BMY Bristol Myers Squibb Co

SAMSUNG GROUP

Drug Unit Plans $2.5 Billion IPO

Samsung BioLogics Co., the contract drug-manufacturing unit of South Korean conglomerate Samsung Group, is planning to raise as much as $2.5 billion from an initial public offering that would value it at roughly $10 billion, according to people familiar with the matter.

The company, which makes biologic drugs on behalf of clients like Bristol-Myers Squibb Co. and Roche Holding AG, expects to file this week for approval to list shares in South Korea, one of the people said. It expects to complete the share offering in the fourth quarter of this year, the person said.

Samsung BioLogics is expected to offer between 10% and 25% of its shares to the public based on South Korean listing requirements and investor demand, meaning the company would raise between $1 billion and $2.5 billion, one of the people said.

The biggest IPO globally this year was in June, when Danish utility Dong Energy AS raised $2.61 billion.

Samsung in April announced plans to list the unit, without giving details on the exact timing or size of the IPO.

While Samsung is best known for its crown jewel, smartphone and semiconductor maker Samsung Electronics Co., Lee Jae-yong, the vice chairman and heir apparent of the conglomerate, has poured billions of dollars into the emerging field of biologic drugs. Such drugs are complex to make because they are based on living cells -- used to treat a variety of illnesses, including cancer and arthritis -- differentiating them from simpler, chemically synthesized drugs like aspirin.

Mr. Lee is betting that biologic drugs can become a new growth engine for Samsung as the long-term outlook for smartphones and semiconductors becomes more uncertain.

In addition to manufacturing biologic drugs on behalf of other companies, Samsung has another affiliate, Samsung Bioepis Co., which develops near-replicas of existing biologic drugs that are soon to lose patent protection, called biosimilars. Samsung Bioepis was on track for an IPO on the Nasdaq Stock Market earlier this year, but the offering was shelved amid market volatility.

Samsung BioLogics is 51% owned by the Samsung Group's de facto holding company, Samsung C&T Corp. Samsung Electronics owns about 47%. Samsung BioLogics owns 91.2% of Samsung Bioepis. Samsung BioLogics said in May that Korea Investment Holdings Co. and NH Investment & Securities Co. will lead the share sale domestically, while overseas duties will be handled by Citigroup Inc., J.P. Morgan Chase & Co. and Credit Suisse Group AG.

Samsung BioLogics is one of the world's largest manufacturers of biologic drugs by capacity.

Late last year, the company broke ground on a third plant, which is expected to have the world's largest production capacity of 180,000 liters. Samsung BioLogics also is already considering additional plants.

When the third plant begins operations, expected in late 2018, Samsung BioLogics will have a drug-manufacturing capacity of 360,000 liters, putting it ahead of rivals Lonza Group of Switzerland and Germany's Boehringer Ingelheim GmbH.

--

Alec Macfarlane

and Jonathan Cheng

INSURANCE

Aetna-Humana Trial Is to Begin Dec. 5

WASHINGTON -- A federal judge said Wednesday that he would begin trial proceedings on Dec. 5 in the Justice Department's antitrust challenge to the proposed merger of Aetna Inc. and Humana Inc.

The start date is a compromise between the proposals of the two sides, but it also amounted to a setback for the insurance companies. When he opened a scheduling hearing Wednesday, U.S. District Judge John Bates said he was leaning toward an early November trial, which would have allowed him to decide the case before the end of the year.

The health insurers had argued for such a time frame and applauded the judge's initial proposal, noting that the current contractual agreement between the two companies is subject to a Dec. 31 deadline. If the merger isn't approved by then, Humana would have the option of walking away from the deal and potentially collecting a $1 billion breakup fee.

But the Justice Department during the course of the hearing argued that such an accelerated timeline wouldn't give it a fair chance to prove its case. The department also argued that nothing prevented the companies from extending their merger agreement a little longer to give the court time to issue a ruling.

The judge took a short break, then returned to the bench and said he had been persuaded by some of the department's arguments. Judge Bates set the Dec. 5 start date and allotted 13 days for trial proceedings.

The judge pledged to rule in the case promptly but said he was making no promises that he would be able to decide it by the end of the year. Instead, he said the parties should proceed with the "expectation" that he will issue a ruling in mid-January.

The Justice Department filed suit last month to block two major proposed health insurance mergers, the Aetna-Humana deal and Anthem Inc.'s proposed acquisition of Cigna Corp., arguing the transactions would suppress competition and hurt consumers.

Both cases were initially assigned to Judge Bates, a George W. Bush appointee, but last week the judge sent the Anthem case for reassignment to another judge, saying it wasn't feasible for him to handle both in an expeditious fashion.

Judge Amy Berman Jackson, an Obama appointee, is now presiding over the Anthem matter. She has set a hearing this Friday to discuss trial scheduling for that case.

--Brent Kendall

CHESAPEAKE ENERGY

Company to Shed Barnett Shale Assets

Chesapeake Energy Corp. is exiting the Barnett Shale in Texas, which will eliminate about $1.9 billion of future commitments and improve its operating income over the next few years.

Chesapeake, which noted the "significant negative cash flow profile" of the Barnett assets, said it would convey its Barnett interests to Saddle Barnett Resources LLC, which is backed by private-equity firm First Reserve Corp.

Meanwhile, Chesapeake and Williams Partners LP will terminate a gathering agreement. Chesapeake will pay Williams $400 million in connection with the termination and a renegotiation of an agreement in the Mid-Continent area.

The proposed Barnett transaction includes about 215,000 net developed and undeveloped acres and about 2,800 operated wells.

Chesapeake expects the moves to increase its operating income for the rest of 2016 through 2019 by $200 million to $300 million annually.

--Josh Beckerman

PERRIGO

Profit Falls Short of Expectations

Drugmaker Perrigo Co. on Wednesday said it missed earnings expectations for the latest quarter and cut its guidance for the year as it continues to battle pricing pressure and competition in the market.

Perrigo stock, which has lost more than half its value over the past 12 months, dropped 12% premarket to $83.39.

"Our financial results were below our expectations primarily due to competition and price erosion in the Rx business," Chief Executive John Hendrickson said. Mr. Hendrickson was named to his position after Joseph Papa resigned to take on the CEO role in early May at troubled Valeant Pharmaceuticals International Inc.

Perrigo's performance has waned and its stock has plunged after Mr. Papa rallied shareholders to reject a takeover offer in November from Mylan NV that valued Perrigo at $26 billion, insisting the company's growth prospects would be brighter as a stand-alone firm. At Perrigo's premarket level Wednesday morning, the company's market value would be about $12 billion.

The over-the-counter specialty-pharmaceutical company says it now expects 2016 adjusted earnings of $6.85 to $7.15 a share, down from the forecast three months ago of $8.20 to $8.60 a share.

Perrigo also said it is expecting lower performance from its branded-consumer-healthcare segment, where second-quarter sales fell 2% to $394 million.

Sales in the consumer healthcare segment fell 8% to $686 million during the quarter, dragged down by lower existing products sales, particularly in the cough/cold category as the past allergy season was relatively weak. The prescription pharmaceuticals segment saw its sales rise 5% to $293 million, led by new product sales and product acquisitions.

For the quarter ended July 2, Perrigo posted a profit of $194 million, or $1.35 a share, more than double last year's profit of $56 million, or 38 cents a share. Sales fell 3.3% to $1.48 billion.

Adjusted earnings came in at $1.93 a share, a decline from $2.18 a share a year ago.

Analysts polled by Thomson Reuters had expected $1.98 in per-share earnings on $1.43 billion in revenue.

--Brittney Laryea

(END) Dow Jones Newswires

August 11, 2016 02:49 ET (06:49 GMT)

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