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March 28, 2024

Biogen confirms it is upping stake in Samsung Bioepis

PUBLISHED : May 18, 2018 - 16:38

UPDATED : May 18, 2018 - 23:07

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[THE INVESTOR] Samsung BioLogics said on May 18 that Biogen Therapeutics has confirmed that it will increase its stake in their joint venture Samsung Bioepis up to nearly 50 percent in a move that could sway the authorities who are looking into the Samsung affiliate’s accounting irregularity allegations.

“Samsung BioLogics received a letter from Biogen on May 17 saying that the company will exercise its call option (to raise its stake in Samsung Bioepis to 50 percent minus one share) by the due date on June 29,” Samsung BioLogics said in a regulatory filing. 

Biogen is expected to pay some 700 billion won (US$648.7 million) to acquire a 44.6 percent stake in Samsung Bioepis. 



Related:
All about Samsung BioLogics’ alleged window dressing
What’s at stake in Samsung BioLogics accounting scandal?



Samsung Bioepis is an Incheon-based biosimilar developer jointly set up by the US biotech firm and Samsung BioLogics in 2012. Since then, the Samsung unit has increased its stake in Bioepis from 85 percent to 96 percent.

The letter from Biogen comes at a crucial time when Samsung BioLogics CEO Kim Tae-han and other executives attended a hearing to defend themselves against the Financial Supervisory Service’s tentative ruling that the company breached accounting rules to exaggerate the value of Samsung Bioepis in order to inflate its net profit just before its 2016 listing.

“The letter is clear evidence for refuting the FSS and a civic group’s assertions that Biogen does not intend to exercise the option,” a Samsung BioLogics official told The Investor. 

Whether Biogen's willingness to purchase a bigger stake in Samsung Bioepis was strong enough in 2015 to warrant BioLogics's change in its accouting method has become a key factor in deciding the fate of the Samsung unit.

Samsung BioLogics said it stopped categorizing Samsung Bioepis as a subsidiary and started labeling it as an affiliate because Biogen notified the company in late 2015 that it would increase its control when BioLogics‘s books for 2015 were being compiled.

As a result, the valuation of Samsung Bioepis skyrocketed to 4.8 trillion won from 290 billion won after it switched to valuing the biosimilar maker at fair market value instead of book value. Thanks to the change, Samsung BioLogics logged a net profit of 1.9 trillion won after posting four straight years of deficits.

The FSS reportedly said that Samsung BioLogics shouldn’t have changed its ownership status in the books because Biogen wanted more Samsung Bioepis stake in mid-2015 but changed its mind later in the year due to a discord with Samsung BioLogics.

According to the Samsung BioLogics official, the talk on Samsung Bioepis’ stake was rekindled when the biosmilar maker said it would pursue its listing on NASDAQ in July 2015. ”Biogen let us know its intention to buy more stocks in November but we haven’t talked about the issue since Bioepis delayed the NASDAQ listing,” he said.

By Park Han-na (hnpark@heraldcorp.com)

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