Management dispute over S.Korea’s CTC Bio heats up

A management dispute over a South Korean pharmaceutical maker CTC Bio Inc. specializing in animal drugs is intensifying as another medical company has joined the battle.

PharmaResearch Co., which is popular for regenerative medicines, and its affiliate Pluto bought a 7.05% stake in the Kosdaq-listed CTC from the market, becoming its second-largest shareholder in an aim to gain management control, according to its regulatory filing last month.

PharmaResearch has been increasing its stake in CTC further as the board of directors on March 31 decided to spend up to 30 billion won ($22.8 million), including 13.5 billion won for the previous investment, to buy CTC shares. PharmaResearch is likely to become CTC’s top shareholder with about a 13% stake if it uses the money for the stocks.

CTC’s current largest shareholder is CEO Lee Min-Goo with 9.77% while The Bridge Inc., wholly owned by him, holds 2.69%.

The intensifying dispute has led to a surge in CTC’s share price. The stock has gained 6.4% since the company announced PharmaResearch’s purchase. On Monday, it hit 11,640 won, the highest since September 2021 when the company was engulfed in another management battle.

PharmaResearch’s stocks on Tuesday surged 11.45% to close at 83,700 won, far outperforming a 0.26% gain in the wider Kosdaq.

HOSTILE TAKEOVER

PharmaResearch appeared to have been investing in CTC for a hostile takeover as a CTC founding member and former CEO Chun Hong-ryul, who was deprived of the company’s management control in September 2021, is behind the purchase, industry sources said. CTC’s founding members have been trying to regain control of the company.

Chun founded Pluto, in which PharmaResearch invested 10 billion won last year. He is reportedly a fellow alumnus of PharmaResearch Chairman Jung Sangsoo from the College of Pharmacy at Chung-Ang University in Seoul.

Investors are keeping an eye on if other shareholders such as DongKoo Bio & Pharma Co. CEO Cho Yong-jun support PharmaResearch or Lee. Cho and his family are known to hold approximately a 5% stake in CTC.

Cho bought a stake of more than 5% in the company to participate in management rights in 2021 when Lee took control. Cho’s purchase prompted speculation over a management dispute, but he formed a partnership.

His stake shrank to 4.94% in January last year as the company issued more shares, but stock market sources said he was unlikely to have reduced his share.

SD Biosensor Inc., the world's largest COVID-19 test kit seller, also drew attention as SDB Investment Co., wholly owned by Chairman Cho Young-sik, has a 6.46% stake in CTC.

SD Biosensor has been actively investing in other biopharmaceutical companies for business expansion. Last year, it joined hands with private equity firm SJL Partners LLC to acquire Meridian Bioscience Inc., a Nasdaq-listed diagnostic company, for about $1.53 billion.

Write to Ye-Jin Jun at ace@hankyung.com
 
Jongwoo Cheon edited this article.