[Edaily Reporter KIM SAE-MI ] The merger between AriBio Holdings (formerly Solux Co., Ltd.(290690)) and AriBio—which had been pursued for over two years to transform the unlisted new drug developer AriBio into a publicly listed company—has ultimately fallen through. The direct reason is that AriBio Holdings’ stock price has fallen significantly below the mandatory tender offer price, leading to expectations that a large-scale exercise of mandatory tender offer rights would occur if the merger were forced through.

AriBio states that, given the changes in its business and financial environment compared to two years ago—including the completion of the global Phase 3 clinical trial for its Alzheimer’s disease treatment “AR1001” and the signing of domestic and international licensing agreements—both companies have opted to focus on growing their respective corporate values. AriBio is currently reviewing new options, including a direct listing.

Stock Price at 4,000 Won, but Buyout Price at 10,719 Won… Merger Burden Grows

Aribio Holdings and Aribio announced on the 29th that they each held board meetings that day and decided to terminate the absorption merger agreement between the two companies. Consequently, all follow-up schedules related to the merger—including the extraordinary shareholders’ meeting scheduled for January 6 of next year—have been canceled.

This merger was initially proposed in August 2024 as a merger by absorption in which Solux Co., Ltd. would absorb AriBio. Under this structure, Solux Co., Ltd.—a publicly listed company—would remain as the surviving entity, while AriBio—an unlisted company—would be dissolved; upon completion of the merger, AriBio’s business was scheduled to be integrated into the listed company.

According to the initial announcement, the surviving company’s name was also planned to be changed to AriBio following the merger. On June 29, while the merger process was underway, Solux Co., Ltd. changed its name to AriBio Holdings, citing reasons of enhancing its corporate image and diversifying its business.

However, the merger process stalled for over two years due to repeated requests from financial authorities to amend the securities registration statement. As of last July, there had been 14 amendments to the merger-related securities registration statement, 10 of which were made in response to requests from the Financial Supervisory Service. The merger schedule was subsequently revised again, pushing the final merger date back to February 11 of next year.

Under the most recent merger proposal, the exchange ratio was set at 2.0610695 shares of AriBio for each share of AriBio Holdings, with plans to issue 58,595,200 new shares to AriBio shareholders. The proposed buyout price for AriBio Holdings shareholders was 10,719 won per share.

However, the gap between the merged company’s market price and the share buyout price widened significantly. AriBio Holdings’ closing price on the 28th was 3,990 won, falling well below the share buyout price.

Consequently, AriBio Holdings stated, “The benchmark stock price of the merged company is significantly lower than the buyout price calculated in accordance with relevant laws and regulations,” adding, “If an extraordinary general meeting of shareholders is held after the securities registration statement takes effect, we expect a large number of buyout rights to be exercised by the respective parties.”

The original merger agreement included a provision stating that if the amount of share purchase requests from AriBio Holdings exceeded 1.5 billion won or from AriBio exceeded 3 billion won, the two companies could mutually agree to terminate the merger agreement.

Changes in the conditions for assessing AriBio’s enterprise value since the merger was first proposed also played a role. AriBio Holdings explained, “The target company’s benchmark share price has fluctuated due to an additional exclusive distribution agreement,” adding, “It is necessary to prevent an increase in the risk resulting from the exercise of a large number of share purchase rights.” They added, “We determined that halting the merger and terminating the merger agreement was the appropriate decision in the best interests of all parties and their shareholders.”

“The Environment Has Changed Since Two Years Ago”… AriBio Reevaluates Listing Strategy

In a Seohan issued today, AriBio and AriBio Holdings stated, “Enhancing the corporate value of both companies takes priority over completing the merger,” adding, “The situation has clearly changed since we first began pursuing the merger two years ago.”

When the merger was initially planned for August 2024, one of the main objectives was to transform AriBio into a publicly listed company in order to secure the funding and business foundation necessary to stably conduct the global Phase 3 clinical trial for the Alzheimer’s disease treatment “AR1001.” Since then, AriBio completed the 52-week dosing period at the end of June and, following the final safety follow-up visit (LPLV) for the last patient at the end of July, concluded the main phase of its global Phase 3 clinical trial and has entered the data analysis phase.

The company’s commercialization foundation has also expanded. Following the signing of an exclusive domestic manufacturing and sales agreement with SamjinPharmaceutical(005500)in March 2023, AriBio entered into a licensing agreement with Arserra in the UAE for the Middle East region. In May of this year, the company signed a global exclusive licensing agreement with China’s Fosun Pharma worth up to $4.7 billion (approximately 7 trillion won). According to the company, the cumulative value of AR1001 contracts stands at approximately 10 trillion won.

With the withdrawal of the merger, a reevaluation of AriBio’s listing strategy has become inevitable. This is because the company itself had cited “transitioning to a publicly listed company” as one of the purposes of the merger, and the existing path to entering the stock market—a merger with a publicly listed company—has now disappeared.

An AriBio official stated, “We are exploring various options, including a direct initial public offering (IPO),” adding, “Nothing has been decided yet.”

AriBio Holdings must also move beyond its original plans, which were based on the merger, and develop a new growth strategy as a separately listed company. The company plans to cultivate AriBio Holdings as the central entity responsible for group strategy and coordination among affiliates, while strengthening the competitiveness of its own businesses.

Meanwhile, AriBio Holdings, AriBio, and ARIBIOLAB (formerly CHA Vaccine Research Institute(261780)) plan to hold a vision-proclamation ceremony on the 1st of next month to disclose the background behind the termination of the merger agreement, the roles of each company, and their future growth strategies.

The company stated, “We apologize for keeping our shareholders waiting for so long during the merger process,” and emphasized that this is “a new path toward a brighter future, adapted to the changing environment.”