IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>On 10 January, Bloomberg reported that Apollo is considering an equity commitment of JPY1.5 trillion in the <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> MBO. </li>
<li>Securing financing is a key challenge for the MBO. Apollo’s involvement suggests a shift to a higher mix of equity vs debt, which should ease concerns about securing debt financing. </li>
<li>The article suggests that the MBO valuation could be lower than previously reported. However, 7&amp;i's underlying value supports a JPY8 trillion MBO valuation (market cap). </li>
</ul>


On 10 January, Bloomberg reported that Apollo is considering an equity commitment of JPY1.5 trillion in the Seven &amp; I Holdings (3382 JP) MBO. 
Securing financing is a key challenge for the MBO. Apollo’s involvement suggests a shift to a higher mix of equity vs debt, which should ease concerns about securing debt financing. 
The article suggests that the MBO valuation could be lower than previously reported. However, 7&amp;i's underlying value supports a JPY8 trillion MBO valuation (market cap). 


Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking

<ul>
<li>On 26 December, CVC extended its <a href="https://www.smartkarma.com/entities/macromill-inc" target="_blank" rel="noopener">Macromill, Inc. (3978 JP)</a> offer period by 10 business days to 17 January. The offer price remained unchanged, but it was not declared final.</li>
<li>The extension is unsurprising as the shares have traded above terms for 30 out of 32 trading days. The emergence of Oasis as the largest shareholder is an added complication. </li>
<li>Lowering the minimum acceptance condition is not a viable option. A bump is increasingly likely. Trading patterns suggest a minimum required revised offer of around JPY1,200.</li>
</ul>


On 26 December, CVC extended its Macromill, Inc. (3978 JP) offer period by 10 business days to 17 January. The offer price remained unchanged, but it was not declared final.
The extension is unsurprising as the shares have traded above terms for 30 out of 32 trading days. The emergence of Oasis as the largest shareholder is an added complication. 
Lowering the minimum acceptance condition is not a viable option. A bump is increasingly likely. Trading patterns suggest a minimum required revised offer of around JPY1,200.


Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable

Nec Networks & System Integr / Event-Driven

<ul>
<li>Oasis has become a substantial shareholder of <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</a>, representing 13.2 million shares or an 8.83% ownership ratio. </li>
<li>Oasis has not commented on its intentions, but its stake signifies two possibilities – the start of an activist campaign to secure a bump or a play on appraisal rights.</li>
<li>A bump while possible is not a certainty. NEC is likely to wait to see to if Oasis increases its stake to a level which threatens its offer. </li>
</ul>


Oasis has become a substantial shareholder of Nec Networks &amp; System Integr (1973 JP), representing 13.2 million shares or an 8.83% ownership ratio. 
Oasis has not commented on its intentions, but its stake signifies two possibilities – the start of an activist campaign to secure a bump or a play on appraisal rights.
A bump while possible is not a certainty. NEC is likely to wait to see to if Oasis increases its stake to a level which threatens its offer. 


NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>An <a href="https://bunshun.jp/denshiban/articles/b10138" target="_blank" rel="noopener">article</a> in Japanese weekly magazine <em>Bunshun </em>this morning sent shares in<a href="https://www.smartkarma.com/entities/sbi-sumishin-net-bank-ltd" target="_blank" data-smartkarma-citation="entities:34572:1" rel="noopener">SBI Sumishin Net Bank (7163 JP)</a> limit up +17% with a headline that NTT Docomo was interested to buy.</li>
<li>Without access to the article, I can't go deep, but the base concept is that NTT Docomo is "worried" about KDDI (which has a bank, as does Softbank Corp)</li>
<li>It is not clear how serious it is, SBI Sumishin is super-expensive, and buying a bank isn't the same as buying a company. Hmmm...</li>
</ul>


An article in Japanese weekly magazine Bunshun this morning sent shares inSBI Sumishin Net Bank (7163 JP) limit up +17% with a headline that NTT Docomo was interested to buy.
Without access to the article, I can't go deep, but the base concept is that NTT Docomo is "worried" about KDDI (which has a bank, as does Softbank Corp)
It is not clear how serious it is, SBI Sumishin is super-expensive, and buying a bank isn't the same as buying a company. Hmmm...


NTT (9432 JP) And SBI Sumishin NetBank (7163 JP)? Maybe. Maybe Not. Seven Bank A Better Idea

<ul>
<li>
<a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> did not dispute the <a href="https://www3.nhk.or.jp/news/html/20241119/k10014643321000.html" target="_blank" rel="noopener">NHK article’s</a> claims that the founding family aims to raise buyout funds by the end of the fiscal year.</li>
<li>Since 13 November, there have been conflicting press reports on the MBO offer price. The NHK article’s implied offer price of JPY3,082 seems the most credible. </li>
<li>The MBO’s aggressive completion timeline pressures <a href="https://www.smartkarma.com/entities/alimentation-couche-tard-inc" target="_blank" data-smartkarma-citation="entities:25103:1" rel="noopener">Alimentation Couche-Tard (ATD CN)</a> to respond by either overbidding, working with the founding family at the back-end or walking away.</li>
</ul>



Seven &amp; I Holdings (3382 JP) did not dispute the NHK article’s claims that the founding family aims to raise buyout funds by the end of the fiscal year.
Since 13 November, there have been conflicting press reports on the MBO offer price. The NHK article’s implied offer price of JPY3,082 seems the most credible. 
The MBO’s aggressive completion timeline pressures Alimentation Couche-Tard (ATD CN) to respond by either overbidding, working with the founding family at the back-end or walking away.


Seven & I Holdings (3382 JP): Evaluating the Potential MBO

Japan

FamilyMart Co., Ltd. operates convenience store chains. The Company provides rice balls, hot snacks, stews, beverages, and other products. FamilyMart conducts businesses in China, Taiwan, South Korea, Thailand, and other countries and regions.

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Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking

Apollo’s involvement strongly signals the viability of the Ito family MBO. 7&i's underlying value supports a JPY8 trillion MBO valuation.

Arun George

Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable

On 26 December, CVC extended its Macromill offer period to 17 January. A bump is increasingly likely. Trading patterns suggest a minimum required...

Arun George

NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC

Since announcing the offer, the shares have traded at or above terms. Including Oasis’ pre-tender stake, the total potential “NO” volume is 35.0m...

Arun George

NTT (9432 JP) And SBI Sumishin NetBank (7163 JP)? Maybe. Maybe Not. Seven Bank A Better Idea

A news weekly magazine Bunshun today had an article suggesting a bank executive thought NTT Docomo was on its way to buying SBI Sumishin Netbank....

Travis Lundy

Seven & I Holdings (3382 JP): Evaluating the Potential MBO

The NHK article increases the credibility of the MBO. The completion time pressures Couche-Tard to respond by either overbidding, working on a...

Arun George

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