Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Last week <a href="https://www.smartkarma.com/entities/hitachi-metals-ltd" target="_blank" data-smartkarma-citation="entities:8561:1" rel="noopener">Hitachi Metals (5486 JP)</a> reported decent earnings and strong forecasts against what is probably significantly stale consensus expectations. </li>
<li><em>"The Consortium is not aware of any significant problems with procedures/responses under the Competition Act and will continue to strive to complete these procedures and responses as early as possible."</em></li>
<li>That caused a jump, but that is the same language used in the 30 Nov 2021 release. Yes, I think this gets done, but Reward/Risk is smaller now.</li>
</ul>


Last week Hitachi Metals (5486 JP) reported decent earnings and strong forecasts against what is probably significantly stale consensus expectations. 
"The Consortium is not aware of any significant problems with procedures/responses under the Competition Act and will continue to strive to complete these procedures and responses as early as possible."
That caused a jump, but that is the same language used in the 30 Nov 2021 release. Yes, I think this gets done, but Reward/Risk is smaller now.


Hitachi Metals - Nice Rebound Reduces Forward Reward/Risk Ratio

<ul>
<li>The <a href="https://www.smartkarma.com/entities/hitachi-transport-system-ltd" target="_blank" data-smartkarma-citation="entities:2395:1" rel="noopener">Hitachi Transport System (9086 JP)</a> deal announced last week was a big win for minorities, discussed in <a href="https://www.smartkarma.com/insights/hitachi-transport-system-9086-shareholders-get-the-big-win-in-this-vlbo" target="_blank" data-smartkarma-citation="insights:69131" rel="noopener">Hitachi Transport System (9086) Shareholders Get the BIG Win in This VLBO</a>. </li>
<li>Market ructions and the Hitachi Metals saga have this trading wide. </li>
<li>This deal looks different in terms of approval risk and timing risk than Hitachi Metals and is worth a closer look now.</li>
</ul>


The Hitachi Transport System (9086 JP) deal announced last week was a big win for minorities, discussed in Hitachi Transport System (9086) Shareholders Get the BIG Win in This VLBO. 
Market ructions and the Hitachi Metals saga have this trading wide. 
This deal looks different in terms of approval risk and timing risk than Hitachi Metals and is worth a closer look now.


Hitachi Transport (9086 JP):  Trading Too Wide

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

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<ul>
<li>Hitachi Metals started drifting noticeably below terms from early Nov last year and fell as low as 14% below the ¥2,181 offer price in early March. </li>
<li>Along with relatively strong guidance yesterday the company reaffirmed the commitment of the Bain consortium to the offer despite some delays. </li>
<li>We have no special insight into the actual likelihood of a break here but we do believe downside may be limited even if one occurs.</li>
</ul>


Hitachi Metals started drifting noticeably below terms from early Nov last year and fell as low as 14% below the ¥2,181 offer price in early March. 
Along with relatively strong guidance yesterday the company reaffirmed the commitment of the Bain consortium to the offer despite some delays. 
We have no special insight into the actual likelihood of a break here but we do believe downside may be limited even if one occurs.


Hitachi Metals – Steel Price Recovery Probably Limits Downside Even in the Event of a Break

<ul>
<li>On 24 March, the EGM defeated both company and 3D Investment proposals. That night, a leak in the Nikkei said the company would pursue privatisation measures. Supply side interest. Check. </li>
<li>That same day, Bain signed a "Confirmation Agreement" with lead Toshiba shareholder Effissimo would tender into a Bain Tender Offer. Demand Side interest confirmed. Check. </li>
<li>Now we have a 3D public letter to the Board demanding 3 measures before the AGM. </li>
</ul>


On 24 March, the EGM defeated both company and 3D Investment proposals. That night, a leak in the Nikkei said the company would pursue privatisation measures. Supply side interest. Check. 
That same day, Bain signed a "Confirmation Agreement" with lead Toshiba shareholder Effissimo would tender into a Bain Tender Offer. Demand Side interest confirmed. Check. 
Now we have a 3D public letter to the Board demanding 3 measures before the AGM. 


Toshiba (6502) - 3D Writes Another Letter

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hitachi-metals-ltd" target="_blank" data-smartkarma-citation="entities:8561:1" rel="noopener">Hitachi Metals (5486 JP)</a> is currently awaiting regulatory approval for its takeover by a consortium led by Bain Capital, announced in late April 2021. </li>
<li>The deal was originally expected to see a Tender Offer launched in November 2021, but that was delayed because the bidders lacked some necessary regulatory approvals.</li>
<li>Since then, the stock has sold off. Today it sold off a LOT. Deal break? Market ructions? Someone getting a tap on the shoulder? How far down is the gap?</li>
</ul>



Hitachi Metals (5486 JP) is currently awaiting regulatory approval for its takeover by a consortium led by Bain Capital, announced in late April 2021. 
The deal was originally expected to see a Tender Offer launched in November 2021, but that was delayed because the bidders lacked some necessary regulatory approvals.
Since then, the stock has sold off. Today it sold off a LOT. Deal break? Market ructions? Someone getting a tap on the shoulder? How far down is the gap?


Hitachi Metals (5486) - Where IS Undisturbed?

Japan

Hitachi Metals Ltd. manufactures a wide range of specialty steel and metal products, including industrial machinery, magnetic and electronic materials and parts, and aluminium castings and wheels.  The Company's products are marketed to a variety of users including the automobile, aerospace, nuclear, and computer industries worldwide.  The Company is a subsidiary of Hitachi, Ltd.

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Hitachi Metals (5486 JP)

Hitachi Metals - Nice Rebound Reduces Forward Reward/Risk Ratio

Hitachi Metals (5486) has bounced 4.4% since reporting earnings last week, reducing the "risk spread" to terms by half. The catalyst? A reiteration...

Travis Lundy

Hitachi Transport (9086 JP): Trading Too Wide

Hitachi Transport System is trading quite wide for what appears to be a reasonably generic deal. There are few high market share segments overseas...

Travis Lundy

Hitachi Metals – Steel Price Recovery Probably Limits Downside Even in the Event of a Break

While we have no special insight into the probability of Bain's bid being rejected in our view recoveries in steel company earnings limit downside...

Mio Kato

Toshiba (6502) - 3D Writes Another Letter

Toshiba (6502) has been racking up its "positive newsflow points" in the last several days. This may be the last near-term shoe to fall.

Travis Lundy

Hitachi Metals (5486) - Where IS Undisturbed?

Hitachi Metals (5486) has been awaiting regulatory approval for a couple of months. In December, I expected a Q1 or April approval. But today the...

Travis Lundy

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