Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/green-cross-labcell-corp" target="_blank" data-smartkarma-citation="entities:33237:1" rel="noopener">Green Cross LabCell (144510 KS)</a> (now known as GC Cell) the world’s largest cell therapy product producer with its top selling anticancer drug, Immunecell-LC. The drug has label expansion scope.</li>
<li>The company has developed a pipeline of late and early-stage cell therapy candidates for solid tumors. It also has a strong position in global cell therapy CDMO business.</li>
<li>GC Cell’s unrivaled position in the specimen test services in Korea acts as the main cash cow to feed its future growth engine of cell therapy development.</li>
</ul>



Green Cross LabCell (144510 KS) (now known as GC Cell) the world’s largest cell therapy product producer with its top selling anticancer drug, Immunecell-LC. The drug has label expansion scope.
The company has developed a pipeline of late and early-stage cell therapy candidates for solid tumors. It also has a strong position in global cell therapy CDMO business.
GC Cell’s unrivaled position in the specimen test services in Korea acts as the main cash cow to feed its future growth engine of cell therapy development.


GC Cell (144510 KS): Enviable Portfolio of Cell Therapy Funded by Sample Test Service Business

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<p>The merger between Green Cross Lab Cell (GCLC) and Green Cross Cell has been completed, and new shares will be listed on November 17, which is next Wednesday.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/529/original/Screen+Shot+2021-11-08+at+9.58.23+PM.png?1636426770" class="editor-image img-responsive" data-smartkarma-image-id="240529"></figure></section><div class="content-caption">(Source: KRX KIND)</div><p>Considering the dissent rights exercised, the total number of new shares to be issued was set at 5,244,765 shares.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/530/original/Screen+Shot+2021-11-08+at+10.02.19+PM.png?1636426964" class="editor-image img-responsive" data-smartkarma-image-id="240530"></figure></section><div class="content-caption">(Source: KRX KIND)</div><p>As a result, these 5.24M new shares will get listed on November 17 at a capital increase rate of nearly 50% (and a shareholding dilution of 33%).</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Swap overview"}'>Capital increase rate</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":": Existing shares"}'>Pre-merger shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10554054}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>10,554,054</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":": New shares"}'>: New shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5244765}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>5,244,765</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":": Post-merger shares outstanding"}'>: Post-merger shares outstanding</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15798819}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-2]C[0]+R[-1]C[0]">15,798,819</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.49694316515719933}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-2]C[0]/R[-3]C[0]"><strong>49.69%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shareholding dilution"}'><strong>Shareholding dilution</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.33197196575263}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-3]C[0]/R[-2]C[0]"><strong>33.20%</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX KIND"}'>Source: KRX KIND</td></tr>
</tbody>
</table>

The merger between Green Cross Lab Cell (GCLC) and Green Cross Cell has been completed, and new shares will be listed on November 17, which is next Wednesday.(Source: KRX KIND)Considering the dissent rights exercised, the total number of new shares to be issued was set at 5,244,765 shares.(Source: KRX KIND)As a result, these 5.24M new shares will get listed on November 17 at a capital increase rate of nearly 50% (and a shareholding dilution of 33%).





Capital increase rate

Pre-merger shares outstanding
10,554,054


: New shares
5,244,765


: Post-merger shares outstanding
15,798,819


Capital increase rate
49.69%


Shareholding dilution
33.20%

Source: KRX KIND



Green Cross Lab Cell: Short-Selling Entry Timing Ahead of New Shares Listing on Nov 17

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<div><p>The Korea Exchange (KRX) will announce the results of the December 2021 review of the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> in November. The constituent changes will be effective after the close of trading on 9 December.</p></div><div>
<p>With the review period complete, we see 15 potential inclusions and exclusions for the index at the December rebalance.</p>
<p>The potential inclusions are <a href="https://www.smartkarma.com/entities/bioneer-corp" target="_blank" data-smartkarma-citation="entities:11487:1" rel="noopener">Bioneer Corp (064550 KS)</a>, <a href="https://www.smartkarma.com/entities/bnc-korea-co-ltd" target="_blank" data-smartkarma-citation="entities:34785:1" rel="noopener">BNC Korea (256840 KS)</a>, <a href="https://www.smartkarma.com/entities/cellid-co-ltd" target="_blank" data-smartkarma-citation="entities:34892:1" rel="noopener">Cellid (299660 KS)</a>, <a href="https://www.smartkarma.com/entities/nanos-co-ltd" target="_blank" data-smartkarma-citation="entities:16796:1" rel="noopener">Nanos Co Ltd (151910 KS)</a>, <a href="https://www.smartkarma.com/entities/aptabio-therapeutics-inc" target="_blank" data-smartkarma-citation="entities:34894:1" rel="noopener">AptaBio Therapeutics (293780 KS)</a>, <a href="https://www.smartkarma.com/entities/access-bio-inc-kdr" target="_blank" data-smartkarma-citation="entities:5729:1" rel="noopener">Access Bio Inc (950130 KS)</a>, <a href="https://www.smartkarma.com/entities/wonik-qnc-corp" target="_blank" data-smartkarma-citation="entities:6828:1" rel="noopener">Wonik QnC Corp (074600 KS)</a>, <a href="https://www.smartkarma.com/entities/komico-ltd" target="_blank" data-smartkarma-citation="entities:24033:1" rel="noopener">KoMiCo Ltd. (183300 KS)</a>, <a href="https://www.smartkarma.com/entities/tk-chemical-corp" target="_blank" data-smartkarma-citation="entities:13428:1" rel="noopener">TK Chemical (104480 KS)</a>, <a href="https://www.smartkarma.com/entities/kona-i-co-ltd" target="_blank" data-smartkarma-citation="entities:19695:1" rel="noopener">Kona I Co Ltd (052400 KS)</a>, <a href="https://www.smartkarma.com/entities/coocon-corp" target="_blank" data-smartkarma-citation="entities:32234:1" rel="noopener">Coocon Corp (294570 KS)</a>, <a href="https://www.smartkarma.com/entities/interpark-holdings-corp" target="_blank" data-smartkarma-citation="entities:12073:1" rel="noopener">Interpark Holdings (035080 KS)</a>, <a href="https://www.smartkarma.com/entities/dk-d-i-co-ltd" target="_blank" data-smartkarma-citation="entities:9948:1" rel="noopener">Dk D&amp;I Co Ltd (033310 KS)</a>, <a href="https://www.smartkarma.com/entities/saraminhr-co-ltd" target="_blank" data-smartkarma-citation="entities:8494:1" rel="noopener">SaraminHR (143240 KS)</a> and <a href="https://www.smartkarma.com/entities/intellian-technologies-inc" target="_blank" data-smartkarma-citation="entities:34895:1" rel="noopener">Intellian Technologies (189300 KS)</a>.</p>
<p>The potential deletions are <a href="https://www.smartkarma.com/entities/lemon-co-ltd" target="_blank" data-smartkarma-citation="entities:28841:1" rel="noopener">Lemon Co Ltd (294140 KQ)</a>, <a href="https://www.smartkarma.com/entities/g-treebnt-co-ltd" target="_blank" data-smartkarma-citation="entities:1933:1" rel="noopener">G Treebnt (115450 KS)</a>, <a href="https://www.smartkarma.com/entities/spigen-korea-co-ltd" target="_blank" data-smartkarma-citation="entities:9852:1" rel="noopener">Spigen Korea (192440 KS)</a>, <a href="https://www.smartkarma.com/entities/wisol-co-ltd" target="_blank" data-smartkarma-citation="entities:14463:1" rel="noopener">Wisol Co Ltd (122990 KS)</a>, <a href="https://www.smartkarma.com/entities/dongkuk-structures-constru" target="_blank" data-smartkarma-citation="entities:20412:1" rel="noopener">Dongkuk Structures &amp; Constru (100130 KS)</a>, <a href="https://www.smartkarma.com/entities/ubiquoss-inc" target="_blank" data-smartkarma-citation="entities:14341:1" rel="noopener">Ubiquoss Holding (078070 KS)</a>, <a href="https://www.smartkarma.com/entities/icure-pharm-inc" target="_blank" data-smartkarma-citation="entities:27142:1" rel="noopener">Icure Pharm Inc (175250 KS)</a>, <a href="https://www.smartkarma.com/entities/winix-inc" target="_blank" data-smartkarma-citation="entities:19972:1" rel="noopener">Winix Inc (044340 KS)</a>, <a href="https://www.smartkarma.com/entities/telcon-inc" target="_blank" data-smartkarma-citation="entities:15231:1" rel="noopener">Telcon Inc (200230 KS)</a>, <a href="https://www.smartkarma.com/entities/danawa-co-ltd" target="_blank" data-smartkarma-citation="entities:7191:1" rel="noopener">Danawa Co Ltd (119860 KS)</a>, <a href="https://www.smartkarma.com/entities/advanced-process-systems-corporation" target="_blank" data-smartkarma-citation="entities:24087:1" rel="noopener">Advanced Process Systems (265520 KS)</a>, <a href="https://www.smartkarma.com/entities/toptec-co-ltd" target="_blank" data-smartkarma-citation="entities:7332:1" rel="noopener">Toptec Co Ltd (108230 KS)</a>, <a href="https://www.smartkarma.com/entities/optoelectronics-solutions-co" target="_blank" data-smartkarma-citation="entities:2098:1" rel="noopener">Optoelectronics Solutions Co (138080 KS)</a>, <a href="https://www.smartkarma.com/entities/daea-ti-co-ltd" target="_blank" data-smartkarma-citation="entities:1473:1" rel="noopener">Daea Ti Co Ltd (045390 KS)</a> and <a href="https://www.smartkarma.com/entities/unison-co-ltd-south-korea" target="_blank" data-smartkarma-citation="entities:18617:1" rel="noopener">Unison Co Ltd (018000 KS)</a>.</p>
<p><a href="https://www.smartkarma.com/entities/huons-co-ltd" target="_blank" data-smartkarma-citation="entities:16275:1" rel="noopener">Huons Co Ltd (084110 KS)</a> is a very close add and the corresponding deletion is <a href="https://www.smartkarma.com/entities/koentec-co-ltd" target="_blank" data-smartkarma-citation="entities:4049:1" rel="noopener">Koentec Co Ltd (029960 KS)</a>.</p>
<p>One-way turnover is estimated at 6.95% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.</p>
<p>The potential inclusions outperformed the potential deletions in August before returns flatlined in September and then dropped in October. There could be outperformance from now to the announcement of the changes.</p>
</div>

The Korea Exchange (KRX) will announce the results of the December 2021 review of the KOSDAQ 150 Index (KOSDQ150 INDEX) in November. The constituent changes will be effective after the close of trading on 9 December.
With the review period complete, we see 15 potential inclusions and exclusions for the index at the December rebalance.
The potential inclusions are Bioneer Corp (064550 KS), BNC Korea (256840 KS), Cellid (299660 KS), Nanos Co Ltd (151910 KS), AptaBio Therapeutics (293780 KS), Access Bio Inc (950130 KS), Wonik QnC Corp (074600 KS), KoMiCo Ltd. (183300 KS), TK Chemical (104480 KS), Kona I Co Ltd (052400 KS), Coocon Corp (294570 KS), Interpark Holdings (035080 KS), Dk D&amp;I Co Ltd (033310 KS), SaraminHR (143240 KS) and Intellian Technologies (189300 KS).
The potential deletions are Lemon Co Ltd (294140 KQ), G Treebnt (115450 KS), Spigen Korea (192440 KS), Wisol Co Ltd (122990 KS), Dongkuk Structures &amp; Constru (100130 KS), Ubiquoss Holding (078070 KS), Icure Pharm Inc (175250 KS), Winix Inc (044340 KS), Telcon Inc (200230 KS), Danawa Co Ltd (119860 KS), Advanced Process Systems (265520 KS), Toptec Co Ltd (108230 KS), Optoelectronics Solutions Co (138080 KS), Daea Ti Co Ltd (045390 KS) and Unison Co Ltd (018000 KS).
Huons Co Ltd (084110 KS) is a very close add and the corresponding deletion is Koentec Co Ltd (029960 KS).
One-way turnover is estimated at 6.95% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
The potential inclusions outperformed the potential deletions in August before returns flatlined in September and then dropped in October. There could be outperformance from now to the announcement of the changes.


KOSDAQ150 Index Rebalance Preview: 15 Potential Changes and Large Turnover

<p>On 16 July, <a href="https://www.smartkarma.com/entities/green-cross-labcell-corp" target="_blank" data-smartkarma-citation="entities:33237:1" rel="noopener">Green Cross LabCell (144510 KS)</a> and <a href="https://www.smartkarma.com/entities/green-cross-cell-corp" target="_blank" data-smartkarma-citation="entities:15811:1" rel="noopener">Green Cross Cell (031390 KS)</a> announced that they had entered into a definitive merger agreement to combine in an all stock transaction. For each share of <a href="https://www.smartkarma.com/entities/green-cross-cell-corp" target="_blank" data-smartkarma-citation="entities:15811:1" rel="noopener">Green Cross Cell (031390 KS)</a> held, shareholders would receive 0.4023542 shares of <a href="https://www.smartkarma.com/entities/green-cross-labcell-corp" target="_blank" data-smartkarma-citation="entities:33237:1" rel="noopener">Green Cross LabCell (144510 KS)</a>.</p><p>On 13 September, shareholders approved the merger at the EGM and <a href="https://www.smartkarma.com/entities/green-cross-labcell-corp" target="_blank" data-smartkarma-citation="entities:33237:1" rel="noopener">Green Cross LabCell (144510 KS)</a> is the surviving entity. Both stocks will be suspended from 28 October and <a href="https://www.smartkarma.com/entities/green-cross-labcell-corp" target="_blank" data-smartkarma-citation="entities:33237:1" rel="noopener">Green Cross LabCell (144510 KS)</a> is expected to resume trading on 17 November.</p><p>Both stocks are <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> constituents and the merger will open up a spot in the index.</p><p>Last evening post market close, the KRX announced that <a href="https://www.smartkarma.com/entities/eubiologics-co-ltd" target="_blank" data-smartkarma-citation="entities:23739:1" rel="noopener">Eubiologics (206650 KS)</a> would be added to the index at the close of trading on 27 October. The stock was a high probability inclusion at the December rebalance and will now get index membership next week instead. This will also make the stock short-sell eligible from the open on 28 October.</p><p>Passive funds benchmarked to the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> will need to buy 1.29m shares (KRW 60.3bn; 1.1 days of ADV) of <a href="https://www.smartkarma.com/entities/eubiologics-co-ltd" target="_blank" data-smartkarma-citation="entities:23739:1" rel="noopener">Eubiologics (206650 KS)</a> at the close on 27 October.</p><p>The impact on the Green Cross stocks will be a lot lower since we expect most trackers to swap their shares in <a href="https://www.smartkarma.com/entities/green-cross-cell-corp" target="_blank" data-smartkarma-citation="entities:15811:1" rel="noopener">Green Cross Cell (031390 KS)</a> for shares in <a href="https://www.smartkarma.com/entities/green-cross-labcell-corp" target="_blank" data-smartkarma-citation="entities:33237:1" rel="noopener">Green Cross LabCell (144510 KS)</a>, unless the price ratio deviates significantly from the merger ratio.</p>

On 16 July, Green Cross LabCell (144510 KS) and Green Cross Cell (031390 KS) announced that they had entered into a definitive merger agreement to combine in an all stock transaction. For each share of Green Cross Cell (031390 KS) held, shareholders would receive 0.4023542 shares of Green Cross LabCell (144510 KS).On 13 September, shareholders approved the merger at the EGM and Green Cross LabCell (144510 KS) is the surviving entity. Both stocks will be suspended from 28 October and Green Cross LabCell (144510 KS) is expected to resume trading on 17 November.Both stocks are KOSDAQ 150 Index (KOSDQ150 INDEX) constituents and the merger will open up a spot in the index.Last evening post market close, the KRX announced that Eubiologics (206650 KS) would be added to the index at the close of trading on 27 October. The stock was a high probability inclusion at the December rebalance and will now get index membership next week instead. This will also make the stock short-sell eligible from the open on 28 October.Passive funds benchmarked to the KOSDAQ 150 Index (KOSDQ150 INDEX) will need to buy 1.29m shares (KRW 60.3bn; 1.1 days of ADV) of Eubiologics (206650 KS) at the close on 27 October.The impact on the Green Cross stocks will be a lot lower since we expect most trackers to swap their shares in Green Cross Cell (031390 KS) for shares in Green Cross LabCell (144510 KS), unless the price ratio deviates significantly from the merger ratio.

KOSDAQ150 Index Rebalance: Green Cross Merger & EuBiologics Addition

<h2>Stock swap arb spread</h2><p>The cancellation risk from the Green Cross Lab Cell/Green Cross Cell merger has disappeared. Although no official announcement has been made yet, a Green Cross Lab Cell company official said in an interview with the local media last Friday that the stock purchase cost was less than ₩150B, set as the ceiling.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/324/original/1.png?1633802584" class="editor-image img-responsive" data-smartkarma-image-id="234324"></figure></section><p><a href="https://n.news.naver.com/article/243/0000017006" target="_blank" rel="noopener">The link to this news report by "The Economist" is here.</a></p><p>The appraisal rights exercise period was September 13 to October 4 for Green Cross Lab Cell (the acquirer) and Green Cross Cell (the target company).</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Schedule"}' data-sheets-note="Sang Hyun Park: We have to buy shares until BOD+1 to be eligible to receive stock purchase rights. We then have to notify our dissenting opinion until the end of dissenting opinion notice period.">Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock purchase right exercise"}'><strong>Stock purchase right exercise begins</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"2020. 09. 13 ~ 10. 04"}'><strong>2021. 09. 13</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'><strong>Stock purchase right exercise ends</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44147}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'><strong>2021. 10. 04</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The exercise prices are ₩103,244 for Green Cross Lab Cell and ₩41,163 for Green Cross Cell. The share prices had consistently been substantially below the exercise prices, making many arb traders worry about the cancellation. But despite a decent spread (3~7%) throughout the exercise period, it turns out that the company managed to keep it below the threshold that may trigger the cancellation.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Swap overview"}'>Appraisal rights exercise overview</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock purchase ceiling condition"}'><strong>Stock purchase ceiling condition</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"If exceeds for both combined"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>If the total cost exceeds</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Amount"}'><strong>- Ceiling amount for both companies combined</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":150}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><strong>₩150.0B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Exercise price - Green Cross Lab Cell Corp"}' data-sheets-formula='="Exercise price - "&amp;R[-11]C[1]'>Exercise price - Green Cross Lab Cell Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":103244}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩103,244</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Exercise price - Green Cross Cell Corp"}' data-sheets-formula='="Exercise price - "&amp;R[-9]C[1]'>Exercise price - Green Cross Cell Corp</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":41163}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩41,163</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Spread - stock purchase"}'>Spread - stock purchase</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Acquirer"}'>Acquirer</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Target company"}'>Target company</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current price"}'><strong>Price on the last trading day of the appraisal rights exercise period (October 1)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":98200}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=Status!R[-9]C[1]"><strong>₩98,200</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":38150}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=Status!R[-9]C[1]"><strong>₩38,150</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Exercise price"}'>Exercise price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":103244}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=Terms!R[-18]C[0]">₩103,244</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":41163}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=Terms!R[-17]C[-1]">₩41,163</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Transfer income tax"}'>Transfer income tax</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2220.68}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[16]C[0]/R[9]C[0]">₩2,221</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":937.86}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[16]C[0]/R[9]C[0]">₩938</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Shares"}'>- Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10000}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[8]C[0]">10,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10000}' data-sheets-numberformat='{"1":2,"2":"#,##0"}' data-sheets-formula="=R[8]C[0]">10,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Tax-adj. exercise price"}'>Tax-adj. exercise price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":101023.32}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-3]C[0]-R[-2]C[0]">₩101,023</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":40225.14}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-3]C[0]-R[-2]C[0]">₩40,225</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Spread"}'><strong>Spread</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0287507128309573}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[-1]C[0]-R[-5]C[0])/R[-5]C[0]"><strong>2.88%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.05439423328964612}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[-1]C[0]-R[-5]C[0])/R[-5]C[0]"><strong>5.44%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td></tr>
</tbody>
</table><p>The current swap arb spread is 1.99%. As the possibility of a merger increased, the swap spread was gradually revised down. Nevertheless, we were able to obtain an arb spread of close to 5% by mid-September, so we would have been able to secure decent profits if we started arb trading at this time.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap gain"}'>Swap gain</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Green Cross Lab Cell Corp"}' data-sheets-formula="=Terms!R[2]C[0]">Green Cross Lab Cell Corp</td>
<td style="text-align: center;" data-sheets-value='{"1":2,"2":"Green Cross Cell Corp"}' data-sheets-formula="=Terms!R[5]C[-1]"><div><div>Green Cross Cell Corp</div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current price"}'>Current price</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":92900}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula='=googlefinance(Terms!R[2]C[0], "price")'>₩92,900</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":36650}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula='=googlefinance(Terms!R[5]C[-1], "price")'>₩36,650</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap price"}'>Swap price</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":102882}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩102,882</td>
<td style="text-align: center;" data-sheets-value='{"1":3,"3":41395}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩41,395</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap ratio"}'>Swap ratio</td>
<td colspan="2" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":0.40235415330184093}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula="=R[-1]C[1]/R[-1]C[0]">0.4023542</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price for 100 shares of the target company"}'><strong>Price for 100 shares of the target company</strong></td>
<td colspan="2" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":3665000}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-3]C[1]*100"><strong>₩3,665,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Number of new shares of the acquiring company"}'>Number of new shares of the acquiring company</td>
<td colspan="2" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":40.2354153301841}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula="=100*R[-2]C[0]">40.2354153</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Value of the new shares at the current price"}'><strong>Value of the new shares at the current price</strong></td>
<td colspan="2" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":3737870.0841741026}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-1]C[0]*R[-5]C[0]"><strong>₩3,737,870</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap gain"}'><strong>Swap gain</strong></td>
<td colspan="2" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":0.019882696909714226}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R[-1]C[0]-R[-3]C[0])/R[-3]C[0]"><strong>1.99%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td></tr>
</tbody>
</table><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/234/325/original/image_92664529421633803241243.png?1633803242" class="editor-image img-responsive" data-smartkarma-image-id="234325"></figure><div class="content-highlight"><ul>
<li><strong>There are still opportunities for arb trade. We can immediately execute arb trading if sufficient spread occurs before the Green Cross Cell trading suspension (October 28).</strong></li>
<li><strong>However, it is uncertain whether we will see a spread of more than 4% again from now as the cancellation risk, which was the only risk of this event, disappeared.</strong></li>
<li><strong>Still, it seems worthwhile to keep an eye on the spread movement until the trading suspension date.</strong></li>
</ul></div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Schedule"}' data-sheets-note="Sang Hyun Park: We have to buy shares until BOD+1 to be eligible to receive stock purchase rights. We then have to notify our dissenting opinion until the end of dissenting opinion notice period.">Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension (only Green Cross Cell)"}'><strong>Trade suspension begins (only for Green Cross Cell)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"2020. 10. 28 ~ 11. 11"}'><strong>2021. 10. 28</strong></td>
</tr>
<tr>
<td><strong>Trade suspension begins (only for Green Cross Cell) </strong></td>
<td style="text-align: right;"><strong>2021. 11. 11 </strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44147}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 11. 12</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

Stock swap arb spreadThe cancellation risk from the Green Cross Lab Cell/Green Cross Cell merger has disappeared. Although no official announcement has been made yet, a Green Cross Lab Cell company official said in an interview with the local media last Friday that the stock purchase cost was less than ₩150B, set as the ceiling.The link to this news report by "The Economist" is here.The appraisal rights exercise period was September 13 to October 4 for Green Cross Lab Cell (the acquirer) and Green Cross Cell (the target company).





Schedule

Stock purchase right exercise begins
2021. 09. 13


Stock purchase right exercise ends
2021. 10. 04

Source: DART

The exercise prices are ₩103,244 for Green Cross Lab Cell and ₩41,163 for Green Cross Cell. The share prices had consistently been substantially below the exercise prices, making many arb traders worry about the cancellation. But despite a decent spread (3~7%) throughout the exercise period, it turns out that the company managed to keep it below the threshold that may trigger the cancellation.





Appraisal rights exercise overview

Stock purchase ceiling condition
If the total cost exceeds


- Ceiling amount for both companies combined
₩150.0B


Exercise price - Green Cross Lab Cell Corp
₩103,244


Exercise price - Green Cross Cell Corp
₩41,163

Source: DART









Spread - stock purchase
Acquirer
Target company


Price on the last trading day of the appraisal rights exercise period (October 1)
₩98,200
₩38,150


Exercise price
₩103,244
₩41,163


Transfer income tax
₩2,221
₩938


- Shares
10,000
10,000


Tax-adj. exercise price
₩101,023
₩40,225


Spread
2.88%
5.44%

Source: DART &amp; KRX

The current swap arb spread is 1.99%. As the possibility of a merger increased, the swap spread was gradually revised down. Nevertheless, we were able to obtain an arb spread of close to 5% by mid-September, so we would have been able to secure decent profits if we started arb trading at this time.







Swap gain
Green Cross Lab Cell Corp
Green Cross Cell Corp


Current price
₩92,900
₩36,650


Swap price
₩102,882
₩41,395


Swap ratio
0.4023542


Price for 100 shares of the target company
₩3,665,000


Number of new shares of the acquiring company
40.2354153


Value of the new shares at the current price
₩3,737,870


Swap gain
1.99%

Source: DART &amp; KRX


There are still opportunities for arb trade. We can immediately execute arb trading if sufficient spread occurs before the Green Cross Cell trading suspension (October 28).
However, it is uncertain whether we will see a spread of more than 4% again from now as the cancellation risk, which was the only risk of this event, disappeared.
Still, it seems worthwhile to keep an eye on the spread movement until the trading suspension date.






Schedule

Trade suspension begins (only for Green Cross Cell)
2021. 10. 28


Trade suspension begins (only for Green Cross Cell) 
2021. 11. 11 


Listing
2021. 11. 12

Source: DART



GC Lab Cell Merger: Multi-Staged Arb Setups for Swap Spreads & KOSDAQ 150 Rebalancing on Oct 27

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