Published : Aug. 30, 2016 - 18:00
Celltrion founder and CEO Seo Jung-jin stepped aside for more professional management of his phenomenally successful bio venture last year, but few in Korea think his era is over.
The 59-year-old entrepreneur, who started the pharmaceutical firm in 2002 with 50 million won ($44,400) and very little prior knowledge of drugs, still has a firm grip on the business through personal holdings of company stocks and a team of close confidants among top management.
“Celltrion shares are widely dispersed. There appears to be no force right now with a meaningful number of shares who can pose a threat to Seo,” said analyst Koo Ja-yong of Dongbu Securities.
A key vehicle for Seo in his ownership of Celltrion and other businesses is Celltrion Holdings, a private company 93.8 percent owned by him.
The firm has a 19.28 percent stake in the Kosdaq-listed Celltrion, supplemented by a combined 3.03 percent stake owned by Celltrion GSC, a procurement arm of Celltrion that is 71 percent owned by Seo and over 30 friendly individuals, including executives of Celltrion and its affiliate companies.
Celltrion’s second-largest shareholder is ION Investment, an investment arm of Singapore’s Temasek Holdings, with 14.3 percent of shares. The rest, or about 63 percent, are unaffiliated.
Theoretically, 22 percent is not enough to make Seo immune to hostile takeover bids. But, as long as the No. 2 shareholder is on his side, the chairman’s control can be considered solid, said analyst Koo.
By law, a shareholder must make a public disclosure when his or her holding in a listed company exceeds 5 percent. Other than the No. 1 and No. 2 shareholders, no Celltrion investors have made such a disclosure.
At Celltrion, Seo’s post has been elevated to chairman, while two of the most trusted men from his years at the now-defunct Daewoo Motor, who joined him in founding Celltrion, now run the company as co-CEOs.
At Celltrion Pharm, a listed affiliate of Celltrion, Seo’s younger brother, Jung-ju, is CEO.
Through Celltrion Holdings, Seo organizes not just Celltrion, but several other businesses he founded or acquired.
Celltrion Holdings owns 19.3 percent of Celltrion, which then controls 48.8 percent of Celltrion Pharm, which focuses more on the domestic market. Pharm, in turn, owns 100 percent of the R&D unit Celltrion Chemical Research Institute.
Seo personally owns 46.4 percent of Celltrion Healthcare, which has the exclusive rights to market and sell the company’s flagship and most promising drug, Remsima.
The entrepreneur also holds 71 percent of shares of Celltrion GSC, which in 2013 acquired 100 percent of Hanskin, a local cosmetic brand now renamed to Celltrion Skincure.
Dream E&M, Seo’s latest venture into Korea’s hot entertainment scene that invests in TV dramas and films, is also wholly owned by Celltrion Holdings.
The current corporate-governance setup, however, may undergo significant changes, with Celltrion Healthcare preparing for an initial public offering.
At an investor relations session late last year, Celltrion Healthcare CEO Kim Hyoung-ki said the company could merge with Celltrion in two or three years after the planned floatation.
“For the merger to have a fair ratio, I think it’s good to have the companies’ value judged by the market,” he reportedly said.
Seo himself hinted at the possibility of such a move earlier in the year.
“The merger is one of the options that we are considering. Nothing has been decided,” said Celltrion spokesperson Lee Kun-hyuk. Celltrion Healthcare will make the IPO, but when this will happen is also not decided, he added.
A local law governing internal trade at big business groups is a factor in deciding the relation between Celltrion and Celltrion Healthcare, analysts say.
Korea’s fair trade rule bans conglomerates from channeling contracts to listed companies that are 30 percent or more owned by their controlling families.
As Celltrion sells its products exclusively through Celltrion Healthcare, which is 46 percent owned by Seo, it is subject to the ban.
By Lee Sun-young (
milaya@heraldcorp.com)