Samsung BioLogics shares plunge over accounting concerns

SEOUL (Reuters) - Shares in Samsung BioLogics Co Ltd 207940.KS plunged on Monday amid concerns about its accounting practices ahead of a meeting of regulators this week to review whether it has violated rules which could lead to its delisting.

The biotech drug arm of Samsung Group, South Korea’s biggest family-run conglomerate, fell 16 percent by 0425 GMT, wiping 3.9 trillion won ($3.5 billion) off its market value after South Korean media reported that regulators were expected to reach a conclusion about the case at a meeting on Wednesday.

An official at South Korea’s top corporate watchdog, the Financial Services Commission (FSC), could not confirm the reports.

A Korea Exchange official told Reuters the firm could be delisted if it is found to have violated listing rules.

Samsung BioLogics is owned by tech giant Samsung Electronics 005930.KS and Samsung C&T Corp 028260.KS, in which Samsung Group heir Jay Y.Lee is the top shareholder.

Some lawmakers and an activist group have claimed BioLogics violated accounting rules to inflate net profit before its 2016 listing.

The firm’s valuation of unlisted joint venture Samsung Bioepis jumped 18 times to about $4.5 billion in 2015 as a result of accounting changes the company says were necessary to reflect different standards in the event its partner exercised its call option. It has denied any wrongdoing.

“Everything is still unclear about how the BioLogics case will end up. I wouldn’t expect it will be delisted since changing the evaluation method doesn’t appear to be meant to deceive its shareholders,” said Park Ju-gun, head of corporate analysis firm CEO Score.

“But someone at the company’s top level will take legal responsibility if it is found to be negligent or purposeful.”

In July, the FSC delayed a decision on whether BioLogics had intentionally breached accounting rules by switching the company’s value.

Reporting by Hayoung Choi; additional reporting by Yena Park; writing by Ju-min Park; Editing by Stephen Coates