Speculations grow that the merger between Celltrion Group's major affiliates —Celltrion, Celltrion Healthcare, and Celltrion Pharm— will accelerate with the recently planned comeback of Seo Jung-jin, the honorary chairman of Celltrion Group.
Industry watchers based their speculations on the group’s recent announcement that it held a board meeting at each of the three affiliates last Friday. These meetings appointed Seo as a candidate for director and co-chair of the board of directors of Celltrion Holdings, Celltrion, Celltrion Healthcare, and Celltrion Pharm for a two-year term.
If the agenda is approved at each company's shareholders' meeting and board of directors on March 28, Seo will make major management-related decisions for the Celltrion Group.
Seo's comeback comes as the proposed mergers between the three affiliates, which the group Seo's retirement in 2021, have progressed sluggishly.
Seo initially announced his plans to merge the three affiliates into an integrated pharmaceutical company by 2021 to achieve management transparency, strengthen governance, and expand business capabilities and competitiveness.
Under the group's governance structure, Seo controls Celltrion and Celltrion Healthcare through Celltrion Holdings, while Celltrion Pharm is under the control of Celltrion.
Seo is the largest shareholder, with a 97.19 percent stake in Celltrion Holdings, and the largest shareholder of Celltrion and Celltrion Healthcare, with 19.97 and 24.23 percent stakes in the two companies.
Celltrion is the largest shareholder of Celltrion Pharm and holds a 54.87 percent stake in the company.
As part of the merger process, Celltrion Holdings and Celltrion Healthcare Holdings decided to merge in October 2021 and complete the merger in December of the same year.
In March 2022, the group also resolved the controversy over violations of accounting standards that could affect the merger.
Despite all those efforts, the merger process has been sluggish, mainly due to backlash from minority shareholders angered by the low stock price. For a merger, two-thirds of shareholders must agree at a general shareholders' meeting.
In the first half of 2022, minority shareholder ratios at Celltrion, Celltrion Healthcare, and Celltrion Pharm were 67.49 percent, 56.64 percent, and 45.12 percent.
The stock prices of the three affiliates have been on a downward trend since reaching their highest on Dec. 30, 2020.
Based on the closing price on Tuesday, the stock prices of the three listed companies have dropped by more than half from their peak levels.
However, Seo's return to management positively impacts the stock price of the three affiliates, and industry watchers believe that chances are high that minority shareholders will support the merger if their stock prices recover.
After Celltrion Group announced Seo's return last Friday, share prices of Celltrion, Celltrion Healthcare, and Celltrion Pharm have risen.
As of market close Tuesday, Celltrion's shares stood at 155,600 won ($119.74), up 8.28 percent from last Thursday, a day before Celltrion announced Seo's return. Celltrion Healthcare and Celltrion Pharm shares also stood at 62,800 and 73,900 won, up 16.51 and 30.61 percent.