[Edaily Reporter KIM SAE-MI ] Huons Lab ( Huons Co., Ltd.(243070)) has ultimately withdrawn its merger with Huons Lab, which it had pursued to strengthen its R&D capabilities for new biopharmaceuticals. The decision was driven by the growing disparity between the merger price and the market price, which became a burden as the stock price fell while the merger schedule was delayed due to opposition from shareholders of its parent company, Huons Co., Ltd. ( Huons Global Co., Ltd.(084110) ).
On the 26th, Huons Co., Ltd. held a board of directors meeting and announced that it had terminated the merger agreement with Huons Lab and withdrawn the merger decision. Consequently, all related procedures—including the extraordinary general meeting of shareholders to approve the merger—have been canceled.
Previously, on May 18, Huons Co., Ltd. had decided to merge with its unlisted affiliate, Huons Lab, through an absorption merger. The merger ratio between Huons Co., Ltd. and Huons Lab was set at 1 to 0.4256943, and 3,825,373 new shares of Huons Co., Ltd. were scheduled to be issued as a result of the merger.
At the time, Huons Co., Ltd. stated that the purpose of the merger was to secure a pipeline of new biopharmaceutical drugs to drive future growth and to strengthen the competitiveness of its biopharmaceutical business by integrating research and development (R&D) capabilities. The merger valuation was set at 34,062 won per share for Huons Co., Ltd. and 14,500 won per share for Huons Lab.
However, following the merger announcement, opposition arose—primarily from minor shareholders of Huons Global Co., Ltd.—which brought the merger process to a halt. Huons postponed the merger schedule to further gather shareholder feedback and devise shareholder protection measures, taking into account the intent behind the establishment of the dual-listing guidelines.
Huons Co., Ltd. explained, “While gathering opinions from various stakeholders, including minority shareholders, we continuously reviewed the impact of the merger on the rights and interests of existing shareholders and on shareholder value,” adding, “The merger schedule was significantly delayed compared to initial expectations due to changes in the regulatory environment and conflicts of interest between the parent and subsidiary shareholders.”
The decline in the stock price during the merger delay also contributed to the decision to withdraw the merger. The merger price for Huons Co., Ltd., calculated at the time the merger was decided, was 34,062 won per share. The company noted that subsequent declines in the stock price—driven by volatility in the domestic stock market and a downturn in investor sentiment toward the pharmaceutical and biotech sectors—widened the gap between the merger price and the exercise price of the right to demand share repurchase and the current market price.
Huons Co., Ltd. stated, “Various internal and external circumstances have changed compared to the time the merger agreement was signed,” adding, “We determined that proceeding with the merger as planned posed a high risk of undermining the value for existing shareholders.” The company further noted, “While the need to secure business synergies and mid- to long-term growth drivers through the merger remains valid, we have decided to halt the merger process, prioritizing the protection of existing shareholder value above all else.”
With the merger falling through, the shareholder return plan proposed by Huons Global Co., Ltd. has also been scrapped. Last June, Huons Global Co., Ltd. had decided to distribute approximately 260,000 shares—out of the 2,204,297 new Huons shares it was scheduled to acquire through the merger of Huons Co., Ltd. and Huons Lab—as an in-kind dividend to general shareholders, excluding the largest shareholder and related parties. Based on the merger valuation at the time, the in-kind dividend amounted to approximately 1,780 won per share, and Huons Global Co., Ltd. had expected that general shareholders would receive one share of Huons Co., Ltd. for every 20 shares they held.
In a corrected disclosure issued that day, Huons Global Co., Ltd. stated, “Following the withdrawal of the decision to merge the subsidiary, the plan to distribute the new shares to be acquired through the merger as a stock dividend to general shareholders has also been withdrawn.” The resolution to convene an extraordinary general meeting of shareholders, which had been proposed to seek approval or rejection of the merger, was also withdrawn.
