Huons and Huons Lab Cancel Merger Decision: "Protecting Shareholder Value First"

Merger Price-Market Price Gap Widens Amid Share Price Drop
Financial Burden from Appraisal Rights Also Considered

The planned merger between Huons Global’s subsidiaries, Huons and Huons Lab, has been halted. After the merger decision, Huons’ share price dropped sharply, leading to a significant gap between the merger price and the current market price. The company also took into account the increased financial burden from the exercise of appraisal rights by shareholders.

On August 26, Huons announced that, following the recommendation of a special committee, its board of directors resolved to terminate the ongoing merger agreement with Huons Lab.

The special committee at Huons recommended halting the merger, considering that Huons’ stock price had fallen significantly due to government policy, opposition from the parent company’s shareholders, and changes in the stock market environment. The committee explained that the increasing discrepancy between the merger price agreed upon at the time of the decision and the current market price has heightened the need to protect the value of existing shareholders.

Furthermore, the gap between the exercise price for appraisal rights and the current stock price would increase the company’s financial burden, leading to concerns that the value of existing shareholders could be further eroded.

On the same day, Huons Global also held a board meeting and resolved to cancel the extraordinary shareholders’ meeting previously scheduled to approve the merger between its subsidiaries, Huons and Huons Lab, in line with the special committee’s recommendation.

However, the company maintains that the strategic rationale for pursuing the merger has not disappeared. The special committee of Huons Global assessed that the strategic rationale for the merger remains valid, pointing to Huons Lab’s need for financing and Huons’ response to drug pricing system reforms.

The committee noted that there were significant differences of opinion among shareholders regarding the calculation of the merger ratio; therefore, it recommended halting the merger and focusing available resources on research and development (R&D), business development (BD), and restoring shareholder trust instead.

Su-Young Song, CEO of Huons Global, stated, "The decision to halt the merger was made after careful consideration to respond to government policies and to protect shareholder value. We are fully committed to supporting the demonstration of the unique value of Huons Lab’s bio-platform technology through global technology transfer achievements."

This content was produced with the assistance of AI translation services.