Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Jardines, Xiaomi, Tilt Renew, Kumho Petro, Kunlun Energy, Takeei/Rever

Travis Lundy

The Tender Offer for <a href="https://www.smartkarma.com/entities/jih-sun-financial-holdings" target="_blank" data-smartkarma-citation="entities:17971:1" rel="noopener">Jih Sun Financial (5820 TT)</a> by <a href="https://www.smartkarma.com/entities/fubon-financial-holding-co" target="_blank" data-smartkarma-citation="entities:11869:1" rel="noopener">Fubon Financial Holding Co (2881 TT)</a> closes on 23 March. The original close was 1 February but a 50-day extension was granted as requested, to 23 March. In Taiwan, Tender Offers are for a minimum of 20 days and a maximum of 50 days, and an extension can be granted for 50 days. There are further extensions possible for "reasonable cause" upon application to the FSC, but it is not clear that exists in this case. I expect if Fubon wants it, the FSC would be inclined to grant it. There appears to be substantial regulatory support for the deal as a first among what may be many such future financial holding company consolidations. But there remain questions as to whether this gets done or not.

The Tender Offer for Jih Sun Financial (5820 TT) by Fubon Financial Holding Co (2881 TT) closes on 23 March. The original close was 1 February but a 50-day extension was granted as requested, to 23 March. In Taiwan, Tender Offers are for a minimum of 20 days and a maximum of 50 days, and an extension can be granted for 50 days. There are further extensions possible for "reasonable cause" upon application to the FSC, but it is not clear that exists in this case. I expect if Fubon wants it, the FSC would be inclined to grant it. There appears to be substantial regulatory support for the deal as a first among what may be many such future financial holding company consolidations. But there remain questions as to whether this gets done or not. 

Equity Bottom-Up

11 weeks ago yesterday, for the end of 2020, I published my report <a href="https://www.smartkarma.com/insights/2021-high-conviction-shinsei-bank" target="_blank" data-smartkarma-citation="insights:46544" rel="noopener">2021 High Conviction - Shinsei Bank</a> idea. Since the close of the next day, the shares are up 46.7%. A large part of that performance has been due to the rise in the TOPIX Bank Index - up 26.7% in the same period. Much of that move has occurred in the past five weeks as The Great Rotation, driven by higher rates, a steeper curve, and inflationary expectations, has propelled last year's losers to this year's winners, and <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a>, SaaS stocks, junk stocks, and others have underperformed. But there were a couple of other bits in the story too. A buyback, an asset sale, and understanding of the float dynamics given the over-arching goal of <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a> and its shareholders is to be able to get the government out of its shares (and accompanying oversight) it purchased in March 2000. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/193/195/original/Screenshot+2021-03-10+at+1.09.10+AM.png?1615309764" class="editor-image img-responsive" data-smartkarma-image-id="193195"></figure></section>This insight provides a brief update to those inputs.

11 weeks ago yesterday, for the end of 2020, I published my report 2021 High Conviction - Shinsei Bank idea. Since the close of the next day, the shares are up 46.7%. A large part of that performance has been due to the rise in the TOPIX Bank Index - up 26.7% in the same period. Much of that move has occurred in the past five weeks as The Great Rotation, driven by higher rates, a steeper curve, and inflationary expectations, has propelled last year's losers to this year's winners, and Tesla Motors (TSLA US), SaaS stocks, junk stocks, and others have underperformed. But there were a couple of other bits in the story too. A buyback, an asset sale, and understanding of the float dynamics given the over-arching goal of Shinsei Bank (8303 JP) and its shareholders is to be able to get the government out of its shares (and accompanying oversight) it purchased in March 2000. This insight provides a brief update to those inputs.

2021 High Conviction Update - Shinsei Bank Float Squeeze to Mitigate Near-Term

Yesterday, the Taiwan Fair Trade Commission announced its "non-prohibition" of the takeover of <a href="https://www.smartkarma.com/entities/jih-sun-financial-holdings" target="_blank" data-smartkarma-citation="entities:17971:1" rel="noopener">Jih Sun Financial (5820 TT)</a> by <a href="https://www.smartkarma.com/entities/fubon-financial-holding-co" target="_blank" data-smartkarma-citation="entities:11869:1" rel="noopener">Fubon Financial Holding Co (2881 TT)</a>.
As a reminder, this deal was put forth on 18 December 2020 by Fubon at TWD 13.00/share, to purchase 50.01-100.00% of Jih Sun Financial in a Tender Offer, making it the first merger in Taiwan of financial holding companies. 
It came with an FSC stamp of approval baked in, but not TFTC, and days after the deal was announced, there were questions about Fubon's intentions with regard to one of the shareholders. 
Yesterday, the Taiwan Fair Trade Commission gave its stamp of approval. Now it's a question of whether Fubon can get to 50%.

Yesterday, the Taiwan Fair Trade Commission announced its "non-prohibition" of the takeover of Jih Sun Financial (5820 TT) by Fubon Financial Holding Co (2881 TT).
As a reminder, this deal was put forth on 18 December 2020 by Fubon at TWD 13.00/share, to purchase 50.01-100.00% of Jih Sun Financial in a Tender Offer, making it the first merger in Taiwan of financial holding companies. 
It came with an FSC stamp of approval baked in, but not TFTC, and days after the deal was announced, there were questions about Fubon's intentions with regard to one of the shareholders. 
Yesterday, the Taiwan Fair Trade Commission gave its stamp of approval. Now it's a question of whether Fubon can get to 50%.

Fubon Financial Deal for Jih Sun Gets TFTC Signoff

Coming just two months after the FSC had rejected a proposal by Thai tycoon Charoen Pokphand's holding company to purchase the 24.09% stake in <a href="https://www.smartkarma.com/entities/jih-sun-financial-holdings" target="_blank" data-smartkarma-citation="entities:17971:1" rel="noopener">Jih Sun Financial (5820 TT)</a> held by Hong Kong-based Capital Target Limited, it initially looked to me like the <a href="https://www.smartkarma.com/entities/fubon-financial-holding-co" target="_blank" data-smartkarma-citation="entities:11869:1" rel="noopener">Fubon Financial Holding Co (2881 TT)</a> announcement of a low-premium Tender Offer at NT$13/share to purchase Jih Sun Financial, which camecomplete with regulator pre-approval, was likely wrapped up as a nice package to get Shinsei and Capital Target out without requiring other minorities to sell.  A couple of days afterwards, Fubon noted that it had not made any contact with either of  <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a> or Hong Kong-based Capital Target Limited prior to making the offer, but noted that it had wanted to purchase Jih Sun to raise its market share of Taiwanese stock market turnover (from 5.54% to 9.13% by adding Jih Sun's 3.59%). It noted that it would issue new shares - 60% common shares and 40% preferred shares - in order to finance the acquisition.Yesterday, Jih Sun announced the result of its board consideration of the Offer after having obtained the requisite fairness opinions required by Article 14 of the Regulations Governing Public Tender Offers for Securities of Public Companies.Jih Sun noted that it had not discussed the Tender Offer with Fubon prior to Fubon making its offer, and also noted that the accounting firms which had been engaged to provide fair value opinions found that a fair value per share estimated range was NT$13.89-15.71/share, and when looking at the "market price method", the other accountant had suggested the range NT$9.63-16.93/share against the NT$13 Offer. Several days after the announcement of the Offer, the Financial Supervisory Commission noted in response to legislator questions that the FSC was investigating the nature of the spike in share price and volume before the Tender Offer announcement, noting that the FSC itself and its personnel had kept quiet about the deal since October when they started looking at it. The news around this situation suggests my analysis of who owned Capital Target Limited may have been wrong - that a different originally offshore Chinese person may be (or have been) the controller of Capital Target Limited.This makes things a bit weirder.

Coming just two months after the FSC had rejected a proposal by Thai tycoon Charoen Pokphand's holding company to purchase the 24.09% stake in Jih Sun Financial (5820 TT) held by Hong Kong-based Capital Target Limited, it initially looked to me like the Fubon Financial Holding Co (2881 TT) announcement of a low-premium Tender Offer at NT$13/share to purchase Jih Sun Financial, which camecomplete with regulator pre-approval, was likely wrapped up as a nice package to get Shinsei and Capital Target out without requiring other minorities to sell.  A couple of days afterwards, Fubon noted that it had not made any contact with either of  Shinsei Bank (8303 JP) or Hong Kong-based Capital Target Limited prior to making the offer, but noted that it had wanted to purchase Jih Sun to raise its market share of Taiwanese stock market turnover (from 5.54% to 9.13% by adding Jih Sun's 3.59%). It noted that it would issue new shares - 60% common shares and 40% preferred shares - in order to finance the acquisition.Yesterday, Jih Sun announced the result of its board consideration of the Offer after having obtained the requisite fairness opinions required by Article 14 of the Regulations Governing Public Tender Offers for Securities of Public Companies.Jih Sun noted that it had not discussed the Tender Offer with Fubon prior to Fubon making its offer, and also noted that the accounting firms which had been engaged to provide fair value opinions found that a fair value per share estimated range was NT$13.89-15.71/share, and when looking at the "market price method", the other accountant had suggested the range NT$9.63-16.93/share against the NT$13 Offer. Several days after the announcement of the Offer, the Financial Supervisory Commission noted in response to legislator questions that the FSC was investigating the nature of the spike in share price and volume before the Tender Offer announcement, noting that the FSC itself and its personnel had kept quiet about the deal since October when they started looking at it. The news around this situation suggests my analysis of who owned Capital Target Limited may have been wrong - that a different originally offshore Chinese person may be (or have been) the controller of Capital Target Limited.This makes things a bit weirder. 

Fubon Financial Offer for Jih Sun Gets Even Weirder

Taiwan

Fubon Financial Holding Co., Ltd. is a financial holding company, formed through the merger of Fubon Insurance, Fubon Securities, Fubon Commercial Bank, and Fubon Life Assurance.

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Fubon Financial Holding Co (2881 TT)

Last Week in Event SPACE: Jardines, Xiaomi, Tilt Renew, Kumho Petro, Kunlun Energy, Takeei/Rever

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Jih Sun Financial Deal Down To The Wire

Fubon deal for Jih Sun comes down to the wire. Extension is possible but there is no word from either of the two big holders. Jih Sun trades at...

Travis Lundy

2021 High Conviction Update - Shinsei Bank Float Squeeze to Mitigate Near-Term

Shinsei Bank has performed dramatically well in the last 11 weeks since the High Conviction Idea. A lot of that has been float compression. Some of...

Travis Lundy

Fubon Financial Deal for Jih Sun Gets TFTC Signoff

Fubon Deal to Acquire Jih Sun Financial gets Taiwan FTC approval. There are a couple of boxes still to tick but tough ones are done. The question...

Travis Lundy

Fubon Financial Offer for Jih Sun Gets Even Weirder

Fubon said they hadn't communicated with the two main holders, but would. Now Jih Sun says accountants say the bid may be light, but Jih Sun puts...

Travis Lundy

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