Huons Group on Tuesday rebutted allegations that its planned merger between Huons and Huons Lab is intended to facilitate management succession, calling the claims "groundless." The move appears aimed at quelling growing pushback from some investors in Huons Global (084110) over the merger ratio and potential changes to the group's governance structure.
In a statement released the same day, Huons Group said, "The claims by some shareholders that the merger between Huons and Huons Lab is connected to succession purposes, and the media reports based on those claims, are entirely untrue."
Huons earlier held a board meeting on the 18th and approved a contract to absorb Huons Lab, a subsidiary of Huons Global. The company plans to complete the merger by mid-August following an extraordinary shareholders' meeting in July.
Some Huons Global shareholders have been protesting the deal, taking issue with the valuation of the unlisted Huons Lab and the merger ratio. They argue that since Huons Lab is developing the "HyDIFFUZE" platform technology, which converts intravenous (IV) injections into subcutaneous (SC) formulations, transferring its future growth potential to Huons could undermine shareholder value at Huons Global.
Huons Group explained that the merger is a strategic decision aimed at securing future growth engines for the group and strengthening its bio-research and development competitiveness. The group said Huons Lab is currently in a state of capital impairment, making it essential to secure stable R&D funding, and that the merger is also necessary to maintain Huons' innovative pharmaceutical company certification and expand R&D investment. "If it becomes difficult to maintain the innovative pharmaceutical company designation, a massive decline in revenue would be unavoidable," Huons Group said. "We are expanding R&D spending in line with the Ministry of Health and Welfare's policy direction."
The group also reiterated the rationale for designating Huons, the operating company, rather than the holding company Huons Global, as the merger entity. Huons Global is a pure holding company with limited revenue sources and cash holdings, while Huons possesses the capabilities to execute R&D pipelines, including production, development, and regulatory approval responses, making it a more suitable entity for the merger.
The group emphasized that a special committee including outside experts was operated during the merger decision-making process, which reviewed the legitimacy of the transaction's purpose, the fairness of its terms, and the appropriateness of its procedures. The merger ratio was also determined through multiple external evaluations, the company said. Separately, the Huons Global board is independently reviewing the appropriateness of the merger ratio and its impact on shareholders, and is preparing a shareholder briefing session to explain related matters.
"There are currently no plans whatsoever for the controlling shareholder to gift shares," a Huons Group official said. "The argument linking the merger to succession does not align with the facts at all." The official added, "We are fully aware of shareholders' concerns and will continue to communicate actively going forward. We are also reviewing protection measures for Huons Global shareholders."
