Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>In this insight, we take a look at Quiddity's estimates for the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.</li>
<li>At present, I do not see any movements between the DAX and MDAX indices.</li>
<li>However, there could be two changes between the MDAX and SDAX index and there could be one more ADD/DEL for the SDAX index.</li>
</ul>


In this insight, we take a look at Quiddity's estimates for the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.
At present, I do not see any movements between the DAX and MDAX indices.
However, there could be two changes between the MDAX and SDAX index and there could be one more ADD/DEL for the SDAX index.


Quiddity Leaderboard-DAX Jun 23: SMA Solar, Hochtief, Adtran, Aroundtown

Index Rebalance

<ul>
<li>The September 2022 index changes for DAX, MDAX, SDAX, and TecDAX were announced late last night.</li>
<li>There is one change for the DAX Index, four changes for the MDAX Index, seven changes for the SDAX Index, and two changes for the TecDAX Index.</li>
<li>In this insight, we take a closer look at our expectations for index flows and potential trading ideas.</li>
</ul>


The September 2022 index changes for DAX, MDAX, SDAX, and TecDAX were announced late last night.
There is one change for the DAX Index, four changes for the MDAX Index, seven changes for the SDAX Index, and two changes for the TecDAX Index.
In this insight, we take a closer look at our expectations for index flows and potential trading ideas.


DAX, MDAX, SDAX, TecDAX Sep 2022 Rebal: Large Impacts Only for Hella & Stabilius

<ul>
<li>We have completed roughly half of the 20-day Reference Period for the DAX Equity Indices family for the September 2022 Rebalance.</li>
<li>In this insight, we take a look at the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.</li>
<li>Three names could move from SDAX to MDAX while the SDAX index could see another 4 ADDs/DELETEs.</li>
</ul>


We have completed roughly half of the 20-day Reference Period for the DAX Equity Indices family for the September 2022 Rebalance.
In this insight, we take a look at the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.
Three names could move from SDAX to MDAX while the SDAX index could see another 4 ADDs/DELETEs.


DAX/​​MDAX/​​SDAX Quiddity Leaderboard Sep 2022: Final Expectations

European Event-Driven Analyst

Jesus Rodriguez Aguilar

ADVA Optical Networking SE / Event-Driven

<ul>
<li>Adtran lowered the minimum acceptance threshold from 70% to 60%; the condition was thus fulfilled by the end of the initial acceptance period. Additional acceptance period runs until 14 February. </li>
<li>The consummation of the offer continues to be subject to closing conditions not yet fulfilled, especially foreign direct investment approval in Germany.</li>
<li>A 15% increase in the ADVA share price since the threshold condition was fulfilled has caused the spread to become negative (-3.4%). If you were already long, recommendation is tender.</li>
</ul>


Adtran lowered the minimum acceptance threshold from 70% to 60%; the condition was thus fulfilled by the end of the initial acceptance period. Additional acceptance period runs until 14 February. 
The consummation of the offer continues to be subject to closing conditions not yet fulfilled, especially foreign direct investment approval in Germany.
A 15% increase in the ADVA share price since the threshold condition was fulfilled has caused the spread to become negative (-3.4%). If you were already long, recommendation is tender.


ADTRAN/​ADVA Optical Networking: Additional Acceptance Period

<a href="https://www.smartkarma.com/entities/adtran-inc" target="_blank" data-smartkarma-citation="entities:14322:1" rel="noopener">Adtran Inc (ADTN US)</a> seeks to gain scale and strengthen its position in the fibre market, by acquiring vendor <a href="https://www.smartkarma.com/entities/adva-optical-networking-se" target="_blank" data-smartkarma-citation="entities:21579:1" rel="noopener">Adva Optical Networking Se (ADV GR)</a> in an all-stock deal. The transaction aims to create a global end-to-end fibre networking solutions leader that combines ADTRAN's global leadership in fibre access, fibre extension and subscriber connectivity solutions with ADVA's global leadership in metro Wavelength Division Multiplexing (WDM), data center interconnect, business Ethernet and network synchronization solutions.
ADTRAN and ADVA have complementary customers and product lines. Access and aggregation account for 61% of ADTRAN's turnover, while cloud interconnect/metro WDM accounts for 70% of ADVA’s turnover.
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There is a market opportunity created by the stimulus to roll out fibre networks and the displacement of eastern vendors. 
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ADTRAN offers 0.8244 ADTN US x 1 ADV GR. This is equivalent to €14.98 per ADVA share based on ADTRAN’s 3-month VWAP as of 27 August, thus representing a premium of 22% to the 3-month VWAP. For an equity value of €789 million, and an EV of €759 million, an implied multiple of 1.3x LTM Revenue. It also represents 1.4x EV/Fwd Revenue, 7.5x EV/Fwd EBITDA and 18.9x Fwd P/E (source: Capital IQ consensus).
ADTRAN has received irrevocable undertakings from Egora (13.7% stake and ADVA’s largest shareholder). The transaction is subject to customary closing conditions, including, ADTRAN shareholders’ approval and minimum acceptance condition of at least 70% of all outstanding ADVA shares.
My fair value estimate for ADVA is €17.79/share, DCF based (see calculations in the insight).
Median ADTRAN's TP on Capital IQ consensus is $27.5/share ( €23.23/share in euro).
As for the deal, this is a genuine merger rather than a lowball bid, with high probabilities to close, in my view. Gross spread is 4.6%. I recommend setting up the spread.

Adtran Inc (ADTN US) seeks to gain scale and strengthen its position in the fibre market, by acquiring vendor Adva Optical Networking Se (ADV GR) in an all-stock deal. The transaction aims to create a global end-to-end fibre networking solutions leader that combines ADTRAN's global leadership in fibre access, fibre extension and subscriber connectivity solutions with ADVA's global leadership in metro Wavelength Division Multiplexing (WDM), data center interconnect, business Ethernet and network synchronization solutions.
ADTRAN and ADVA have complementary customers and product lines. Access and aggregation account for 61% of ADTRAN's turnover, while cloud interconnect/metro WDM accounts for 70% of ADVA’s turnover.



There is a market opportunity created by the stimulus to roll out fibre networks and the displacement of eastern vendors. 



ADTRAN offers 0.8244 ADTN US x 1 ADV GR. This is equivalent to €14.98 per ADVA share based on ADTRAN’s 3-month VWAP as of 27 August, thus representing a premium of 22% to the 3-month VWAP. For an equity value of €789 million, and an EV of €759 million, an implied multiple of 1.3x LTM Revenue. It also represents 1.4x EV/Fwd Revenue, 7.5x EV/Fwd EBITDA and 18.9x Fwd P/E (source: Capital IQ consensus).
ADTRAN has received irrevocable undertakings from Egora (13.7% stake and ADVA’s largest shareholder). The transaction is subject to customary closing conditions, including, ADTRAN shareholders’ approval and minimum acceptance condition of at least 70% of all outstanding ADVA shares.
My fair value estimate for ADVA is €17.79/share, DCF based (see calculations in the insight).
Median ADTRAN's TP on Capital IQ consensus is $27.5/share ( €23.23/share in euro).
As for the deal, this is a genuine merger rather than a lowball bid, with high probabilities to close, in my view. Gross spread is 4.6%. I recommend setting up the spread.

ADTRAN/ADVA Optical Networking: Friendly Merger, Spread

United States

Adtran Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, focuses provides networking and communications equipment that enables voice, data, video and Internet communications across any network infrastructure. Adtran Holdings serves customers worldwide.

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ADTRAN Holdings (ADTN US)

Quiddity Leaderboard-DAX Jun 23: SMA Solar, Hochtief, Adtran, Aroundtown

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Janaghan Jeyakumar, CFA

DAX, MDAX, SDAX, TecDAX Sep 2022 Rebal: Large Impacts Only for Hella & Stabilius

Hella and Stabilus are likely to see large positive impacts but the other candidates generally have small impacts and small flow sizes.

Janaghan Jeyakumar, CFA

DAX/MDAX/SDAX Quiddity Leaderboard Sep 2022: Final Expectations

Delivery Hero has to climb one rank to get into DAX. MDAX and SDAX could see multiple index changes. Takkt's recent negative momentum could have...

Janaghan Jeyakumar, CFA

ADTRAN/ADVA Optical Networking: Additional Acceptance Period

By the end of the acceptance period, the offer had been accepted by more than 60% of all ADVA shares. The minimum acceptance threshold has...

Jesus Rodriguez Aguilar

ADTRAN/ADVA Optical Networking: Friendly Merger, Spread

This is a genuine merger rather than a lowball bid, with high probabilities to close, in my view. Gross spread is 4.6%. I recommend setting up the...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Leaderboard-DAX Jun 23: SMA Solar, Hochtief, Adtran, Aroundtown

Deutsche Lufthansa AG needs its average share price in the reference period to be around 7% higher than the current price (i.e. average price...

Janaghan Jeyakumar, CFA

DAX, MDAX, SDAX, TecDAX Sep 2022 Rebal: Large Impacts Only for Hella & Stabilius

Hella and Stabilus are likely to see large positive impacts but the other candidates generally have small impacts and small flow sizes.

Janaghan Jeyakumar, CFA

DAX/​​MDAX/​​SDAX Quiddity Leaderboard Sep 2022: Final Expectations

Delivery Hero has to climb one rank to get into DAX. MDAX and SDAX could see multiple index changes. Takkt's recent negative momentum could have...

Janaghan Jeyakumar, CFA

ADTRAN/​ADVA Optical Networking: Additional Acceptance Period

By the end of the acceptance period, the offer had been accepted by more than 60% of all ADVA shares. The minimum acceptance threshold has...

Jesus Rodriguez Aguilar

ADTRAN/ADVA Optical Networking: Friendly Merger, Spread

This is a genuine merger rather than a lowball bid, with high probabilities to close, in my view. Gross spread is 4.6%. I recommend setting up the...

Jesus Rodriguez Aguilar

DAX/MDAX/SDAX Quiddity Leaderboard Sep 2022: Final Expectations

ADTRAN/ADVA Optical Networking: Additional Acceptance Period