As Huons Global moves to merge its subsidiaries Huons and Huons Lab, it unveiled a shareholder-return plan for retail investors. The move is seen as a response to concerns that the merger could dilute the parent company's shareholder value.
Huons Global said it held a board meeting on the 8th and approved a plan to pay in-kind dividends of a portion of the new Huons shares it will receive through the subsidiary merger to retail investors.
Under the plan, only retail investors—excluding the largest shareholder, related parties, and treasury shares—will be eligible for the in-kind dividends. Huons Global plans to distribute 260,038 of the new Huons shares allocated in the merger to retail investors. Retail investors will receive 1 Huons share for every 20 shares of Huons Global they hold.
Huons Global's equity structure consists of 57.14% for the largest shareholder and related parties, 3.57% in treasury shares, and 39.28% held by retail investors. The company decided to convert the total new shares to be received from the merger based on the retail investors' equity ratio and pay about 30% of that as in-kind dividends.
Calculating the in-kind dividend size at the Huons merger price of 34,062 won per share, it amounts to about 1,780 won per Huons Global share. Including the previously released annual cash dividends of 800 won (200 won per quarter), the annual dividend per share comes to 2,580 won. Huons Global said the total dividends will be about 31.5 billion won, with a dividend yield of about 9% based on the closing price on the 5th.
The shareholder-return plan reflects recommendations from a special committee formed after a shareholder meeting on the 4th. The special committee, which included external experts, reviewed ways to mitigate dilution of the parent company's shareholder value from the subsidiary merger and proposed paying a portion of the new shares as dividends to retail investors.
The in-kind dividends will be paid if the merger is finalized. Huons Global plans to hold an extraordinary shareholders meeting next month and complete the merger procedures, then pay the dividends in April after winning approval at the regular shareholders meeting in March next year.
Huons Global will hold an extraordinary shareholders meeting on July 3 to ask shareholders whether the holding company should exercise its voting rights on the Huons–Huons Lab merger. Whether the largest shareholder and related parties will face voting right restrictions will follow future government guidelines.
The company expects that, if the merger succeeds, combining Huons' synthetic drug business with Huons Lab's bio platform technology will strengthen research and development capabilities. The company also sees funding conditions for research and development improving as Huons Lab's pipeline based on human-derived hyaluronidase under development is brought under the Huons structure.
Song Su-young, CEO of Huons Global, said, "We prepared this plan through communication with retail investors and a review by the special committee," and added, "We will proceed with the merger process reflecting shareholders' opinions and enhance corporate value and shareholder value."