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M&As

Samsung looks to acquire bio company, reviews botox maker Hugel

Sitting on more than 100 trillion won in dry powder, Samsung is resuming M&A activities after a four-year hiatus

By Jul 20, 2021 (Gmt+09:00)

Hugel's botox product 
Hugel's botox product 

Samsung Group is looking to buy a biopharmaceutical company as the top South Korean business conglomerate is resuming merger and acquisition activities following a hiatus of at least four years.

A group official said on Wednesday Samsung considered joining the competition to acquire a controlling stake in Hugel Inc., South Korea’s top maker of botulinum toxin, more commonly known as botox, from US private equity firm Bain Capital.

"Samsung C&T Corp. reviewed the possibility of acquiring Hugel, but we dropped the plan," he said in response to a media report on Tuesday that it is one of the potential buyers. "Samsung will continue to pursue the acquisition of a bio company."

Samsung's acquisition of a controlling stake in Hugel, estimated at around 2.3 trillion won ($2 billion), would have marked the conglomerate’s largest acquisition effort since Samsung Electronics Co. concluded an $8 billion takeover of Harman, a US electronics systems maker for automobiles, in 2017.

According to investment banking officials on Tuesday, the top business conglomerate’s business support task force in charge of mergers and acquisitions was conducting due diligence on Hugel.

Samsung hired law firm Kim & Chang as well as accounting companies as advisers for its Hugel bid, according to the officials.

Some local business groups have already expressed their interest in a 44% stake in the botox maker, which would give the buyer management rights.

A consortium led by Korea’s GS Group, an energy-focused conglomerate, and financial investors, is looking to buy Hugel.

Last month, GS Group said through a regulatory filing that it is considering taking over a stake in Hugel, although nothing concrete has yet been decided.

SK Group and Shinsegae Group are also said to be interested in Hugel.

Samsung Group
Samsung Group

SYNERGY WITH SAMSUNG BIOLOGICS

Industry watchers say if Samsung acquired Hugel, it would create synergy with Samsung Biologics Co., the group’s biopharmaceutical affiliate.

Samsung C&T Corp., the largest shareholder of Samsung Biologics, operates a biopharmaceutical business through the bio affiliate that makes medicine for other pharmaceutical companies under a contract manufacturing organization (CMO) scheme.

Established in 2001, Hugel is Korea’s largest maker of botulinum toxin products used to treat overactive muscle conditions and facial wrinkles. The company controls about half the domestic botox market.

It went public by listing its shares on the tech-heavy Kosdaq market in 2015.

The company currently sells its products in 27 overseas markets, including Japan, Taiwan and Vietnam.

Last year, it posted an operating profit of 78 billion won on revenue of 211 billion won on a consolidated basis.

Hugel's botox product for export to China
Hugel's botox product for export to China

RENEWED INTEREST IN M&As

Samsung Group’s flagship company, Samsung Electronics, sitting on a cash pile of more than 100 trillion won, said earlier this year that it plans to pursue M&As more aggressively to diversify its business portfolio.

For Samsung watchers, the question is not if but when the tech giant will finally re-enter the M&A market since the Harman deal in 2017.

As of January, the company held 116 trillion won in cashable assets. Its net cash assets, excluding liabilities, stood at 104 trillion won.

(Updated to add Samsung's clarification on reports of its bid for Hugel)

Write to Shin-Young Park at nyusos@hankyung.com

In-Soo Nam edited this article.

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