SK Bioscience to buy German vaccine maker IDT Biologika for $244 mn

South Korea’s vaccine developer SK Bioscience Co. will acquire a controlling stake in the world’s top 10 vaccine firm IDT Biologika GmbH in Germany for 339 billion won ($244 million) in hopes of doubling its sales in what would be the biggest ever investment by a Korean vaccine maker.

The Korean company announced in a regulatory filing on Thursday that its wholly owned German operation SK Bioscience Germany GmbH will acquire a 60.6% stake in IDT Biologika from Klocke Holding GmbH for a total of 339 billion won in cash.

The deal includes the German vaccine manufacturer’s existing and new shares to be issued through a rights offering, as well as existing shares in another firm called Technik-Energie-Wasser Servicegesellschaft mbH, according to the filing.

IDT Biologika is a German vaccine manufacturer with a history of more than 100 years, which was merged into Klocke Group, a multinational pharmaceutical contract manufacturing and contract packaging firm headquartered in Germany, in 1993.

The German firm offers contract development and manufacturing organization (CDMO) services for vaccines, cell and gene therapies and biologics with manufacturing sites in Germany and the US.

The Korean vaccine maker expects to nearly double its sales after the deal, which is believed to be the biggest investment by a Korean vaccine maker, it said.  

SK Bioscience shares jumped 8% and ended at 53,300 won on Thursday, welcoming the deal.

DEEPER PARTNERSHIP THROUGH CROSS INVESTMENT

Following SK Bioscience’s stake purchase, Klocke Group will hold a 40% stake in IDT Biologika, becoming the second biggest stakeholder after the Korean firm.

The German CMO group will also invest about 79 billion won in SK Bioscience to own a 1.9% stake.

Through their cross investment, the two companies will deepen their partnership in the CDMO sector while jointly operating and managing IDT Biologika, the Korean company said.

IDT Biologika boasts a strong track record of clinching long-term CDMO deals with multinational biotech and pharmaceutical companies from 15 countries, including Japan’s Takeda Pharmaceuticals.

SK Bioscience pins high hopes on the German company in speeding up the diversification of its portfolio by venturing into new sectors such as oncolytic virus treatment and cell and gene therapy (CGT).

The investment is also expected to allow SK Bioscience to obtain global-standard vaccine and biologic manufacturing capabilities that meet requirements in developed countries such as the US and Europe.

IDT Biologika’s facilities offer CMO services meeting Good Manufacturing Practice (GMP) and Biosafety Level 2 (BSL-2) requirements.

The Korean firm is also expected to broaden its customer base through the expansion of its global network connecting the US, Europe and Korea after the deal.

IN LINE WITH SK GROUP’S BUSINESS REBALANCING

The IDT stake purchase comes at a time SK Bioscience's sibling companies are forced to streamline their assets under SK Group’s scrutiny.

Korea’s second-largest conglomerate is carrying out aggressive corporate restructuring to reduce the number of its affiliates to focus more on future growth engines.

This month, it announced a slew of sales of its assets across the board, including a plant of the group’s CDMO company SK Pharmteco Co. in the US.

But SK Bioscience’s IDT Biologika acquisition is in line with the group’s business “rebalancing” efforts, the Korean vaccine maker’s Chief Executive Officer Ahn Jae-yong said during a press conference on the buyout on Thursday.

“Rebalancing is all about choice and focus, but we must not miss chances at the same time,” said Ahn. “We have seized a good opportunity by acquiring IDT.”

Combined with IDT Biologika’s revenue of more than 400 billion won last year, SK Bioscience’s annual revenue already surpassed 750 billion won based on last year's figure, said the CEO, expecting steady revenue growth through 2030 as one company.

The Korean company plans to produce its original vaccine products from its new German family’s facilities while producing rivals’ products.

Ahn also said the Korean vaccine maker’s purchase of IDT Biologika will allow it to add CDMO as its new business, brushing off concerns that it is transforming into a CDMO company, which could cannibalize SK Group’s CDMO unit SK Pharmteco’s business.

Joining the group-wide rebalancing efforts, SK Bioscience is currently seeking to cut its five-year investment announced last year.

In April last year, Ahn vowed to spend 2.4 trillion won through 2027 and seek mergers and acquisitions to expand its business portfolio beyond contract manufacturing to gene therapy development.

(Updated with SK Bioscience CEO’s comments from the company’s press conference on the IDT Biologika buyout)

Write to Young- Ae Lee at 0ae@hankyung.com

Sookyung Seo edited this article.