As Huons Group moves to merge Huons Lab, which holds a platform technology that converts intravenous (IV) drugs into subcutaneous (SC) formulations, with a listed affiliate, the market is paying close attention. In particular, with reports that Huons Lab is in talks with a global pharmaceutical company on a contract to convert antibody-drug conjugates (ADCs) to SC, some in the market say the group may be trying to complete the merger first while the corporate value is still low before a major tech out-licensing deal.
On the 13th, Huons said in a response to a Korea Exchange (KRX) inquiry disclosure the previous day that it is reviewing strategic options, including a merger of subsidiaries, to ensure mid- to long-term sustainable growth by strengthening the competitiveness of its pharmaceutical-bio business and R&D, and that it will re-disclose when specifics are decided or within one month. This effectively acknowledged the market rumor of a Huons Lab merger.
Huons Lab plans to hold a board meeting on the 18th to discuss the agenda, and Aug. 7 has been mentioned as the merger date.
◇ Revisions to the merger plan amid investor opposition… Market says "Huons inclusion is likely"
According to the industry, Huons Group had initially reviewed several merger scenarios. Early on, a plan to absorb and merge Huons Lab into Huons was reportedly a strong contender. However, opposition from financial investors (FIs) such as Korea Development Bank (KDB) and VS Investment made a structural change unavoidable. Previously, Huons Lab raised 9.2 billion won through a third-party allotment paid-in capital increase in April last year.
The company then also reviewed a merger with Huons Global, but reportedly pivoted to another option after running into issues with the equity structure and merger ratio. The industry believes last-minute coordination is continuing with multiple structures still on the table.
The market in fact reacted sensitively to the merger rumor. Since the news surfaced on the 11th, Huons Global shares have plunged more than 17% for two straight days. Shares of affiliates Humedix, HuM&C and PanGen Biotech also fell in tandem. By contrast, shares of Huons, cited in the market as the likely merger destination, rose.
Dissatisfaction is growing especially among Huons Global shareholders. The market worries that if Huons Lab is folded into Huons, the value of Huons Lab currently held by Huons Global could be diluted. If tech out-licensing of Huons Lab's SC platform materializes and its corporate value jumps, a considerable portion of the added excess value would accrue to Huons shareholders, potentially widening the gap in benefits between the two shareholder groups.
Even so, the prevailing view in the market is that a merger with Huons is the most realistic possibility. The industry believes Huons Lab's fundraising last year was structured on the premise of a future initial public offering (IPO), but since the Lee Jae-myung administration announced a ban on dual listings recently, a separate listing push has become difficult.
◇ "HiDfuze" contract becomes visible… "Tidying up the succession structure before a reassessment of corporate value"
The backdrop to the heightened market interest is Huons Lab's SC conversion platform "HiDfuze." HiDfuze is a technology that switches biologics administered by intravenous injection to a subcutaneous form to improve dosing convenience. In the global pharmaceutical industry, demand is rapidly increasing to convert high-priced biologics such as ADCs and immuno-oncology drugs into SC formulations that are more convenient for patients.
Huons Lab was valued at about 100 billion won when it raised funds in April last year. However, with the possibility of HiDfuze tech out-licensing coming to the fore recently, some observers say its current corporate value is likely much higher.
The industry in particular is focusing on the fact that Huons Lab's talks on a global tech deal have advanced substantially. According to multiple industry sources, Executive Vice President Yoon In-sang, the eldest son of Huons Group Chairman Yoon Sung-tae, recently shared with affiliate executives the draft contract under discussion with a global pharmaceutical company and the expected deal size, explaining Huons Lab's growth potential.
The deal is said to involve jointly developing a conversion of a global pharmaceutical company's ADC therapy into an SC formulation. The market believes that if the deal materializes, not only Huons Lab's corporate value but also Huons Global's share price could be significantly re-rated.
Because of this, some inside and outside the industry also suggest the group may be trying to complete the merger before tech out-licensing. Chairman Yoon Sung-tae is currently the largest shareholder of Huons Global, holding 5,413,011 shares (42.76%). Executive Vice President Yoon In-sang received 60,000 shares as a gift from Chairman Yoon in Feb. 2024 and now holds 584,694 shares (4.62%), making him the second-largest shareholder. Yoon In-sang, the chairman's eldest son and an executive vice president at Huons Global, was promoted to senior manager in July 2024 and then to executive vice president in July last year.
The market also interprets this as being tied to the future succession structure. If Huons Lab lands a major contract, the corporate value of Huons Global, the group's holding company, could rise sharply, leading to the view that the group aims to complete internal asset reorganization and governance cleanup before then.
An industry official said, "For the largest shareholder, the higher the share price, the greater the eventual burden of gift and inheritance taxes," adding, "That is why the market is sensitive to the timing of the merger versus the tech deal."
Some also say that if a large tech deal materializes and the potential for a re-rating of corporate value grows, controversy could erupt over the fairness of the merger ratio calculation process.
However, the company said nothing has been finalized regarding the tech out-licensing contract or the merger.
Huons Group plans to hold an investor relations (IR) meeting with institutional investors on the 20th to explain the status of Huons Lab's tech deal talks and the direction of its governance restructuring.