Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven


For the month of September, 9 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$14bn.



Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow-up discussions, or simply click on the insight link(s) below the name.







New Deals


Industry


Size (US$bn)


Type


Premium




Australia




Ausnet Services (AST AU) 
Transmission
7.0
Scheme
31%



AusNet Services (AST AU) Opens Its Books to Brookfield
AusNet Services (AST AU): Spurned APA Trumps Brookfield's Proposal
AusNet (AST AU): APA Elevates Tussle With Brookfield And Taps Takeover Panel




Ale Property (LEP AU) 
Pub properties
0.8
Scheme
N/A


ALE-Charter Hall: A Post-Lockdown Bet on Australian Pubs



Smartgroup Corp (SIQ AU) 
Employee services
1.0
Scheme
31.7%


Smartgroup (SIQ AU): Indicative Offer From TPG/Potential Capital/Aware Super



Japan




Maxvalu Nishinihon (8287 JP) / Fuji Co Ltd (8278 JP) 
Supermarkets
1.6
Merger
N/A


Fuji (8278) &amp; Maxvalu Nishinihon (8287): Aeon Family Supermarket Integration



Nippo Corp (1881 JP) 
Contractor
2.0
Tender Offer
13.8%



ENEOS To Steamroll Nippo (1881 JP) Minorities
NIPPO (1881 JP) Gets Some Cowbell - It Probably Needs More




Shinsei Bank (8303 JP) 
Financial
1.0
Hostile Offer
38.9%



SBI (8473) Launches a HOSTILE Tender Offer on Shinsei Bank (8303)!
Shinsei Bank - Valuations
Shinsei Looks To A Poison Pill, But Probably Not Really
Shinsei To Launch a Poison Pill; SBI Plays Coy, So We Wait SBI &amp; Shinsei Talking Past Each Other  




Malaysia




Scientex Bhd (SCI MK) 
Real estate
0.1
VTO
12.97%


Scientex - Daibochi: Unconditional Voluntary Take-Over Offer



Singapore








Roxy Pacific Holdings (ROXY SP) 
Real estate
0.3
Offer
19.8%


Roxy-Pacific (ROXY SP): Pre-Conditional Offer Led By Founder



US




iClick Interactive Asia Group (ICLK US) 
Online marketer
0.6
Merger
19%


IClick (ICLK US): PAG &amp; Oasis Shake The Trees


Source: Smartkarma Insights






The average premium for the new deals announced (or first discussed) in September was ~24%, with a year-to-date average of ~32% (121 deals &amp; total deal size of US$249bn).
This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively.



Offer Premium Summary




     




2019


2020


2021 YTD



Australia
33.0%
32.4%
34.9%


Hong Kong
25.2%
34.7%
33.9%


Japan
44.0%
35.2%
28.4%


ROW
29.1%
24.2%
33.1%


Average
31.5%
31.1%
32.4%



Source: Smartkarma Insights








Summary of News in September of Arb Situations On Smartkarma's Radar


(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation)






Australia


Comments (with links to announcements &amp; insights)




1300 Smiles Ltd (ONT AU) 

No September update




5G Networks Ltd/Australia (5GN AU) / Webcentral (WCG AU) 

No September update




Afterpay Touch (APT AU) 

No September update




Australian Pharmaceutical Industries (API AU) 

17-Sep:  Aussie Pharma (API AU): Wesfarmer's Sweetened (Yet Indicative) Offer
27-Sep: Aussie Pharma (API AU): Sigma's Rival Bid (Just) Edges Wesfarmers
Sigma Healthcare (SIG AU)'s corporate affairs manager said due diligence can commence immediately. As API indicated that Sigma's NBIO was capable of being superior, it opened up access. So much for exclusive DD.




Empired Ltd (EPD AU) 

25-Sep: Empired (EPD AU): Scheme Booklet Out. Meeting On The 25 October




Hansen Technologies (HSN AU) 

5-Sep: And it's a no deal - BGH withdraws its proposal for Hansen Technologies (HSN AU).
 
"Having conducted extensive due diligence inquiries in relation to the company, BGH has not notified Hansen of any issue which Hansen considers material in the context of Hansen’s current operations and strategy. BGH Capital has advised the company that it continues to see Hansen as a highly effective organisation with an outstanding management team and strong prospects."




iCar Asia Ltd (ICQ AU) 

9-Sep: Carsome has requested an extension of the exclusivity period under the process deed with iCar Asia Ltd (ICQ AU), such that the exclusivity period is extended initially to the 30 September, then to automatically to the 30 October provided Casome has completed DD by the 30 Sept. Ithe board is currently minded to agree to this request.




Huon Aquaculture (HUO AU) 

23-Sep: Huon Aquaculture (HUO AU)'s Scheme Booklet is out. The Scheme Meeting will take place on the 29 October, with expected implementation on the 8 November.  28-Sep: The effective date under JBS' Offer has been changed to the 3 November from 4 November previously. 




Iress Ltd (IRE AU) 

16-Sep: Another deal failure. EGT and Iress Ltd (IRE AU) have been unable to agree to a transaction. 




Japara Healthcare (JHC AU) 

18-Sep: Japara Healthcare (JHC AU): 21st October Scheme Meeting




Mainstream Group Holdings Ltd (MAI AU) 
No September update



Milton Corp Ltd (MLT AU) 

3-Sep: Marvelous Milton Merger Mapping Mabbled: Ratio Done, Now For The Hard Part
17-Sep: Marvelous Milton and WHSP (SOL AU) Index Event Prepositioning Analysis




Oil Search Ltd (OSH AU) 

10-Sep: Oil Search/Santos: PNG a Potential Party Pooper




Rhipe Ltd (RHP AU) 

9-Sep: Rhipe (RHP AU): Done Deal As Scheme Booklet Dispatched




Spark Infrastructure (SKI AU) 

No September update




Sydney Airport (SYD AU) 

13-Sep:  Sydney Airport (SYD AU): Consortium Ups Bid And Granted Due Diligence




Think Childcare (TNK AU) 

29-Sep: Shareholders approved the Scheme




Youfoodz Holdings (YFZ AU) 

2-Sep: Youfoodz Holdings (YFZ AU) announced that the Federal court of Australia has approved the convening of Scheme Meeting and despatch of Scheme Booklet. The Scheme Meeting will be conducted as a virtual meeting (video conference) at 10.00 am (Sydney time) on Friday, 8th October 2021.










Hong Kong


Comments (with links to announcements &amp; insights)




Beijing Capital Land Ltd H (2868 HK) 

23-Sep: Beijing Capital Land Ltd H (2868 HK) H shareholders overwhelmingly approve the merger. The last day of trading in shares is today - the 24th.  Payment is expected on or before the 8 November. 




China Youzan Limited (8083 HK) 

No September update




Golden Throat Holdings (6896 HK) 

1-Sep: As expected, Golden Throat Holdings (6896 HK) has pushed out the dispatch date for the Scheme Dochemnt to the 19 October (on or before). 



Kerry Logistics Network (636 HK)

16-Sep: Partial closes for Kerry Logistics Network (636 HK) - 89.6% pro-ration. Not bad. 




Nature Home Holding Company (2083 HK) 

14-Sep: Nature Home (2083 HK): Scheme Doc Out. Court Meeting On 6 Oct. Evergrande Overhang
28-Sep: Nature Home (2083 HK): Risk Aversity Sees Spread Blow Out




Suchuang Gas Corp (1430 HK) 

27-Sep: Shares suspended for some reason.




Soho China Ltd (410 HK) 

10-Sep: Another deal break.










India


Comments 




Adani Power (ADANI IN) 

No September update




Mphasis Ltd (MPHL IN) 

No September update










Japan


Comments (with links to announcements &amp; insights)




GCA Corporation (2174 JP) 

9-Sep: Houlihan Lokey Bumps the GCA Offer - A Whopping 1.3%!!!
28-Sep: The Houlihan Lokey (HLI US) takeout of GCA Corporation (2174 JP) is on its way. The Tender Offer Result was just announced and HLI has 89.58%. That means there will be an EGM and squeezeout. 




Hitachi Metals (5486 JP) 

No September update




Sakai Ovex (3408 JP) 
9-Sep: The Sakai Ovex (3408 JP) Tender Offer has been completed successfully. 
The bidders did not get as much as I thought they might, but the top owner has 77.27%.  That means the squeezeout will go through an EGM and this will be delisted maybe a month after the EGM.










Malaysia


Comments 




Ijm Plantations (IJMP MK) 
No September update



MMC Corp Bhd (MMC MK) 
22-Sep: MMC Corp (MMC MK): This Is A Buy








New Zealand


Comments 




Z Energy Ltd (ZEL NZ) 
27-Sep: Z Energy Ltd (ZEL NZ) announced that the original four-week exclusivity period with Ampol has been extended by a further two weeks.









Taiwan


Comments (with links to insights &amp; announcements)




China Development Financial (2883 TT) / China Life Insurance (2823 TT)

No September update












(Mostly) Asia M&A: September 2021 Roundup

Travis Lundy

<p>In <a href="https://www.smartkarma.com/insights/houlihan-lokey-to-take-out-gca-light-but-likely-done" target="_blank" data-smartkarma-citation="insights:55490" rel="noopener">Houlihan Lokey To Take Out GCA :  Light But Likely Done</a> I suggested that the price for the investment bank/consultant was light, but that the tender offer at ¥1,380/share would most likely get done. </p><div class="content-highlight"><p>Today, Houlihan Lokey <a href="https://ssl4.eir-parts.net/doc/2174/ir_material3/168782/00.pdf" target="_blank" rel="noopener">bumped the Tender Offer Price</a>. </p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/851/original/Screenshot+2021-09-09+at+2.46.44+PM.png?1631170030" class="editor-image img-responsive" data-smartkarma-image-id="228851"></figure></section><div class="content-highlight"><p>By ¥18/share - 1.30435% - from ¥1,380/share to ¥1,398/share.</p></div><p>Don't spend it all in one place ladies and gents.</p><p>It was not clear that Houlihan Lokey <em>needed</em> to bump. The price hadn't cleared the Tender Offer Price since announcement. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/865/original/Screenshot+2021-09-09+at+3.05.10+PM.png?1631171145" class="editor-image img-responsive" data-smartkarma-image-id="228865"></figure></section><p></p><p>More below the fold.</p>

In Houlihan Lokey To Take Out GCA :  Light But Likely Done I suggested that the price for the investment bank/consultant was light, but that the tender offer at ¥1,380/share would most likely get done. Today, Houlihan Lokey bumped the Tender Offer Price. By ¥18/share - 1.30435% - from ¥1,380/share to ¥1,398/share.Don't spend it all in one place ladies and gents.It was not clear that Houlihan Lokey needed to bump. The price hadn't cleared the Tender Offer Price since announcement. More below the fold.

Houlihan Lokey Bumps the GCA Offer - A Whopping 1.3%!!!

Last Week in Event SPACE:  Afterpay, SPH, ESR Cayman, Prosus/Naspers, Kingsoft, Milton, SOHO China

<p><a href="https://www.smartkarma.com/entities/gca-savvian-corp" target="_blank" data-smartkarma-citation="entities:3841:1" rel="noopener">Gca Savvian (2174 JP)</a> was a business formed in 2004 and listed in Tokyo on the MOTHERS exchange in October 2006. In March 2008 it merged with US M&amp;A boutique, and remained listed in Tokyo. In July 2016, the company absorbed Europe-based Altium Corporate Finance Group and in April 2020 acquired Stella EOC in Northern Europe. </p><p>Over time, the business has grown so Japan is now but a third of revenues, and in the past 12 months, the firm has booked JPY 34.2bn in revenues. The company has grown and grown and while 2020 was a trying year, 2021 is bouncing back. Re-booming in fact. </p><p>Today, the company reported <a href="https://ssl4.eir-parts.net/doc/2174/ir_material3/166089/00.pdf" target="_blank" rel="noopener">Q2</a> and <a href="https://ssl4.eir-parts.net/doc/2174/ir_material3/166088/00.pdf" target="_blank" rel="noopener">H1 results</a>, and an <a href="https://ssl4.eir-parts.net/doc/2174/ir_material3/166091/00.pdf" target="_blank" rel="noopener">increase in forecast</a> from the last time a forecast was released (just two months ago on 2 June). Full year revenues are expected 14.7% higher than originally and nearly double last year. Full year OP is expected 17% higher than the previous forecast and more than double last year. Net Profit is forecast at 17.2% higher than the last forecast and 117% higher than last year, all on a non-GAAP basis. On an IFRS basis, all those gains are a percent or two higher.</p><p>The other news was that US niche investment bank <a href="https://www.smartkarma.com/entities/houlihan-lokey-inc" target="_blank" data-smartkarma-citation="entities:1744:1" rel="noopener">Houlihan Lokey (HLI US)</a> announced a <a href="https://ssl4.eir-parts.net/doc/2174/ir_material3/166093/00.pdf" target="_blank" rel="noopener">deal</a> to take GCA private in a Tender Offer - a friendly deal <a href="https://ssl4.eir-parts.net/doc/2174/ir_material3/166092/00.pdf" target="_blank" rel="noopener">recommended</a> by management - at ¥1380/share. </p><p>This is at a decent premium to recent price, but at ¥1380/share it is just ¥1000/share after one converts the options and deducts the net cash (cash minus other current liabilities, which are far larger than debt). That is 12x 2021 company forecast EPS. That may not be that generous if there are synergies to be had. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/221/948/original/Screenshot+2021-08-03+at+7.23.23+PM.png?1627989828" class="editor-image img-responsive" data-smartkarma-image-id="221948"></figure><p></p></section><p>Of course, the <em>investment</em> banking and advisory business is not unlike the advertising business (and I am sure many of the readers here will agree from their own perspective. There are not a lot of hard assets in investment banking and as the principals will tell you, the best assets walk out the door at the end of every day. So assigning earnings multiples is <em>something</em> of a hit and miss situation. </p><p>That said, concluding that a growing business (with a low cost base, high variable cost ratio, and minimal capital needs) in a growing market is worth only 12x earnings, on an un-levered basis, including control premium strikes me as aggressive, and the bump described on p9 of the <a href="https://ssl4.eir-parts.net/doc/2174/ir_material3/166092/00.pdf" target="_blank" rel="noopener">Opinion</a> tells you that Houlihan Lokey is looking for a deal, and GCA was too - they asked for a bump given upgraded forecasts (which themselves are a bit light for H2) and HLI paid 2.5x the marginal improvement per share. The other issue is that we don't know what deals that a purchasing investment bank could make with its future employees which could allow the purchasing employees to be favourable to such an acquisition. Critics could suggest we are closer to the top of the cycle than the bottom for investment bank earnings, but downturns create their own opportunities when you are not a capital provider, and HLI and GCA have financial restructuring teams.</p><p>More below the fold.</p>

Gca Savvian (2174 JP) was a business formed in 2004 and listed in Tokyo on the MOTHERS exchange in October 2006. In March 2008 it merged with US M&amp;A boutique, and remained listed in Tokyo. In July 2016, the company absorbed Europe-based Altium Corporate Finance Group and in April 2020 acquired Stella EOC in Northern Europe. Over time, the business has grown so Japan is now but a third of revenues, and in the past 12 months, the firm has booked JPY 34.2bn in revenues. The company has grown and grown and while 2020 was a trying year, 2021 is bouncing back. Re-booming in fact. Today, the company reported Q2 and H1 results, and an increase in forecast from the last time a forecast was released (just two months ago on 2 June). Full year revenues are expected 14.7% higher than originally and nearly double last year. Full year OP is expected 17% higher than the previous forecast and more than double last year. Net Profit is forecast at 17.2% higher than the last forecast and 117% higher than last year, all on a non-GAAP basis. On an IFRS basis, all those gains are a percent or two higher.The other news was that US niche investment bank Houlihan Lokey (HLI US) announced a deal to take GCA private in a Tender Offer - a friendly deal recommended by management - at ¥1380/share. This is at a decent premium to recent price, but at ¥1380/share it is just ¥1000/share after one converts the options and deducts the net cash (cash minus other current liabilities, which are far larger than debt). That is 12x 2021 company forecast EPS. That may not be that generous if there are synergies to be had. Of course, the investment banking and advisory business is not unlike the advertising business (and I am sure many of the readers here will agree from their own perspective. There are not a lot of hard assets in investment banking and as the principals will tell you, the best assets walk out the door at the end of every day. So assigning earnings multiples is something of a hit and miss situation. That said, concluding that a growing business (with a low cost base, high variable cost ratio, and minimal capital needs) in a growing market is worth only 12x earnings, on an un-levered basis, including control premium strikes me as aggressive, and the bump described on p9 of the Opinion tells you that Houlihan Lokey is looking for a deal, and GCA was too - they asked for a bump given upgraded forecasts (which themselves are a bit light for H2) and HLI paid 2.5x the marginal improvement per share. The other issue is that we don't know what deals that a purchasing investment bank could make with its future employees which could allow the purchasing employees to be favourable to such an acquisition. Critics could suggest we are closer to the top of the cycle than the bottom for investment bank earnings, but downturns create their own opportunities when you are not a capital provider, and HLI and GCA have financial restructuring teams.More below the fold.

Houlihan Lokey To Take Out GCA :  Light But Likely Done

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>And just like that, the S&amp;P 500, Nasdaq, and the Dow have reclaimed new highs despite ongoing coronavirus concerns, as a buy the dip strategy has paid off. Primarily responsible for new highs in these indexes is Technology (esp. software and semis/semi suppliers) and FAANG stocks. While these areas all remain bullish, we still have some reservations due to the massive disparity in performance between them and the Materials (<strong>XLB, XME</strong>) and Energy (<strong>RYE</strong>) Sectors, and also small-caps (<strong>IWM</strong>) which continue to hit new RS lows. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Financials: Homebuilding, Large-Cap, Casinos &amp; Gaming, Small-Cap, Asset Management &amp; Custody Banks, Large-Cap, and Investment Banking &amp; Brokerage, Small-Cap.</p>

And just like that, the S&amp;P 500, Nasdaq, and the Dow have reclaimed new highs despite ongoing coronavirus concerns, as a buy the dip strategy has paid off. Primarily responsible for new highs in these indexes is Technology (esp. software and semis/semi suppliers) and FAANG stocks. While these areas all remain bullish, we still have some reservations due to the massive disparity in performance between them and the Materials (XLB, XME) and Energy (RYE) Sectors, and also small-caps (IWM) which continue to hit new RS lows. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Financials: Homebuilding, Large-Cap, Casinos &amp; Gaming, Small-Cap, Asset Management &amp; Custody Banks, Large-Cap, and Investment Banking &amp; Brokerage, Small-Cap.

U.S. Equities: Still Bullish, With Reservations

United States

Houlihan Lokey, Inc. operates as an investment bank. The Company offers mergers and acquisitions, financial restructuring, capital markets, strategic consulting, and financial advisory services. Houlihan Lokey serves customers worldwide.

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Houlihan Lokey (HLI US)

(Mostly) Asia M&A: September 2021 Roundup

For the month of September, 9 new deals were discussed on Smartkarma with an announced deal size of ~US$14bn. The average premium in September was...

David Blennerhassett

Houlihan Lokey Bumps the GCA Offer - A Whopping 1.3%!!!

Houlihan Lokey bumped the offer for GCA even though not a share had traded above terms to date. This is a last-minute ask by GCA agreed by HL. I...

Travis Lundy

Last Week in Event SPACE: Afterpay, SPH, ESR Cayman, Prosus/Naspers, Kingsoft, Milton, SOHO China

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

Houlihan Lokey To Take Out GCA : Light But Likely Done

Large US-based boutique IB Houlihan Lokey has offered to buy smaller Japan-listed but global boutique IB GCA Global. 57% is owned by current+former...

Travis Lundy

U.S. Equities: Still Bullish, With Reservations

And just like that, the S&P 500, Nasdaq, and the Dow have reclaimed new highs despite ongoing coronavirus concerns, as a buy the dip strategy...

Vermilion Research

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