected Samil PwC as the organizer to sell Boryung Biopharma and contacted potential acquisition candidates individually without going through an open bid.

Local news reports said Boryung hoped to raise about 600 billion won ($462.2 million) from the sale. 

Five to six buyers were known to have shown an interest in the preliminary bidding for sale held on Feb. 8.

However, Boryung started negotiations with Dongwon Industries without going through a shortlisting candidate process.

If this acquisition is finally completed, Boryung Biopharma will become the first bio-related unit of the Dongwon Group.

Dongwon Industries is known to have chosen the biopharmaceutical industry as a new growth engine to reorganize its business structure. The company has solely focused on the food business so far.

Industry watchers expect that Dongwon will be able to strengthen its health functional food business through the acquisition of Boryung Biopharma.