Bukwang Pharmaceutical was selected as the preferred bidder to acquire UNION KOREA PHARM and signed a conditional investment agreement, it said on the 17th.
The deal is related to a pre-approval merger and acquisition (M&A) under way at the Seoul Rehabilitation Court and will proceed under the so-called "stalking horse" method. In a stalking horse process, a preferred bidder is named in advance and a public competitive auction is then held; if there are no additional bidders or no more favorable terms are presented, the preferred bidder is finalized as the acquirer.
Bukwang Pharmaceutical aims to strengthen manufacturing capacity and expand its business portfolio through the acquisition. The company said, "We have secured a strategic foothold to broaden production beyond our existing focus on solid oral formulations to antibiotics and injectables, and to expand into the field of chronic-disease treatments centered on ETC."
The primary purpose of the acquisition is to supplement the current capacity shortfall at the Ansan plant. The UNION KOREA PHARM plant is a state-of-the-art facility that obtained large-scale plant GMP (Good Manufacturing Practice) approval in March 2020 and, with an antibiotic line, is said to have a production base expected to generate synergy with Bukwang Pharmaceutical.
Once the acquisition is completed, Bukwang Pharmaceutical's overall drug manufacturing capacity is expected to increase by about 30%. In particular, UNION KOREA PHARM has a liquid injectable production facility capable of producing more than twice the volume of Bukwang Pharmaceutical, raising expectations for expanded injectable capacity. Through this, Bukwang Pharmaceutical is expected to secure a cephalosporin antibiotic manufacturing line, a dedicated cephalosporin antibiotic workspace, related product approvals, and even vial filling and packaging lines for injectables.
Bukwang Pharmaceutical also expressed confidence in normalizing UNION KOREA PHARM's operations. A company representative said, "Given our experience turning a loss-making company into the black under the current management structure, we believe we can leverage that know-how to improve performance and normalize operations in a short period." The person added, "We will convert outsourced production volumes to in-house manufacturing and review integrated production of injectables to raise facility utilization, while pursuing fixed-cost savings and stronger cost competitiveness."
Meanwhile, Bukwang Pharmaceutical held a board meeting on Mar. 28 and decided on a rights offering worth 100 billion won. At the time, the company said, "The funds raised will be used to expand existing manufacturing facilities to resolve drug shortage issues, acquire new equipment, and for operating capital to invigorate research and development."