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.

Event-Driven

<ul>
<li>Fudosan’s offer for <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> will be increased by 9.6% to JPY20,600. The offer has been declared best and final. Elliott intends to accept the offer.</li>
<li>Despite 26.4% premium to the first offer, Fudosan has emerged as the winner, as it will get TICO below real-time book value and the core unlisted business at &lt;1x EV/EBITDA.</li>
<li>Elliott emerges with a sullied reputation, having accepted an offer 21% below its base-case value, not being able to reinvest in BidCo, and declining to pursue appraisal rights.</li>
</ul>


Fudosan’s offer for Toyota Industries (6201 JP) will be increased by 9.6% to JPY20,600. The offer has been declared best and final. Elliott intends to accept the offer.
Despite 26.4% premium to the first offer, Fudosan has emerged as the winner, as it will get TICO below real-time book value and the core unlisted business at &lt;1x EV/EBITDA.
Elliott emerges with a sullied reputation, having accepted an offer 21% below its base-case value, not being able to reinvest in BidCo, and declining to pursue appraisal rights.


Toyota Industries (6201 JP): Winners and Losers

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nintendo-co-ltd" target="_blank" data-smartkarma-citation="entities:5415:1" rel="noopener">Nintendo (7974 JP)</a> has announced a secondary offering of 32.7 million shares (37.6 million including overallotment), worth around US$1.8 billion (US$2.1 billion including overallotment).</li>
<li>There are four selling shareholders: Nomura Trust and Banking Co, Bank of Kyoto, <a href="https://www.smartkarma.com/entities/dena-co-ltd" target="_blank" data-smartkarma-citation="entities:747:1" rel="noopener">DeNA (2432 JP)</a>, and Resona Bank.</li>
<li>The offering as a percentage of outstanding shares and ADV is below average compared to recent large placements. A ToSTNeT-3 repurchase (up to JPY100 billion) will mitigate the impact.</li>
</ul>



Nintendo (7974 JP) has announced a secondary offering of 32.7 million shares (37.6 million including overallotment), worth around US$1.8 billion (US$2.1 billion including overallotment).
There are four selling shareholders: Nomura Trust and Banking Co, Bank of Kyoto, DeNA (2432 JP), and Resona Bank.
The offering as a percentage of outstanding shares and ADV is below average compared to recent large placements. A ToSTNeT-3 repurchase (up to JPY100 billion) will mitigate the impact.


Nintendo (7974 JP): A US$2.1 Billion Secondary Offering

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>As per media reports <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> (TMC) could be planning to unwind some of its US$19bn cross-shareholding by working with financial institutions.</li>
<li>In our prior series of notes, we had looked at the cross-shareholding across a swathe of companies, the largest of which was Toyota Motors.</li>
<li>In this note, we take a quick look at the possible shareholding unwind.</li>
</ul>


As per media reports Toyota Motor (7203 JP) (TMC) could be planning to unwind some of its US$19bn cross-shareholding by working with financial institutions.
In our prior series of notes, we had looked at the cross-shareholding across a swathe of companies, the largest of which was Toyota Motors.
In this note, we take a quick look at the possible shareholding unwind.


Aequitas: Toyota Motors Cross-Shareholding - Possible US$19bn Unwind, Might Not Be Soon

<ul>
<li>Reuters reports that Elliott has offered to pay around market price to buy <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> shares from holders who have agreed to tender. The close is 2 March.</li>
<li>Elliott’s strategy is three-fold: increase its stake without launching an expensive partial offer, ensure the minimum is not met, and ensure Fudosan discloses, at best, a modest increase in acceptances. </li>
<li>Elliott’s campaign may work too well, and there remains a possibility that the tender offer fails. In such a scenario, the downside to a deal break price is limited.</li>
</ul>


Reuters reports that Elliott has offered to pay around market price to buy Toyota Industries (6201 JP) shares from holders who have agreed to tender. The close is 2 March.
Elliott’s strategy is three-fold: increase its stake without launching an expensive partial offer, ensure the minimum is not met, and ensure Fudosan discloses, at best, a modest increase in acceptances. 
Elliott’s campaign may work too well, and there remains a possibility that the tender offer fails. In such a scenario, the downside to a deal break price is limited.


Toyota Industries (6201 JP): Risk/Reward Ahead of the Second Close

<ul>
<li>At the first closing date of the <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> offer, Fudosan unsurprisingly extended the close, but surprisingly, voluntarily disclosed the level of acceptances.</li>
<li>At first glance, the disclosure of acceptances was an own goal, as the shares reached new highs, giving Elliott a gift to strengthen its call to reject the offer.</li>
<li>Alternatively, Fudosan’s disclosure could be a shrewd move to signal that its likely endgame (bump marginally above 3Q book value and possibly lower minimum) will succeed.  </li>
</ul>


At the first closing date of the Toyota Industries (6201 JP) offer, Fudosan unsurprisingly extended the close, but surprisingly, voluntarily disclosed the level of acceptances.
At first glance, the disclosure of acceptances was an own goal, as the shares reached new highs, giving Elliott a gift to strengthen its call to reject the offer.
Alternatively, Fudosan’s disclosure could be a shrewd move to signal that its likely endgame (bump marginally above 3Q book value and possibly lower minimum) will succeed.  


Toyota Industries (6201 JP): Disclosure of Acceptances an Own Goal or a Shrewd Move?

Japan

DENSO CORPORATION manufactures electronic parts for automobiles.  The Company's products include automobile air conditioners, air bags, ignition systems, generators, power steering systems, and spark plugs with iridium electrode. The Company also produces communication equipment for mobile navigation system.

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Denso Corp (6902 JP)

Toyota Industries (6201 JP): Winners and Losers

This is a done deal. Despite the bump, Fudosan acquires TICO at a price below real-time book value. Elliott gets a healthy ROI on its investment...

Arun George

Nintendo (7974 JP): A US$2.1 Billion Secondary Offering

The offering as a percentage of outstanding shares and ADV is below average compared to recent large placements. A ToSTNeT-3 repurchase (up to...

Arun George

Aequitas: Toyota Motors Cross-Shareholding - Possible US$19bn Unwind, Might Not Be Soon

As per media reports Toyota Motor (7203 JP) (TMC) could be planning to unwind some of its US$19bn cross-shareholding by working with financial...

Sumeet Singh

Toyota Industries (6201 JP): Risk/Reward Ahead of the Second Close

Elliott is trying to raid the irrevocables ahead of the second close. A revised offer above 3Q book remains likely. The downside to a deal break...

Arun George

Toyota Industries (6201 JP): Disclosure of Acceptances an Own Goal or a Shrewd Move?

At first glance, the acceptance disclosure was an own goal. However, it could be a shrewd move to signal that Fudosan's likely endgame (bump...

Arun George

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