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

Yashili International Holdings / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a>'s latest monthly update suggests that the remaining pre-condition, the 25% Yashili acquisition, is entering the final stages towards being satisfied. </li>
<li>The wording “<em>in the course of processing the relevant application</em>” suggests that the government authorities will grant the new registration certificate, which should be received shortly.</li>
<li>The gross spread is 6.2%. The downside is low as both <a href="https://www.smartkarma.com/entities/danone-sa" target="_blank" data-smartkarma-citation="entities:21403:1" rel="noopener">Danone SA (BN FP)</a> and <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> can waive conditions to satisfy the pre-condition.</li>
</ul>



Yashili International Holdings (1230 HK)'s latest monthly update suggests that the remaining pre-condition, the 25% Yashili acquisition, is entering the final stages towards being satisfied. 
The wording “in the course of processing the relevant application” suggests that the government authorities will grant the new registration certificate, which should be received shortly.
The gross spread is 6.2%. The downside is low as both Danone SA (BN FP) and China Mengniu Dairy Co (2319 HK) can waive conditions to satisfy the pre-condition.


Yashili (1230 HK): Monthly Update Suggests that Pre-Condition Satisfaction in the Final Leg

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a>'s spread to <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>’s offer (HK$1.20) has widened to 10.1% due to doubts about the satisfaction of the remaining pre-condition.</li>
<li>We think the delay in satisfying Dumex Key Condition is due to the glacial bureaucratic process. The pre-conditions long stop date is 31 July 2023, which provides sufficient time.</li>
<li>Both <a href="https://www.smartkarma.com/entities/danone-sa" target="_blank" data-smartkarma-citation="entities:21403:1" rel="noopener">Danone SA (BN FP)</a> and Mengniu can waive conditions to satisfy the pre-condition. Both have the motivation to complete the transaction as it facilitates the unwinding of their partnership.</li>
</ul>



Yashili International Holdings (1230 HK)'s spread to China Mengniu Dairy Co (2319 HK)’s offer (HK$1.20) has widened to 10.1% due to doubts about the satisfaction of the remaining pre-condition.
We think the delay in satisfying Dumex Key Condition is due to the glacial bureaucratic process. The pre-conditions long stop date is 31 July 2023, which provides sufficient time.
Both Danone SA (BN FP) and Mengniu can waive conditions to satisfy the pre-condition. Both have the motivation to complete the transaction as it facilitates the unwinding of their partnership.


Yashili’s Widening Spread Is an Opportunity

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a> independent shareholders unanimously approved the proposed transactions at the 16 August EGM, a crucial step for <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>’s HK$1.20 offer.</li>
<li>The remaining pre-condition is the completion of the 25% Yashili acquisition. The completion conditions suggest that this pre-condition is low risk and will likely be completed soon.</li>
<li>The value test is only applicable to the scheme. At last close and for a November completion, the gross and annualised spread to the offer is 8.1% and 29.6%, respectively.</li>
</ul>



Yashili International Holdings (1230 HK) independent shareholders unanimously approved the proposed transactions at the 16 August EGM, a crucial step for China Mengniu Dairy Co (2319 HK)’s HK$1.20 offer.
The remaining pre-condition is the completion of the 25% Yashili acquisition. The completion conditions suggest that this pre-condition is low risk and will likely be completed soon.
The value test is only applicable to the scheme. At last close and for a November completion, the gross and annualised spread to the offer is 8.1% and 29.6%, respectively.


Yashili’s Pre-Condition EGM Approval Secured

<ul>
<li>The approval by <a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a> independent shareholders of the proposed transactions at the 16 August EGM is a pre-condition to the HK$1.20 per share privatisation proposal.</li>
<li>Shareholders will pass the ordinary resolutions at the EGM so that they can vote on the attractive privatisation proposal. The key risk is timing around the satisfaction of the pre-conditions.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>’s offer remains attractive in the context of multiples and historical share prices. At the last close, the gross spread to the offer is 10.1%.</li>
</ul>


The approval by Yashili International Holdings (1230 HK) independent shareholders of the proposed transactions at the 16 August EGM is a pre-condition to the HK$1.20 per share privatisation proposal.
Shareholders will pass the ordinary resolutions at the EGM so that they can vote on the attractive privatisation proposal. The key risk is timing around the satisfaction of the pre-conditions.

China Mengniu Dairy Co (2319 HK)’s offer remains attractive in the context of multiples and historical share prices. At the last close, the gross spread to the offer is 10.1%.


Yashili’s Pre-Condition EGM Set for 16 August

<ul>
<li>
<a href="https://www.smartkarma.com/entities/danone-sa" target="_blank" data-smartkarma-citation="entities:21403:1" rel="noopener">Danone SA (BN FP)</a> will sell to <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.  </li>
<li>The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by &lt;10% of all disinterested shareholders.</li>
<li>The offer for <a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a> is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).</li>
</ul>



Danone SA (BN FP) will sell to China Mengniu Dairy Co (2319 HK) its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.  
The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by &lt;10% of all disinterested shareholders.
The offer for Yashili International Holdings (1230 HK) is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).


Yashili’s HK$1.20 Privatisation Offer from Mengniu

China

China Modern Dairy Holdings Ltd. is an industrialized agricultural company. The Company operates dairy farms and produces raw milk in China.  China Modern Dairy Holdings Ltd focuses on large-scale industrialized free-stall dairy farming.

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China Modern Dairy (1117 HK)

Yashili (1230 HK): Monthly Update Suggests that Pre-Condition Satisfaction in the Final Leg

The wording of the update suggests that the pre-condition should be satisfied soon. The downside is low as both Danone and Mengniu can waive...

Arun George

Yashili’s Widening Spread Is an Opportunity

While the pre-condition should be satisfied, both Danone and Mengniu have the incentive and the ability to waive conditions to satisfy the pre...

Arun George

Yashili’s Pre-Condition EGM Approval Secured

The remaining pre-condition is low risk and will likely be completed soon. Interims on 24 August. At last close and for a November completion, the...

Arun George

Yashili’s Pre-Condition EGM Set for 16 August

The EGM will take a convoluted transaction further to completion. Expect the spread to narrow. At the last close, the gross spread to the offer is...

Arun George

Yashili’s HK$1.20 Privatisation Offer from Mengniu

Mengniu will launch a pre-conditional privatisation offer at HK$1.20. The risk around the pre-conditions is low. At the last close, the gross...

Arun George

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