"Samsung Biologics' 3 Trillion Won Rights Offering Seen as Growth Investment Reducing Borrowing Pressures"

Securities Analysts: "Financial Flexibility Secured... Positive Outlook for Peptides"

Funds Allocated for PolyPeptide Acquisition, Targeting Completion by November

Samsung Biologics’ decision to conduct a rights offering worth 3 trillion won is being recognized by the credit rating and securities industries as a strategic move designed to reduce borrowing burdens while pursuing future growth. Global investment banks have also highlighted that this is a proactive investment meant to expand its peptide business and boost production capacity.

According to industry sources on September 1, securities firms are maintaining their “BUY” recommendation for Samsung Biologics based on this assessment.

The planned total amount to be raised through this rights offering is approximately 3 trillion won. The issuance will be conducted through a shareholder allocation followed by a public offering of any forfeited shares (offering ratio: 4.9%; expected issue price: 1,322,000 won). The primary use of proceeds will be to fund the 100% public acquisition of Swiss-based PolyPeptide Group (about 2.7 trillion won).

Initially, concerns were raised about increased borrowing and financial pressures due to the 2.7 trillion won needed for the acquisition. However, analysts note that the decision to conduct a rights offering has significantly alleviated those risks.

Kwon Joonseong, Senior Analyst at NICE Investors Service, commented, “This rights offering is positive in that the necessary funds have been secured for a major equity investment. Through the rights offering, the company will not only secure acquisition capital but also increase its equity capital to around 11 trillion won, reducing related financial burdens.”

Securities analysts also positively evaluated the company’s move to proactively shore up capital rather than rely on excessive borrowing, thus preserving capacity for future investment.

Huh Hyemin, Analyst at Kiwoom Securities, noted, “This rights offering is a preemptive capital increase intended to enable simultaneous entry into the new peptide business and expansion of contract development and manufacturing (CDMO) capabilities. Acquiring PolyPeptide is significant as it represents an expansion into new business modalities.”

Kim Seona, Analyst at Hana Securities, said, “Instead of excessive borrowing, the company expanded its capital through a rights offering. This preserves financial flexibility and leaves room for future borrowing. It’s an optimal period to make a low-cost investment in long-term growth by securing global production hubs and diversifying modalities.”

Global securities houses also analyzed that the PolyPeptide Group acquisition will serve as a gateway for Samsung Biologics to enter the high-growth peptide CDMO market, while further advancing the company’s multi-modality strategy.

Chris Fan, CFA at Goldman Sachs, remarked, “The PolyPeptide acquisition will be a major milestone in strengthening the company’s status in the fast-growing peptide CDMO market. Both the PolyPeptide acquisition and the expansion of the Bio Campus are key investments driving the company’s long-term multi-modality growth strategy.”

Kim Mihyun, Analyst at Morgan Stanley, said, “Samsung Biologics has a solid track record of making sound funding decisions. This rights offering is also considered very appropriate, especially given the recent environment of rising global interest rates.”

Samsung Biologics’ biopharmaceutical manufacturing facility in Rockville, USA. Samsung Biologics

In particular, acquiring PolyPeptide Group—a Swiss peptide CDMO company—will allow Samsung Biologics to enter the high-growth market for GLP-1 (Glucagon-Like Peptide-1) based obesity and diabetes treatments, while also helping to overcome geopolitical risks, according to analysts.

The structure of the offering allocates 20% preferentially to employee shareholders, with 60% allotted to major Samsung Group affiliates (Samsung C&T Corporation and Samsung Electronics), and 20% to general investors. Since up to 80% of the shares are absorbed internally and by group subsidiaries, there is little concern about supply-demand imbalances in the broader market.

From a group-wide perspective, it is forecast that reinvestment of some of the cash generated from the semiconductor business into the bio sector will serve as a sustainable competitive advantage for Samsung Biologics, underscoring its superior capital-raising capabilities versus global peers.

Meanwhile, Samsung Biologics formally launched its public tender offer by posting the “public tender offer statement” for all outstanding PolyPeptide Group shares, excluding treasury shares (a total of 33,016,411 shares), on its website the previous day. The tender period runs through October 12, and Samsung Biologics aims to complete the final acquisition by the end of November.

This content was produced with the assistance of AI translation services.