Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>I tally 53 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>Two new deals were  discussed this week on Smartkarma: <a href="https://www.smartkarma.com/entities/mma-offshore-ltd" target="_blank" data-smartkarma-citation="entities:594:1" rel="noopener">MMA Offshore (MRM AU)</a>'s  Scheme with Singapore's Cyan Renewables; and <a href="https://www.smartkarma.com/entities/sciclone-pharmaceuticals-holdings-limited" target="_blank" data-smartkarma-citation="entities:17351:1" rel="noopener">Sciclone Pharmaceuticals (6600 HK)</a>'s Scheme.</li>
<li>Key updates took place on: <a href="https://www.smartkarma.com/entities/boral-ltd" target="_blank" data-smartkarma-citation="entities:1487:1" rel="noopener">Boral (BLD AU)</a>, <a href="https://www.smartkarma.com/entities/orecorp-ltd" target="_blank" data-smartkarma-citation="entities:8120:1" rel="noopener">Orecorp (ORR AU)</a>, <a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson Inc (2651 JP)</a>, <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC (906 HK)</a>, <a href="https://www.smartkarma.com/entities/cimc-vehicles-group-co-ltd" target="_blank" data-smartkarma-citation="entities:28012:1" rel="noopener">CIMC Vehicle (1839 HK)</a>, <a href="https://www.smartkarma.com/entities/roland-dg-corp" target="_blank" data-smartkarma-citation="entities:10653:1" rel="noopener">Roland DG (6789 JP)</a>, and <a href="https://www.smartkarma.com/entities/welbe-inc" target="_blank" data-smartkarma-citation="entities:31118:1" rel="noopener">Welbe (6556 JP)</a>.</li>
</ul>


I tally 53 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were  discussed this week on Smartkarma: MMA Offshore (MRM AU)'s  Scheme with Singapore's Cyan Renewables; and Sciclone Pharmaceuticals (6600 HK)'s Scheme.
Key updates took place on: Boral (BLD AU), Orecorp (ORR AU), Lawson Inc (2651 JP), CPMC (906 HK), CIMC Vehicle (1839 HK), Roland DG (6789 JP), and Welbe (6556 JP).


(Mostly) Asia-Pac M&A:MMA, Boral, Orecorp, Probiotec, CPMC, CIMC Vehicle, Roland DG, Welbe, SciClone

<ul>
<li>A little over a year ago, shareholders approved <a href="https://www.smartkarma.com/entities/sciclone-pharmaceuticals-holdings-limited" target="_blank" data-smartkarma-citation="entities:17351:1" rel="noopener">Sciclone Pharmaceuticals (6600 HK)</a>'s buyback, which lifted GL Capital's holding to 31.63% from 28.09%, enabling creep provisions.</li>
<li>After the share price gained 14% yesterday, SciClone was suspended pursuant to the Code on Takeovers and Mergers before trading commenced this morning. Mmm.</li>
<li>GL Capital, together with CDH Investments, Ascendent Capital Partner, Ocean Falcon Limited, and Boying Investments Limited, took SciClone private in 2017. Time for another privatisation?</li>
</ul>


A little over a year ago, shareholders approved Sciclone Pharmaceuticals (6600 HK)'s buyback, which lifted GL Capital's holding to 31.63% from 28.09%, enabling creep provisions.
After the share price gained 14% yesterday, SciClone was suspended pursuant to the Code on Takeovers and Mergers before trading commenced this morning. Mmm.
GL Capital, together with CDH Investments, Ascendent Capital Partner, Ocean Falcon Limited, and Boying Investments Limited, took SciClone private in 2017. Time for another privatisation?


SciClone Pharma (6600 HK): GL Capital Consortium Reload?

<ul>
<li>Shareholders have given <a href="https://www.smartkarma.com/entities/sciclone-pharmaceuticals-holdings-limited" target="_blank" data-smartkarma-citation="entities:17351:1" rel="noopener">SciClone Pharmaceuticals (6600 HK)</a>'s buyback the go-ahead which will result in the major shareholder holding (upward of) 31.63%, and the freedom to creep.</li>
<li>As such, a concentrated shareholder register, primarily comprising entities that privatised SciClone in 2017, gets even more concentrated.</li>
<li>Trading inexpensively ahead of the launch of a new (and approved) drug, SciClone is worth a second look. </li>
</ul>


Shareholders have given SciClone Pharmaceuticals (6600 HK)'s buyback the go-ahead which will result in the major shareholder holding (upward of) 31.63%, and the freedom to creep.
As such, a concentrated shareholder register, primarily comprising entities that privatised SciClone in 2017, gets even more concentrated.
Trading inexpensively ahead of the launch of a new (and approved) drug, SciClone is worth a second look. 


SciClone Pharma (6600 HK): Inexpensive Ahead Of New Therapies Rolling Out

European Event-Driven Analyst

Jesus Rodriguez Aguilar

On 31 May, <a href="https://www.smartkarma.com/entities/assicurazioni-generali-spa" target="_blank" data-smartkarma-citation="entities:21191:1" rel="noopener">Assicurazioni Generali (G IM)</a> SpA launched a voluntary tender offer to acquire the 76.33 of <a href="https://www.smartkarma.com/entities/societa-cattolica-di-assicuraz" target="_blank" data-smartkarma-citation="entities:21168:1" rel="noopener">Societa Cattolica Di Assicuraz (CASS IM)</a> it does not already own.
Generali will offer €6.75/share, cum dividend.
<ul>
<li>
A 15.3% premium to Cattolica's closing share price on 28 May 28, for an implied equity value of €1,541.3 mn and an implied EV of €2,437.3 mn. The offer represents 0.67x P/21e BV and 11.2x Fwd P/E. 
</li>
<li>
In case of total acceptance of the offer, at the current bid price, Generali will pay a consideration of €1.176 bn.
</li>
<li>
Minimum acceptance condition: 66.67% of the share capital, which could be lowered to 50% plus one share.
</li>
<li>
Synergies in operating costs, technical ratios and revenues, are estimated to reach a run-rate pre-tax of more than €80 mn p.a., with cost of synergies €150 mn - €200 mn.
</li>
<li>
Generali expects the transaction to finalize by mid-November 2021, subject to all necessary approvals and authorizations. There should not be any antitrust issues, as in any of the three main segments, combined market share would be around 20%.
</li>
</ul>
On 31 May, shares of Cattolica closed at €6.97, a 15% increase vs. the prior trading session and 3.2% above the offer. Cattolica trades at 0.7x vs an 0.9x average of Italian insurers.
Fair value on a standalone basis is €6.64/share (average of comparables median implied Fwd P/E and discounted excess returns, WACC = 8.5%, g=1.8%, estimates from Capital IQ).
Synergies, taxed and capitalized, could be worth up to €1.28/share. Assuming that Cattolica's shareholders capture 60% of the PV of those synergies, TP of Cattolica as a target is €7.4/share. This represents 8.7% upside to the offer price.
Although the Board of Cattolica has not yet issued a reply, this situation may follow a script similar to <a href="https://www.smartkarma.com/insights/creval-credit-agricole-playing-hard-to-get" target="_blank" data-smartkarma-citation="insights:45742" rel="noopener">Creval - Crédit Agricole: Playing Hard to Get</a>, <a href="https://www.smartkarma.com/insights/creval-credit-agricole-grounds-for-an-improved-offer" target="_blank" data-smartkarma-citation="insights:50036" rel="noopener">CreVal - Crédit Agricole: Grounds for an Improved Offer</a> and <a href="https://www.smartkarma.com/insights/credit-agricole-creval-purchase-obligation" target="_blank" data-smartkarma-citation="insights:50658" rel="noopener">Credit Agricole/CreVal: Purchase Obligation</a>. Therefore, a sweetened offer is highly likely, in my view.
Recommendation is long CASS IM, TP €7.4.

On 31 May, Assicurazioni Generali (G IM) SpA launched a voluntary tender offer to acquire the 76.33 of Societa Cattolica Di Assicuraz (CASS IM) it does not already own.
Generali will offer €6.75/share, cum dividend.


A 15.3% premium to Cattolica's closing share price on 28 May 28, for an implied equity value of €1,541.3 mn and an implied EV of €2,437.3 mn. The offer represents 0.67x P/21e BV and 11.2x Fwd P/E. 


In case of total acceptance of the offer, at the current bid price, Generali will pay a consideration of €1.176 bn.


Minimum acceptance condition: 66.67% of the share capital, which could be lowered to 50% plus one share.


Synergies in operating costs, technical ratios and revenues, are estimated to reach a run-rate pre-tax of more than €80 mn p.a., with cost of synergies €150 mn - €200 mn.


Generali expects the transaction to finalize by mid-November 2021, subject to all necessary approvals and authorizations. There should not be any antitrust issues, as in any of the three main segments, combined market share would be around 20%.


On 31 May, shares of Cattolica closed at €6.97, a 15% increase vs. the prior trading session and 3.2% above the offer. Cattolica trades at 0.7x vs an 0.9x average of Italian insurers.
Fair value on a standalone basis is €6.64/share (average of comparables median implied Fwd P/E and discounted excess returns, WACC = 8.5%, g=1.8%, estimates from Capital IQ).
Synergies, taxed and capitalized, could be worth up to €1.28/share. Assuming that Cattolica's shareholders capture 60% of the PV of those synergies, TP of Cattolica as a target is €7.4/share. This represents 8.7% upside to the offer price.
Although the Board of Cattolica has not yet issued a reply, this situation may follow a script similar to Creval - Crédit Agricole: Playing Hard to Get, CreVal - Crédit Agricole: Grounds for an Improved Offer and Credit Agricole/CreVal: Purchase Obligation. Therefore, a sweetened offer is highly likely, in my view.
Recommendation is long CASS IM, TP €7.4.

Generali/Cattolica: Voluntary Tender Offer

Lakshmi Iyer, CFA

Credit

There has been substantial news-flow regarding the possibility of a deal between <a href="https://www.smartkarma.com/entities/future-retail-ltd-4b025726-3be6-41e3-9f59-22ab2a17a8b2" target="_blank" data-smartkarma-citation="entities:26799:1" rel="noopener">Future Retail (FRETAIL IN)</a> and <a href="https://www.smartkarma.com/entities/reliance-industries-ltd" target="_blank" data-smartkarma-citation="entities:198:1" rel="noopener">Reliance Industries (RIL IN)</a> .  We feel that the news reports are credible. We also present our thoughts on potential hurdles facing the deal and recommend booking profits on the FRETAI 5.6% bonds due '23 at current levels (69).<div class="content-highlight">Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.</div>

There has been substantial news-flow regarding the possibility of a deal between Future Retail (FRETAIL IN) and Reliance Industries (RIL IN) .  We feel that the news reports are credible. We also present our thoughts on potential hurdles facing the deal and recommend booking profits on the FRETAI 5.6% bonds due '23 at current levels (69).Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

Future Retail + Reliance - To Be, or Not to Be...

Italy

Generali provides insurance and asset management services. The Company offers life and property and casualty insurance, and insurance solutions with ESG components, as well as asset management services. Generali serves clients worldwide.

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Assicurazioni Generali (G IM)

(Mostly) Asia-Pac M&A:MMA, Boral, Orecorp, Probiotec, CPMC, CIMC Vehicle, Roland DG, Welbe, SciClone

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

SciClone Pharma (6600 HK): GL Capital Consortium Reload?

After shares gained 14% yesterday, SciClone's shares were suspended before trading commenced this morning. The GL Capital consortium took SciClone...

David Blennerhassett

SciClone Pharma (6600 HK): Inexpensive Ahead Of New Therapies Rolling Out

It would not be surprising if the consortium which privatised SciClone six years ago, opts to do the same again. Or instigate an alternative...

David Blennerhassett

Generali/Cattolica: Voluntary Tender Offer

Situation similar to bid for CreVal. Assuming that Cattolica's shareholders capture 60% of the PV of synergies, TP of Cattolica as a target is €7.4...

Jesus Rodriguez Aguilar

Future Retail + Reliance - To Be, or Not to Be...

There has been substantial news-flow regarding the possibility of a deal between Future Retail (FRETAIL IN) and Reliance Industries (RIL IN) . We...

Lakshmi Iyer, CFA

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