SK Holdings raises $1 bn from block sale of SK Biopharm shares

South Korea's SK Holdings Co. has offloaded an 11% stake in SK Biopharmaceuticals Co. in a block trade for 1.1 trillion won ($1 billion) as part of parent SK Group’s efforts to secure fresh funding for new growth businesses.

The block sale took place after Tuesday's market close, pricing the shares at the low end of the indicative range between 129,800 won and 134,225 won apiece, SK Holdings said on Feb. 24. The sale price for 8.6 million shares represented a 12% discount to Tuesday’s close of 147,500 won.

After the block deal, SK Holdings' stake in the pharmaceutical unit dropped to 64% from 75%. 

“This block deal is meaningful in that it eased market concerns about a stock overhang and increased the number of shares in circulation,” said a stock market source.

SK Holdings agreed to a six-month lockup period, under which it is not allowed to sell additional shares in the pharmaceutical arm for six months, according to sources with knowledge of the matter.

The buyers are composed of both domestic and foreign investors. Citigroup Global Markets Securities and Credit Suisse Securities handled the block deal.

On Wednesday, SK Biopharm shares opened sharply lower at 128,000 won, around the block sale price. The stock debuted on the Korea Exchange on July 2, 2020, surging by 30% from its IPO price of 49,000 won.

Since peaking at 269,500 won in its second week of market trading, the stock has halved to 129,500 won in early Wednesday trade.

SELLING STAKES FOR M&As

The energy-focused SK Group has been reducing its stakes in subsidiaries, while maintaining management rights, to improve its financial conditions and raise fresh capital for new businesses and M&A deals.

SK Bioscience Co., a contract manufacturing organization (CMO), is set to list on the Korea Exchange on Mar. 18 to raise up to $1.3 billion.

The South Korean group is seeking to sell up to a 49% stake in its petrochemical arm, SK Global Chemical Co., to a global petrochemical firm, while SK E&S Co., the country's largest city gas supplier, is planning to offload shares in its subsidiaries.

The block deal for SK Biopharm also came as the group is under increasing pressure to reach a billion-dollar settlement with LG Group after SK Innovation Co., an electric vehicle battery maker, lost a lengthy legal battle with LG Energy Solution Co. over alleged trade secret infringement.

Accelerating its push for biotech and EV battery businesses, SK Holdings has been in negotiations to acquire a 70% stake in France’s biologic CMO Yposkesi, in a move to expand its CMO business into gene therapy. Both sides are expected to reach an agreement as early as March, in a deal estimated in multimillions of dollars.

Additionally, SK Innovation signed a deal to acquire a 13% stake in a Chinese electric vehicle battery-swap station operator, Blue Park Smart Energy Technology Co. (BPSE), a subsidiary of Beijing Automotive Group, last month.

In January, SK Holdings and SK E&S each invested 800 billion won to acquire a 9.9% stake in US hydrogen fuel cell maker Plug Power Inc. for $1.5 billion. 

Write to Ri-Ahn Kim and Sang-eun Lucia Lee at knra@hankyung.com
Yeonhee Kim edited this article.