Founder at Stock Spin-off Investing, Stock Spin-Off Investing

Richard Howe

Founder at Stock Spin-off Investing

Stock Spin-Off Investing

Generate attractive returns by taking advantage of inefficiencies in the stock spin-off market.

Stock Spin-offs

Equity Bottom-Up

<ul><li>Continental AG (XTRA: CON) has been high on my watch list for the past 3 months.</li><li>Why? Because Continental is going to be spinning off its auto parts business in late 2025 and it looks like the transaction will create shareholder value.</li><li>I was very close to buying the stock recently. But two things are holding me back for now</li></ul>

Continental AG (XTRA: CON) has been high on my watch list for the past 3 months.Why? Because Continental is going to be spinning off its auto parts business in late 2025 and it looks like the transaction will create shareholder value.I was very close to buying the stock recently. But two things are holding me back for now

Reviewing the Demerger Arbitrage Setup for Continental AG

Event-Driven

<ul><li>First, I sold out of Kenvue (KVUE) when the stock surged earlier this week. We locked in a nice 18% total return. </li><li>Kenvue and its consumer healthcare peers Haleon (HLN), Proctor &amp; Gamble (PG) and Colgate-Palmolive (CL), have all been strong given their defensive nature in a volatile market.</li><li>I still believe that Kenvue (KVUE) is a solid company with 15% upside potential, but I have higher conviction in my other recommendations.</li></ul>

First, I sold out of Kenvue (KVUE) when the stock surged earlier this week. We locked in a nice 18% total return. Kenvue and its consumer healthcare peers Haleon (HLN), Proctor &amp; Gamble (PG) and Colgate-Palmolive (CL), have all been strong given their defensive nature in a volatile market.I still believe that Kenvue (KVUE) is a solid company with 15% upside potential, but I have higher conviction in my other recommendations.

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Vitesco Technologies Group / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/schaeffler-ag" target="_blank" data-smartkarma-citation="entities:21712:1" rel="noopener">Schaeffler (SHA GR)</a> offers €91.00/share for <a href="https://www.smartkarma.com/entities/vitesco-technologies-group-ag" target="_blank" data-smartkarma-citation="entities:36684:1" rel="noopener">Vitesco Technologies Group (VTSC GR)</a>, in cash, 20% premium to 3-month VWAP, 3.3x EV/Fwd EBITDA. There is no minimum acceptance rate.</li>
<li>Later Schaeffler will unify its share classes (current voting ratio 3.01) to use them as currency for Vitesco shareholders not accepting the cash offer (essentially the parent company of Schaeffler).</li>
<li>Vitesco shareholders are being generously rewarded (my fair value estimate is #€74/share), I believe most will tender. Spread is 1.04%/3.70% (gross/annualised, assuming settlement by 31 January). I'd buy below €90/share.</li>
</ul>



Schaeffler (SHA GR) offers €91.00/share for Vitesco Technologies Group (VTSC GR), in cash, 20% premium to 3-month VWAP, 3.3x EV/Fwd EBITDA. There is no minimum acceptance rate.
Later Schaeffler will unify its share classes (current voting ratio 3.01) to use them as currency for Vitesco shareholders not accepting the cash offer (essentially the parent company of Schaeffler).
Vitesco shareholders are being generously rewarded (my fair value estimate is #€74/share), I believe most will tender. Spread is 1.04%/3.70% (gross/annualised, assuming settlement by 31 January). I'd buy below €90/share.


Schaeffler/Vitesco: A Three-Step Merger Process

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<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>As things stand, there will not be any ADDs or DELs from the DAX index or the SDAX index.</li>
<li>There could be two ADDs/DELs for the MDAX index in the June 2023 rebalance.</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.
As things stand, there will not be any ADDs or DELs from the DAX index or the SDAX index.
There could be two ADDs/DELs for the MDAX index in the June 2023 rebalance.


Quiddity Leaderboard-DAX Jun 23: Two Changes for the MDAX Index

<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>Two changes could happen between DAX and MDAX while there could be one change between MDAX and SDAX.</li>
<li>There could be more changes for the MDAX and SDAX indices as a couple name are lurking close to the border.</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.
Two changes could happen between DAX and MDAX while there could be one change between MDAX and SDAX.
There could be more changes for the MDAX and SDAX indices as a couple name are lurking close to the border.


Quiddity Leaderboard-DAX Jun 23: Fresenius, Lufthansa, Covestro, Continental & Others

Germany

Continental AG manufactures tires, automotive parts, and industrial products. The Company produces passenger cars, trucks, commercial vehicles, bicycle tires, braking systems, shock absorbers, hoses, drive belts, conveyor belting, transmission products, and sealing systems. Continental markets its products worldwide.

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Continental (CON GR)

Reviewing the Demerger Arbitrage Setup for Continental AG

Continental AG (XTRA: CON) has been high on my watch list for the past 3 months. Why? Because Continental is going to be spinning off its auto...

Richard Howe

Weekly Update (CON, UNTC, KVUE, TSVT)

First, I sold out of Kenvue (KVUE) when the stock surged earlier this week. We locked in a nice 18% total return. Kenvue and its consumer...

Richard Howe

Schaeffler/Vitesco: A Three-Step Merger Process

Schaeffler plants to take over Vitesco in three acts in a consolidation move. Schaeffler offers a generous premium, which should help conclude...

Jesus Rodriguez Aguilar

Quiddity Leaderboard-DAX Jun 23: Two Changes for the MDAX Index

There are seven days left in the reference period. The index changes will be confirmed after the close on 5th June 2023 and the inclusions...

Janaghan Jeyakumar, CFA

Quiddity Leaderboard-DAX Jun 23: Fresenius, Lufthansa, Covestro, Continental & Others

Fresenius (FRE GR) and Deutsche Lufthansa AG (LHA GR) could move from MDAX to DAX while Covestro AG (1COV GR) and Continental AG (CON GR) could...

Janaghan Jeyakumar, CFA

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