A proxy fight between shareholders for and against the merger between Huons Global's subsidiary Huons Lab and Huons is heating up. As the company seeks to secure yes votes by soliciting proxy voting, the opposing shareholder alliance is mounting a counteroffensive, setting the stage for an intense proxy contest until the extraordinary general meeting.
On the 19th, according to the Financial Supervisory Service's electronic disclosure system, a Huons Global shareholder alliance disclosed reference materials urging shareholders to exercise voting rights against the agenda at the extraordinary general meeting. The alliance is asking shareholders to cast no votes on the merger agenda at the extraordinary meeting on the 3rd of next month. Its strategy is to gather as many no votes as possible by obtaining proxy voting rights.
Earlier, Huons Global also moved the previous day to solicit proxy voting to rally yes votes for the merger. With the opposing side responding within a day, a full-fledged vote showdown has taken shape. According to the minority shareholder alliance platform Act, as of the day, the opposition shareholder mobilization rate stood at 11.6%.
The merger was finalized through a board resolution on the previous month. In the structure, unlisted Huons Lab will be absorbed by Huons, with a merger ratio of 1 to 0.4256893. The merger date is Aug. 18, and the new shares are scheduled to list on Sept. 4.
Huons Lab is a research and development (R&D) corporations that holds the "Hi-D-Fuse" platform technology, which converts intravenous (IV) formulations into subcutaneous (SC) formulations, and is said to be in talks with global pharmaceutical companies for technology out-licensing. The company believes that through this merger, Huons can secure the relevant R&D capabilities and platform technology to strengthen the group's competitiveness.
By contrast, the minority shareholder alliance opposes the merger on the grounds that, if it goes through, core technology would transfer to Huons. They argue that Huons Lab's corporate value was not properly reflected in the merger process. Specifically, they pointed out that although the value of the Hi-D-Fuse technology was assessed at about 129 billion won, its potential for growth and revenue generation was not sufficiently reflected.
They also criticize the structure as effectively a backdoor listing for Huons Lab through listed Huons without going through an initial public offering (IPO). Citing that, before the merger announcement, the largest shareholder donated Huons shares held to children, they raised suspicion that the succession process may have been designed to favor certain shareholders.
The shareholder alliance also argues that Huons Global shareholders cannot exercise defensive measures such as appraisal rights because they are not parties to the merger, and that there was insufficient process to gather opinions.
Regarding the succession process of the owner family as well, it raised suspicion that, based on the fact that the largest shareholder's side donated Huons shares held to children before the merger announcement, the process was intended to produce a result favorable to certain shareholders.
Last month, the shareholder alliance submitted related petitions to the Financial Supervisory Service, the Financial Services Commission, and the National Assembly, and urged an investigation into "an affiliate-to-affiliate sham merger that circumvents the amended Commercial Act" and allegations of leaks of nonpublic information.