Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Arteria shares have rebounded from a dreary 2020 as Q4 results and an optimistic mid-term plan have re-kindled interest in telecoms growth. Management will invest heavily in FY21 to support revenue CAGR of 8% through 2025. We are slightly more conservative but our forecasts for FY25 revenue and profitability are 10% higher than before and support a higher valuation. We are raising our DCF-driven FY21 target price from ¥2,380 to ¥2,800 and with 45% potential upside to our target, remain at Buy.

Arteria shares have rebounded from a dreary 2020 as Q4 results and an optimistic mid-term plan have re-kindled interest in telecoms growth. Management will invest heavily in FY21 to support revenue CAGR of 8% through 2025. We are slightly more conservative but our forecasts for FY25 revenue and profitability are 10% higher than before and support a higher valuation. We are raising our DCF-driven FY21 target price from ¥2,380 to ¥2,800 and with 45% potential upside to our target, remain at Buy.  

Arteria Networks (Buy)- Aggressive Growth Plans Highlight Market Potential

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Seven weeks ago, <a href="https://www.smartkarma.com/entities/marubeni-corp" target="_blank" data-smartkarma-citation="entities:7463:1" rel="noopener">Marubeni Corp (8002 JP)</a> and <a href="https://www.smartkarma.com/entities/secom-co-ltd" target="_blank" data-smartkarma-citation="entities:11405:1" rel="noopener">Secom Co Ltd (9735 JP)</a> announced a joint deal to acquire the rest of <a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a>. </li>
<li>As I wrote in <a href="https://www.smartkarma.com/insights/marubeni-secom-to-launch-tender-offer-for-arteria-networks-4423" target="_blank" data-smartkarma-citation="insights:101969" rel="noopener">the previous piece</a>, the premium was good, but the price was not great. The Board rejected the price, then agreed when the bidders wouldn't go further.  </li>
<li>Now we have a deal and the Tender Offer starts 5 July. It was cheap to start. It's still too cheap. But this one is tough to block.</li>
</ul>


Seven weeks ago, Marubeni Corp (8002 JP) and Secom Co Ltd (9735 JP) announced a joint deal to acquire the rest of ARTERIA Networks Corp (4423 JP). 
As I wrote in the previous piece, the premium was good, but the price was not great. The Board rejected the price, then agreed when the bidders wouldn't go further.  
Now we have a deal and the Tender Offer starts 5 July. It was cheap to start. It's still too cheap. But this one is tough to block.


Arteria Networks (4423) Tender Launches 5 July.

<ul>
<li>
Marubeni (8002 JP) and Secom (9735 JP)<a href="https://www.smartkarma.com/entities/secom-co-ltd" target="_blank" data-smartkarma-citation="entities:11405:1" rel="noopener"></a> today announced a Tender Offer to take private Marubeni's subsidiary <a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a> at a 54% premium to the close. </li>
<li>Listed 4.5yrs ago, the company hasn't grown hugely. Revenue growth is slow. EBITDA growth is flat. The takeout is 3.6x book, 7x estimated EBITDA, and about mid-teens PER. Without synergies.</li>
<li>The price is OK, not great. The Board rejected the final price because it was too low and didn't include synergies, then accepted because the bidders wouldn't go further? Hmmm...</li>
</ul>



Marubeni (8002 JP) and Secom (9735 JP) today announced a Tender Offer to take private Marubeni's subsidiary ARTERIA Networks Corp (4423 JP) at a 54% premium to the close. 
Listed 4.5yrs ago, the company hasn't grown hugely. Revenue growth is slow. EBITDA growth is flat. The takeout is 3.6x book, 7x estimated EBITDA, and about mid-teens PER. Without synergies.
The price is OK, not great. The Board rejected the final price because it was too low and didn't include synergies, then accepted because the bidders wouldn't go further? Hmmm...


Marubeni & Secom To Launch Tender Offer for Arteria Networks (4423)

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/marubeni-corp" target="_blank" data-smartkarma-citation="entities:7463:1" rel="noopener">Marubeni Corp (8002 JP)</a> and <a href="https://www.smartkarma.com/entities/secom-co-ltd" target="_blank" data-smartkarma-citation="entities:11405:1" rel="noopener">Secom Co Ltd (9735 JP)</a>’s tender offer of JPY1,980 per share, a 54.1% premium to the undisturbed price.</li>
<li>The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 16.61% ownership ratio.</li>
<li>The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate. This is doable as the tender price is attractive. </li>
</ul>



ARTERIA Networks Corp (4423 JP) has recommended Marubeni Corp (8002 JP) and Secom Co Ltd (9735 JP)’s tender offer of JPY1,980 per share, a 54.1% premium to the undisturbed price.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 16.61% ownership ratio.
The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate. This is doable as the tender price is attractive. 


Arteria Networks (4423 JP): JPY1,980 Tender Offer from Marubeni and SECOM

Chilled & Frozen Logistics Holdings / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/az-com-maruwa-holdings" target="_blank" data-smartkarma-citation="entities:17280:1" rel="noopener">AZ-Com Maruwa Holdings (9090 JP)</a> has launched a pre-conditional hostile offer for <a href="https://www.smartkarma.com/entities/chilled-frozen-logistics-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:40987:1" rel="noopener">Chilled &amp; Frozen Logistics Holdings (9099 JP)</a> at JPY3,000 per share, a 47.0% premium to the last close.</li>
<li>The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.</li>
<li>The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high. </li>
</ul>



AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled &amp; Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high. 


Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

Japan

ARTERIA Networks Corporation provides telecommunication services. The Company offers internet connection, virtual private network construction, colocation, mobile connection, mobile device management, optical fiber network construction, and other services.

ARTERIA Networks Corp (4423 JP)

Arteria Networks (Buy)- Aggressive Growth Plans Highlight Market Potential

We are raising our forecasts for Arteria (Buy, TP ¥2,800 from 2,380 before) to reflect mid-term guidance and even on a relatively conservative...

Kirk Boodry

Arteria Networks (4423) Tender Launches 5 July.

Marubeni and Secom agreed to buy Arteria Networks. Arteria agreed to sell itself at a price it repeatedly called inadequate. Investors should have...

Travis Lundy

Marubeni & Secom To Launch Tender Offer for Arteria Networks (4423)

Marubeni and Secom will launch a tender to take Marubeni sub Arteria Networks private. The fact pattern on negotiations is worth reading. The price...

Travis Lundy

Arteria Networks (4423 JP): JPY1,980 Tender Offer from Marubeni and SECOM

The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate....

Arun George

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher...

Arun George