Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Shinko Electric Industries / Event-Driven

<ul>
<li>Three years ago I wrote <a href="https://www.smartkarma.com/insights/fujitsu-subsidiary-selldowns-or-buy-ins" target="_blank" data-smartkarma-citation="insights:35032" rel="noopener">Fujitsu Subsidiary Selldowns or Buy-Ins?</a> My choice then was Fujitsu Frontech which was bought out 8 months later. </li>
<li>A Bloomberg article today with quotes from an interview with the CEO of Fujitsu fuelled some movement today. </li>
<li>The "obvious" trade is <a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" data-smartkarma-citation="entities:15066:1" rel="noopener">Shinko Electric Industries (6967 JP)</a> but you have to buy the new dream.</li>
</ul>


Three years ago I wrote Fujitsu Subsidiary Selldowns or Buy-Ins? My choice then was Fujitsu Frontech which was bought out 8 months later. 
A Bloomberg article today with quotes from an interview with the CEO of Fujitsu fuelled some movement today. 
The "obvious" trade is Shinko Electric Industries (6967 JP) but you have to buy the new dream.


Fujitsu (6702) Subsidiary Selldowns To Come

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

With the planned IPO for Kioxia being delayed for at least a few months, we wonder whether this brings Toshiba Tec more into play. As the lone listed subsidiary of Toshiba to not have its fate decided yet, Toshiba Tec is in an interesting position, especially because we consider its portfolio of products and services to be quite an interesting asset when moving into the data age.

With the planned IPO for Kioxia being delayed for at least a few months, we wonder whether this brings Toshiba Tec more into play. As the lone listed subsidiary of Toshiba to not have its fate decided yet, Toshiba Tec is in an interesting position, especially because we consider its portfolio of products and services to be quite an interesting asset when moving into the data age.

Toshiba Tec – Where Is Toshiba Tec Headed?

A bit more than a week ago, NHK reported that <a href="https://www.smartkarma.com/entities/dcm-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13042:1" rel="noopener">Dcm Holdings (3050 JP)</a> would launch a partial Tender Offer on <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a> in October to make Shimachu a subsidiary. That sent shares limit up and then to about ¥3500. I said in <a href="https://www.smartkarma.com/insights/dcm-partial-offer-for-shimachu-coming" target="_blank" data-smartkarma-citation="insights:43444" rel="noopener">DCM Partial Offer for Shimachu Coming?</a> that it would probably need a price of ¥3700-4200 to get done, based on the shareholder structure.Today after the close DCM announced a full Tender Offer for Shimachu at ¥4200/share in order to fully take it private. Now we're talking. This deal makes sense, and as per the analytics, it is not overly expensive for DCM, and it gives them scale in a growing sub-sector of homecenters and home furnishings, and improves the geographical mix. Unlike many full takeover deals in Japan, this has a minimum threshold of 50%, which is what the threshold for a partial tender offer would likely have been. The suggestion here is that they are not completely sure they'd get to 66.7% which would be the level necessary to squeeze out minorities.Much more below the fold.

A bit more than a week ago, NHK reported that Dcm Holdings (3050 JP) would launch a partial Tender Offer on Shimachu Co Ltd (8184 JP) in October to make Shimachu a subsidiary. That sent shares limit up and then to about ¥3500. I said in DCM Partial Offer for Shimachu Coming? that it would probably need a price of ¥3700-4200 to get done, based on the shareholder structure.Today after the close DCM announced a full Tender Offer for Shimachu at ¥4200/share in order to fully take it private. Now we're talking. This deal makes sense, and as per the analytics, it is not overly expensive for DCM, and it gives them scale in a growing sub-sector of homecenters and home furnishings, and improves the geographical mix. Unlike many full takeover deals in Japan, this has a minimum threshold of 50%, which is what the threshold for a partial tender offer would likely have been. The suggestion here is that they are not completely sure they'd get to 66.7% which would be the level necessary to squeeze out minorities.Much more below the fold.

DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.

Our original take on Fujitsu General was that the company was not fulfilling its potential due to a lack of scale but was excessively cheap and could attract a nice premium with the right strategic buyer for Fujitsu to sell to. Since that early December 2019 take, the stock price saw a modest 18% rally into the end of the year, a 40% collapse as COVID fears peaked and a furious 92% rally as markets rebounded and talk of higher demand for air purification systems started. In the meantime, Fujitsu continues with its rather light TOB for Fujitsu Frontech so we refresh our view on Fujitsu General below.

Our original take on Fujitsu General was that the company was not fulfilling its potential due to a lack of scale but was excessively cheap and could attract a nice premium with the right strategic buyer for Fujitsu to sell to. Since that early December 2019 take, the stock price saw a modest 18% rally into the end of the year, a 40% collapse as COVID fears peaked and a furious 92% rally as markets rebounded and talk of higher demand for air purification systems started. In the meantime, Fujitsu continues with its rather light TOB for Fujitsu Frontech so we refresh our view on Fujitsu General below.

Fujitsu General – 36% Above December Levels, What’s the Trade Now?

In our previous note <a href="https://www.smartkarma.com/insights/fujitsu-frontech-why-steal-an-atm-when-you-can-steal-the-atm-maker" target="_blank" rel="noopener">Fujitsu Frontech – Why Steal an ATM When You Can Steal the ATM Maker</a> we explained our rationale for why the premium was too light. In this note we examine developments for peer valuations in the time since then and comment on Fujitsu’s tender period extension.

In our previous note Fujitsu Frontech – Why Steal an ATM When You Can Steal the ATM Maker we explained our rationale for why the premium was too light. In this note we examine developments for peer valuations in the time since then and comment on Fujitsu’s tender period extension.

Fujitsu Frontech – An Updated Look at the Valuation and Tender Extension

Japan

Fujitsu Frontech Ltd mainly produces electronic equipment, display equipment, and machinery parts. The Company's products include minicomputers, Automated Teller Machine (ATM), and Point-Of-Sale (POS). Fujitsu Frontech diversifies by pressed metal molds and digital display equipment.

Fujitsu Frontech (6945 JP)

Fujitsu (6702) Subsidiary Selldowns To Come

A Bloomberg article on Fujitsu selling non-core subs was out today. Nothing new, but there is some nuance. I present a small review, and conclude...

Travis Lundy

Toshiba Tec – Where Is Toshiba Tec Headed?

With the planned IPO for Kioxia being delayed for at least a few months, we wonder whether this brings Toshiba Tec more into play. As the lone...

Mio Kato

DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.

Today after the close Dcm Holdings (3050 JP) a

Travis Lundy

Fujitsu General – 36% Above December Levels, What’s the Trade Now?

Our original take on Fujitsu General was that the company was not fulfilling its potential due to a lack of scale but was excessively cheap and...

Mio Kato

Fujitsu Frontech – An Updated Look at the Valuation and Tender Extension

In our previous note Fujitsu Frontech – Why Steal an ATM When You Can Steal the ATM Maker we explained our rationale for why the premium was too...

Mio Kato