Dongwon solo bidder for Boryung Biopharma estimated at $385 mn

South Korea’s leading seafood and logistics conglomerate Dongwon Group is seeking to buy local biopharmaceutical company Boryung Biopharma Co. as part of its efforts to find a new growth engine.

The seafood giant’s holding company Dongwon Industries Co. on Thursday signed a memorandum of understanding with Boryung Partners to take over a full stake in Boryung Biopharma, according to a regulatory filing by Dongwon Industries on the same day.

Dongwon Industries was picked as an exclusive bidder for the vaccine and novel drug developer under major Korean pharmaceutical group Boryung Corp., and it will soon begin due diligence on the vaccine maker, the company said.

Dongwon Industries plans to sign a binding contract by end-March at the latest, with an aim to complete the acquisition by the third quarter of this year, according to sources.  

Boryung Partners, the largest stakeholder of Boryung Biopharma with nearly 70%, hopes to sell the 100% stake for more than 600 billion won ($461.4 million), while the market estimates its price at about 500 billion won. When Boryung Biopharma drew investment from Shinhan Investment Corp. and Mirae Asset Securities Co., which are now the vaccine developer’s shareholders, its value was estimated at 420 billion won.

Dongwon Industries is also mulling an option to invite financial investors, including private equity funds, for the acquisition.

DONGWON’S INROAD INTO PHARMACEUTICAL

If Dongwon Industries completes the acquisition process, Boryung Biopharma would be the first pharmaceutical unit under the Dongwon Group with businesses spanning from seafood to food and beverage, construction, finance and logistics.

Its latest M&A attempt comes just a few weeks after news that it was in talks with McDonald’s Corp. to buy the latter’s Korean operations to expand its restaurant franchise business.

Dongwon founded in 1969 has expanded its business beyond fishing and seafood with active M&As. It bought major US canned tuna producer StarKist Co. in 2008, Techpack Solutions Co. in 2014 and Dongwon Loex Co. (formerly Dongbu Express) in 2017.

Its M&A drive has further picked up speed since Dongwon Industries became the seafood behemoth’s new holding company in November last year, and Kim Nam-jung, Dongwon Group’s vice chairman and the second son of Dongwon Group founder and honorary Chairman Kim Jae-chul, has emerged as the group’s de factor leader.  

It has chosen the pharmaceutical and bio sector as its new growth engine in hopes that the business could create synergy with its existing food supplement business.

BORYUNG’S LEADERSHIP HANDOVER

Boryung Biopharma was founded in 1991 and developed Korea’s first oral typhoid vaccine, Zerotyph Cap. It earned 19.8 billion won in operating profit in 2021 on sales of 139.1 billion won.

Its biggest shareholder is Boryung Partners with 69.29%, and its Chief Executive Officer Kim Jung-gyun, the grandson of Boryung Group founder Kim Seung-ho and the son of Boryung's Executive Director Kim Eun-seon, holds 1.78%.

The latest stake sale is part of the pharmaceutical group’s move to secure ammunition to tighten the grip of the founding family’s third generation on the group management. With the funds from the sale of Boryung Biopharma, Kim Jung-gyun is expected to bump up his stakes in Boryung Holdings Co., the largest shareholder of Boryung, to become the former’s biggest shareholder.  

Kim held a 22.6% stake in Boryung Holdings as of end-2021, while his mother owned 44.93%. Kim holds a 1.19% stake in Boryung. He is the CEO of Boryung Holdings and co-CEO of Boryung.

Since Boryung picked Samil PwC as the lead advisor for the sale of Boryung Biopharma late last year the sellers have been contacting potential individual suitors for the acquisition. The preliminary bid on Feb. 8 was originally joined by five to six contenders but Boryung chose Dongwon Industries without shortlisting.

Dongwon Industries shares rose 1.6% to end at 51,900 won on Friday, while Boryung shares inched up 0.2% to 9,080 won.

Write to Ji-Eun Ha at hazzys@hankyung.com

Sookyung Seo edited this article.