Malaysian gaming giant Genting Berhad could see its market cap increase by up to 13% following news that Celularity Inc, a biotechnology firm in which it acquired a stake in 2018, has signed a definitive merger agreement with Nasdaq-listed special purpose acquisition company GX Acquisition Corp.
The merger, if approved, would create a new listed company with a pro-forma market cap of US$1.7 billion, including an extra US$80 million of added private investment equity from existing Celularity shareholders of which Genting may take part.
Celularity is a clinical-stage biotechnology company involved in off-the-shelf, allogeneic cellular therapies derived from the postpartum human placenta, targeted towards oncology, infectious and degenerative diseases and with multiple products in trial stages. It counts Genting Chairman and CEO Lim Kok Thay as a director.
Although Genting’s exact stake in either Celularity or the merged entity is not publicly known, Nomura analysts Tushar Mohata and Alpa Aggarwal state in a research note that the merger is positive news for Genting shareholders and can potentially add to the company’s market cap.
“Hypothetically, every 10% stake in a US$1.7 billion market cap listed entity is worth US$170 million, which is ~4.3% of Genting’s current market cap of US$3.9 billion,” they write. “So if Genting ultimately owns 20% to 30% of Celularity, it would add 8.6% to 13% to the current market cap/valuation (before any holding company discount). This value can go up in the future post successful trials and launches of Celularity’s drugs.”
It would also represent the “first major monetization” in Genting’s life-sciences division, they add. While 80% of the company’s EBITDA still comes from its gaming division – which also holds majority stakes in Genting Singapore and Genting Malaysia – “Celularity’s SPAC merger might lead to investors starting to ascribe some option value to Genting’s life-sciences division.”
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