Dongwon backs out of Boryung Biopharma buyout deal

Dongwon Industries Co., South Korea’s No. 1 canned tuna producer, has backed out of a deal estimated between $400 million and $500 million to buy Boryung Biopharma Co., a vaccine and novel drug developer, according to Dongwon and industry sources on Wednesday.

Last month, Dongwon said it had signed a memorandum of understanding with Boryung Partners, the largest shareholder of the biopharma unit, to take over a full stake in the latter.

But Dongwon said in a regulatory filing on Wednesday: “Both parties have agreed to cancel the deal, under which on Feb. 23 we were granted exclusive rights for due diligence on Boryung Biopharma.”

“We made a final decision not to proceed with the deal.”

Now that the negotiations have fallen apart, the company under Boryung Corp. will tap other bidders that submitted letters of intent.

Boryung Partners has a 69.3% stake in Boryung Biopharma.

Kim Jung Gyun, a third-generation leader of the family-run group and CEO of Boryung Partners, holds a 1.78% stake in the biopharma arm. The remainder is held by financial investors, including Shinhan Securities Co. and Mirae Asset Securities Co.

Boryung hopes to fetch more than 600 billion won ($470 million) from the transaction, above the market estimate of about 500 billion won ($390 million).

When the biopharma unit attracted funding from Shinhan and Mirae, it was valued at 420 billion won.

Kim, who also heads the group’s holding company, wants to use the proceeds to increase his stake in Boryung Holdings to become the No. 1 shareholder.

The company had prepared for an initial public offering of the biopharma arm, but changed course to instead sell its entire stake to a third party due to the subdued stock market. 

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.

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

Yeonhee Kim edited this article