Samsung Biologics received a credit impact assessment from NICE Credit Rating on the 21st following its announcement on the 20th to acquire Swiss peptide contract development and manufacturing organization (CDMO) PolyPeptide Group AG for approximately 2.706 trillion won through a public tender offer. NICE Credit Rating, which maintains Samsung Biologics' long-term credit rating at 'AA' with a stable outlook, concluded the immediate credit rating impact would be limited despite the expanded financial burden. The assessment comes as Samsung Biologics disclosed plans to acquire 100% of the Swiss Exchange-listed PPG shares, marking the company's entry into the peptide therapeutics manufacturing sector including GLP-1 obesity and diabetes treatments.
Samsung Biologics Announces 2.706 Trillion Won PolyPeptide Group Acquisition
Samsung Biologics disclosed on the 20th its plan to acquire 100% of PolyPeptide Group shares for 2.706 trillion won through a public tender offer. PolyPeptide Group originated as the peptide production division of global pharmaceutical company Ferring in 1952, spun off in 1996, and listed on the Swiss Exchange in 2021. The company operates 6 production sites across 5 countries including Europe, the United States, and India, with over 1,000 development and production records in peptide therapeutics. PolyPeptide Group's revenue in the previous year reached 669.2 billion won with operating profit of 14.8 billion won. The acquisition targets the peptide pharmaceutical sector, which includes GLP-1 series drugs receiving attention as obesity and diabetes treatments.
NICE Credit Rating Projects Net Debt Increase to 2.376 Trillion Won
NICE Credit Rating estimated Samsung Biologics' financial burden will expand from the acquisition. According to the analysis, Samsung Biologics generated an average earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately 2.1 trillion won over the recent three years (2023-2025) while conducting capital expenditures averaging 1.3 trillion won annually. The company maintained an average free cash flow of 540.4 billion won, sustaining a negative net debt structure as of the end of March this year. Assuming full debt financing for the acquisition price, net debt as of the end of March this year would increase to 2.376 trillion won, with net debt dependence rising to 15.3% and debt ratio climbing to 96.0%. Considering the ongoing construction of the second bio-campus (Plants 5-8) and third bio-campus, near-term debt improvement capacity remains limited.
NICE Credit Rating Maintains AA Stable Rating Despite Acquisition
NICE Credit Rating assessed the immediate credit rating impact as limited. Kwon Jun-seong, chief research analyst at NICE Credit Rating, stated the company's excellent market position and business stability would enable financial structure improvement based on superior cash generation capacity over the medium to long term, considering the excellent financial flexibility backed by the Samsung Group's superior credibility. NICE Credit Rating added it plans to review and reflect in the credit rating the success of the public tender offer, final required funding level, and changes in financial stability according to the acquisition financing structure.
FAQ
What did Samsung Biologics announce on the 20th regarding PolyPeptide Group?
Samsung Biologics announced on the 20th it would acquire 100% of Swiss-listed PolyPeptide Group AG shares for 2.706 trillion won through a public tender offer. PolyPeptide Group operates 6 production sites across 5 countries with over 1,000 peptide therapeutics development and production records, generating 669.2 billion won in revenue in the previous year.
How did NICE Credit Rating assess Samsung Biologics' credit impact from the acquisition?
NICE Credit Rating on the 21st assessed the immediate credit rating impact as limited while maintaining Samsung Biologics' long-term credit rating at 'AA' with a stable outlook. The rating agency projected net debt would increase to 2.376 trillion won and debt ratio would rise to 96.0% assuming full debt financing, but cited the company's superior cash generation capacity and Samsung Group's credibility as supporting factors for medium to long-term financial structure improvement.
