Celltrion scraps merger plan after investor backlash

(Celltrion)

Celltrion Group on Friday ditched its planned merger of the two units Celltrion and Celltrion Pharm after months of fierce resistance from shareholders. The two companies announced that they would focus on their core operations and work on creating synergy within their respective firms.

The decision comes after a series of evaluations conducted by a special review committee set up by their boards of directors, external studies by accounting firms and shareholder surveys.

"We established the special review committee to ensure an objective and independent review of how the merger would align with shareholder interests." Lee Jae-sik, Celltrion's special review committee head, said. "The decision-making process serves as a model for environmental, social and governance management and enhancing shareholder value."

The special committee assessed the merger's feasibility by examining five key areas: merger synergy, financial and nonfinancial risk factors, funding considerations, business feasibility and shareholder opinions. They focused on whether any of these factors would adversely affect shareholders' interests.

Shareholders remained mixed about the proposed merger. Almost 37 percent of Celltrion shareholders opposed the plan, while 55.1 percent abstained from voting. When it comes to Celltrion Pharma shareholders, 67.7 percent voted in favor of the merger and only 9.8 percent opposed it.

Celltrion Chairman Seo Jung-jin and other major stakeholders including Celltrion Holdings, maintained their neutral stance.

External evaluations focused on the merger ratio. Accounting firms were still skeptical about the immediate benefits of the merger, citing Celltrion Pharm’s growth potential has not yet been materialized.

“The merger plan still remains a possibility depending on shareholder opinions. We will continue to prioritize growth and value enhancement,” a Celltrion official said.

By Kim Hae-yeon(hykim@heraldcorp.com)