With the return of Chairman Seo Jung-jin, Celltrion Group is focusing on share buybacks, a move that has raised speculation among industry watchers that the company may be preparing to announce a merger between its affiliates.

While the company said the share buyback is a move to increase shareholder value, industry watchers believe it is likely a management strategy to secure funds for the future merger of Celltrion Group's major affiliates —Celltrion, Celltrion Healthcare, and Celltrion Pharm.

Most recently. Celltrion held a board meeting on July 6 and decided to buy back 333,556 shares, valued at approximately 50 billion won ($39.1 million).

This is Celltrion's fourth share buyback this year. The company previously bought back shares in February, March, and June.

Including the most recent share buyback, Celltrion bought back a total of 1,353,776 shares, worth approximately 200 billion won this year. Last year, Celltrion also completed share repurchases totaling 1,558,883 shares, worth 253.5 billion won.

Celltrion Healthcare has also been active in share repurchases.

On July 6, Celltrion Healthcare held a board meeting and decided to buy back 380,000 shares of its own stock. The purchase is valued at approximately 25 billion won and is the third time this year that Celltrion Healthcare has decided to buy back its own shares, having done so in February and March.

As a result, the company has acquired a total of 1.25 million shares this year, valued at approximately 75 billion won.

Both Celltrion and Celltrion Healthcare have said that they believe their market value continues to be undervalued despite efforts to secure future growth engines materializing, and they repurchased additional shares to stabilize the stock price and enhance shareholder value.

However, some industry watchers have raised the possibility that the company's stock purchases could be utilized for Celltrion Group's long-awaited merger between the three affiliates.

Notably, Celltrion Group selected Mirae Asset Securities as the lead arranger for the merger of Celltrion, Celltrion Healthcare, and Celltrion Pharm on Thursday. 

As a result, industry officials are speculating that the merger could be approved as early as next month and completed by the end of the year.

"Share buybacks are not only to enhance shareholder value but also to be used for mergers and acquisitions," Kiwoom Securities analyst Huh Hye-min said. "The board of directors can decide to merge one month after the share buyback process is completed, so if the most recent share buyback is the last one, the merger process can start as early as mid-August," Huh said.

In this regard, a Celltrion official explained that the overall preparations for the merger are progressing smoothly, and once the detailed schedule is set, it will reveal our official position through public filing.

Celltrion Group has been pushing for a merger since 2020 and has consistently stated its intentions.

In September 2020, Celltrion announced that it would pursue a three-company merger to strengthen its management transparency and governance and expand its business capabilities and competitiveness.

In September of the same year, Chairman Seo established Celltrion Healthcare Holdings by contributing shares of Celltrion Healthcare to create a single holding company system for the three-company merger and finalized the merger of Celltrion Healthcare Holdings with Celltrion Holdings in late 2021.

However, the merger was postponed due to a controversy over accounting fraud that threatened to halt trading.

The company finally resolved the accounting fraud allegation last month, allowing Celltrion to proceed with the merger without any obstacles.