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, a subsidiary of Huons Global, and Huons Lab will be halted. Following the merger decision, Huons' share price dropped significantly, resulting in a substantial gap between the agreed merger price and the current share price, and the company also considered the financial burden stemming from the exercise of appraisal rights.

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

The Huons special committee recommended calling off the merger due to the sharp decline in Huons’ share price caused by changes in government policy, opposition from the parent company’s shareholders, and fluctuations in market conditions. The committee stated that the need to protect the value of existing shareholders has increased, given the wide gap between the originally agreed merger price and the current market price at the time the merger decision was made.

Furthermore, the committee judged that the divergence between the exercise price of appraisal rights and the current share price would increase the company's financial burden, which could further erode the value of existing shareholders’ equity.

Huons Global also held a board meeting on the same day and resolved to cancel the extraordinary general meeting that had been scheduled to approve the absorption-type merger between its subsidiaries Huons and Huons Lab, in accordance with the special committee’s recommendation.

However, the company stated that this does not mean the strategic need for the merger itself no longer exists. The Huons Global special committee judged that the strategic rationale for the merger remains solid, citing the need for Huons Lab to secure funding and Huons’ need to respond to changes in drug pricing systems.

Given the significant differences in opinion among shareholders regarding the calculation of the merger ratio, however, the committee recommended halting the merger and focusing the company’s efforts on research & development (R&D), business development (BD), and restoring shareholder trust.

Soo Young Song, CEO of Huons Global, stated, "The decision to halt the merger was made after deep deliberation, with the intention of responding to government policy and protecting shareholder value. We will do our utmost to support Huons Lab in demonstrating the unique value of its bio-platform technology through successful global technology transfer."

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