The merger between subsidiary Huons Lab and Huons(243070), which Huons Global(084110) had been pursuing, has been called off. With shareholder backlash continuing, it is seen as ultimately withdrawing the merger.
Huons said on the 26th that, following the recommendation of the special committee, it held a board meeting and resolved to terminate the ongoing merger agreement between Huons and Huons Lab.
Earlier, the Huons group pursued a plan for the listed company Huons to absorb and merge the unlisted Huons Lab. Huons Lab is a research and development corporations that holds the "HyDIFFUZE" platform technology, which converts intravenous (IV) formulation drugs into subcutaneous (SC) formulations. The group planned to transfer this technology to Huons and move into full-scale commercialization.
However, the Huons Global minority shareholders' alliance pushed back, saying Huons Lab's value was not sufficiently reflected in the merger process and that the transaction was effectively a backdoor listing. In particular, it took issue with the possibility that, if Huons Lab were incorporated as a subsidiary of Huons, the value of core asset held by Huons Global could be transferred to Huons.
Initially, Huons Global was set to hold an extraordinary shareholders meeting for the absorption merger of Huons and Huons Lab. However, after financial authorities issued guidelines related to duplicate listings, it postponed the shareholders meeting.
The Huons special committee recommended halting the merger, citing changes in government policy, opposition from the parent company's shareholders, and a sharp decline in Huons' share price due to shifts in the stock market environment beyond the company's control. It judged that protecting existing shareholders' value was necessary, as the gap had widened between the merger price calculated at the time of the decision and the current share price.
It also considered that the financial burden could grow due to the difference between the appraisal right exercise price and the current share price, which could further damage existing shareholder value.
The Huons Global board also accepted the special committee's recommendation that day and decided to cancel the call for an extraordinary shareholders meeting for the absorption merger of Huons and Huons Lab.
The special committee determined that the strategic need for the merger itself remains valid, including Huons Lab's funding needs and Huons' response to drug price system reforms. However, given the wide differences with shareholders over matters such as calculating the merger ratio, it ordered the merger to be halted and called for focusing capabilities on the research and development (R&D) and business development (BD) pursued so far, as well as restoring shareholder trust.