Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

In early November, <a href="https://www.smartkarma.com/entities/japan-asia-group-ltd" target="_blank" data-smartkarma-citation="entities:12428:1" rel="noopener">Japan Asia (3751 JP)</a> was trading at roughly ¥340-350/share. The Chairman, who has a history of failed takeovers, decided an MBO of the company was appropriate. He tied up with Carlyle to execute an odd deal whereby Carlyle would be the buyer, but the company would sell 70-80% of its two trophy assets for cash to Carlyle, and would exit, leaving the chairman long the remaining money-losing SurviveCo asset, stakes in the sold assets, and a big pile of cash.  He managed to convince the directors that a value of ¥600/share was reasonable, and recommendable to investors. Discussed in <a href="https://www.smartkarma.com/insights/japan-asia-3751-jp-management-buyout-should-there-be-a-bump" target="_blank" data-smartkarma-citation="insights:44928" rel="noopener">Japan Asia (3751 JP) Management Buyout: Should There Be a BUMP?</a> Well-known Japanese activist Yoshiaki Murakami took issue with this, bought 20% of the shares outstanding, then proposed his own takeover at ¥840/share. Discussed in <a href="https://www.smartkarma.com/insights/murakami-fund-s-tender-for-jag-3751-may-be-rangebound-near-term" target="_blank" data-smartkarma-citation="insights:47158" rel="noopener">Murakami Fund's Tender for JAG (3751):  May Be Rangebound Near-Term</a>. The company did not engage and Carlyle did not respond, until he was on the verge of launching, and then the chairman and Carlyle rejigged their deal to offer ¥1200/share. Funnily enough, this too was recommended by JAG directors. Discussed in <a href="https://www.smartkarma.com/insights/japan-asia-group-3751-murakami-wins-the-mother-of-all-bumps-100" target="_blank" data-smartkarma-citation="insights:47437" rel="noopener">Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100%</a>. Murakami-san objected and requested due diligence to be able to fully formulate the plan to raise Medium-Long-Term Corporate Value and the chance to meet with employees. The Company rejected the due diligence request saying that he did not have a plan to raise Medium-Long-Term Corporate Value and rejected the meeting with employees. Murakami-san responded by launching a Tender Offer at ¥1210/share, ending 22 March 2021. The shares have traded higher since. The MBO conducted by the Chairman and Carlyle failed. Discussed in <a href="https://www.smartkarma.com/insights/overbid-jag-special-committee-plays-stupid-so-murakami-plays-hardball" target="_blank" data-smartkarma-citation="insights:47802" rel="noopener">Overbid: JAG Special Committee Plays Stupid so Murakami Plays Hardball</a>. Somehow, the directors figured out that the Chairman's plan at ¥1200/share was great and recommendable but Murakami-san's plan at ¥1210/share was awful and destined to bring the company to ruin. They opposed his TOB. Discussed in <a href="https://www.smartkarma.com/insights/japan-asia-group-mbo-fails-now-jag-against-murakami-s-higher-bid" target="_blank" data-smartkarma-citation="insights:48360" rel="noopener">Japan Asia Group MBO Fails, Now JAG Against Murakami's Higher Bid</a>. <section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/605/original/Screenshot+2021-03-01+at+5.26.07+PM.png?1614598916" class="editor-image img-responsive" data-smartkarma-image-id="191605"></figure></section></section>The Company has now decided that it wants to improve value for all shareholders. Today, it released a Notice Regarding Measures for Improving Corporate Value and Returning Shareholders (<a href="https://www.japanasiagroup.jp/wordpress/wp-content/uploads/2021-3-1_1.pdf" target="_blank" rel="noopener">Japanese only</a>) and in it, the Board proposes to...<ol>
<li>Have a Management Plan for moving forward, including the concept of a "Second Founding" of the company.</li>
<li>Pay a Special Dividend of ¥300/share</li>
<li>Sell large portions of the Two Major Sellable Assets to a "New Partner"</li>
<li>Have a policy regarding implementation of significant returns to shareholders. </li>
</ol><div class="content-highlight">
This plan is effectively quite similar to what JAG's Board accused Murakami-san of planning to do.
It is designed to obstruct the Murakami Tender Offer, and it will likely succeed in doing so.
I could not exclude the possibility of a Bull Dog Sauce situation here.
</div>Much more below the fold.

In early November, Japan Asia (3751 JP) was trading at roughly ¥340-350/share. The Chairman, who has a history of failed takeovers, decided an MBO of the company was appropriate. He tied up with Carlyle to execute an odd deal whereby Carlyle would be the buyer, but the company would sell 70-80% of its two trophy assets for cash to Carlyle, and would exit, leaving the chairman long the remaining money-losing SurviveCo asset, stakes in the sold assets, and a big pile of cash.  He managed to convince the directors that a value of ¥600/share was reasonable, and recommendable to investors. Discussed in Japan Asia (3751 JP) Management Buyout: Should There Be a BUMP? Well-known Japanese activist Yoshiaki Murakami took issue with this, bought 20% of the shares outstanding, then proposed his own takeover at ¥840/share. Discussed in Murakami Fund's Tender for JAG (3751):  May Be Rangebound Near-Term. The company did not engage and Carlyle did not respond, until he was on the verge of launching, and then the chairman and Carlyle rejigged their deal to offer ¥1200/share. Funnily enough, this too was recommended by JAG directors. Discussed in Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100%. Murakami-san objected and requested due diligence to be able to fully formulate the plan to raise Medium-Long-Term Corporate Value and the chance to meet with employees. The Company rejected the due diligence request saying that he did not have a plan to raise Medium-Long-Term Corporate Value and rejected the meeting with employees. Murakami-san responded by launching a Tender Offer at ¥1210/share, ending 22 March 2021. The shares have traded higher since. The MBO conducted by the Chairman and Carlyle failed. Discussed in Overbid: JAG Special Committee Plays Stupid so Murakami Plays Hardball. Somehow, the directors figured out that the Chairman's plan at ¥1200/share was great and recommendable but Murakami-san's plan at ¥1210/share was awful and destined to bring the company to ruin. They opposed his TOB. Discussed in Japan Asia Group MBO Fails, Now JAG Against Murakami's Higher Bid. The Company has now decided that it wants to improve value for all shareholders. Today, it released a Notice Regarding Measures for Improving Corporate Value and Returning Shareholders (Japanese only) and in it, the Board proposes to...
Have a Management Plan for moving forward, including the concept of a "Second Founding" of the company.
Pay a Special Dividend of ¥300/share
Sell large portions of the Two Major Sellable Assets to a "New Partner"
Have a policy regarding implementation of significant returns to shareholders. 

This plan is effectively quite similar to what JAG's Board accused Murakami-san of planning to do.
It is designed to obstruct the Murakami Tender Offer, and it will likely succeed in doing so.
I could not exclude the possibility of a Bull Dog Sauce situation here.
Much more below the fold.

Japan Asia Group (3751) : Defense Against Hostile TOB Is Bad News

David Blennerhassett

Event-Driven


For the month of February, 20 new deals were discussed on Smartkarma with an overall announced deal size of ~US$31bn.


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




Vocus Communications (VOC AU) 
Telcos
2.6
Scheme
25.6%


Vocus Back In Focus As MIRA Takes A Turn








Hong Kong




Beijing Digital Telecom (6188 HK) 
Mobile devices
0.2
Possible MGO
7.0%


Beijing Digital (6188 HK): Possible Offer From Zhuhai SASAC



Kerry Logistics Network (636 HK) 
Logistics
2.2
Partial
11.22%


Kerry Logistics (636 HK): SF Holdings' Pre-Conditional Partial Offer



Sichuan Languang Justbon (2606 HK) 
Property services
0.7
MOU/Poss Offer
30%


Languang Justbon (2606 HK): Potential General Offer From Country Gardens






India








National Aluminium (NACL IN) 
Aluminium
0.1
Buyback Tender
30%


NALCO India Buyback Tender Offer: A Small Arb








Japan




Being Co Ltd (4734 JP) 
Software
0.1
Tender Offer
34.7%


MBO for Being Co (4734 JP): Tender Offer Is a Done Deal



Dynac Holdings Corporation (2675 JP) 
Restaurants
0.1
Tender Offer
11.5%


Dynac Corp (2675 JP) Tender Offer: Looks like a Done Deal



Japan Asia (3751 JP) 
Infrastructure
0.3
Tender Offer
1%


Japan Asia Group MBO Fails, Now JAG Against Murakami's Higher Bid 



Maeda Corp (1824 JP) &amp; Maeda Road Construction Co (1883 JP) &amp; Maeda Seisakusho (6281 JP) 
Construction
4.0
Merger
14% for Maeda Road


Maeda Corp/Road/Seisakusho - 3-Way Merger 1 Year After Hostile Takeover 



N Field Co Ltd (6077 JP) 
Nursing care
0.2
Tender Offer
42.2%


N Field (6077) Take-Private by Unison Capital - Fast Growth Long Runway Asset Going Not So Rich



Sakai Ovex (3408 JP) 
Textiles
0.2
Tender Offer
31.7%


Sakai Ovex MBO - Wrong Price (And the Bidder Knows It)



Sanken Electric (6707 JP) 
Semis
0.2
Partial Tender
17.1%


Effissimo Launches Unsolicited/Hostile Partial Tender On Sanken Electric



Tsukui Corp (2398 JP) 
Nursing care
0.5
Tender Offer
51.7%


Tsukui Holdings (2398) - Another CHEAP Japan Nursing Care Take-Private Deal



Unimat Retirement Community (9707 JP) 

Nursing care
0.1
Tender Offer
28.4%


MBO for Unimat (9707 JP): Deserves a Bump!


 



Europe








Aggreko PLC (AGK LN) 
Energy
3.2
Offer
39%


Aggreko: £2bn Potential Bid from PE Consortium



Arrow Global (ARW LN) 
Debt purchaser
0.8
Offer
36.2%


Arrow Global - TDR Capital: Preliminary Conditional Proposal



ASTM SpA (AT IM) 
Infrastructure
4.0
Offer
28.8%


ASTM SpA - Nuova Argo Finanziaria Takeout Offer, Trading Tight



Dialog Semiconductor (DLG GR) 
Semi
6.0
Offer
20.3%


Dialog Semiconductor - Renesas Electronics Recommended Cash Offer



Signature Aviation (SIG LN) 
Aviation services
4.7
Scheme
53%


Signature Aviation - PE Consortium Agreed Offer








US




Hollysys Automation Technolo (HOLI US) 
Automation
1.0
Offer
36.7%


Hollysys (HOLI US): Machine Earning


Source: Smartkarma Insights





The above does not include the possible deal for Brilliance China Automotive (1114 HK) (Brilliance China (1114 HK): Grilling Kidneys). 

The average premium for the new deals announced (or first discussed) in February was ~27.5%, with a year-to-date average of ~31%. This compares to the average premium for all deals in 2020 and 2019 of 31% and 31.5% respectively. 




Summary of News in February 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. Where a new insight was written on these names in July, I've included a link, in bold, to that insight in italics.)






Australia


Comments (with links to announcements &amp; insights)




3P Learning (3PL AU) 

22-Feb: 1H21 results




amaysim Australia (AYS AU) 

1-Feb: WAM Capital Ltd (WAM AU) Offer for amaysim Australia (AYS AU) is free of all defeating conditions. Here is the Bidder's Statement. Offer closes on the 30 March - unless extended. 




Asaleo Care Ltd (AHY AU) 

18-Feb: Asaleo (ASX: AHY): Essity's Revised Offer




Bingo Industries (BIN AU) 

22-Feb: 1H21 results




Coca Cola Amatil (CCL AU) 

16-Feb: Coca Cola Amatil: CCEP's Best &amp; Final Offer
17-Feb: Coca-Cola Amatil Takeover Offer Raised 5.9%, Seems Like a Done Deal




Think Childcare (TNK AU) 

20-Jan: Think Childcare (TNK AU): Bigger Bid by Busy Bees




Vitalharvest Freehold Trust (VTH AU) 

26-Feb: Non-binding Offer from ROC of A$1.08/share by way of a Scheme.




WPP AUNZ (WPP AU) 

25-Feb: FY20 results










Hong Kong


Comments (with links to announcements &amp; insights)




Beijing Jingneng Clean Energy (579 HK) 

22-Feb: Beijing Jingneng (579 HK): Low Voter Turn-Out Sees Spread Widening




Car Inc (699 HK) 

18-Feb: Car Inc (699 HK)'s Offer unconditional in all respects. Offeror (MBK) holds 52.11%. Offer closes on the 4 March.




China Logistics Property Holdings (1589 HK) 

No February update




China Machinery Engineering (1829 HK) 

3-Feb: Despatch of Composite Doc pushed out to 20 Jan 2022.




HKC Holdings (190 HK) 

5-Feb: Despatch of Scheme Doc pushed out to 30 April this year.




Huifu Payment Limited (1806 HK) 

19-Feb: Shareholders approved the Scheme at Huifu Payment Limited (1806 HK)'s Scheme Meeting. Cheques to be despatched on or before 8 April.




I.T Ltd (999 HK) 

19-Feb: Court to convene a meeting on the 4 March.




New Century REIT (1275 HK) 

17-Feb: Circular for New Century REIT (1275 HK) has been delayed until the 19 March - on or before. 




Polytec Asset Holdings (208 HK) 

11-Feb: As expected, Polytec Asset Holdings (208 HK) has extended the despatch of the Scheme Doc to 16 April.




Rivera Holdings (281 HK) 

5-Feb: Rivera Holdings (281 HK) Scheme Doc pushed way out to 7 June as the High Court has directed that the hearing of the originating summons for an order to issue its directions for convening the Court Meeting will only be held on 28 May 2021




SHK Hong Kong Industries (666 HK) 

11-Feb: SHK (666 HK): Scheme Doc Out, IFA Says Fair




China Traditional Chinese Medicine (570 HK) 

No February update




Zhejiang New Century Hotel Management Group (1158 HK) 

5-Feb: The pre-conditions for Zhejiang New Century Hotel Management Group (1158 HK) have been satisfied. Composite Doc to be despatched on ore before the 31 March, about a week earlier than my prior estimate. 




Zhuhai Holdings Investment (908 HK) 

11-Feb: As expected, the despatch of the Scheme Doc for Zhuhai Holdings Investment (908 HK) has been pushed back to the 21 April.










India


Comments (with links to insights)




Allcargo Logistics (AGLL IN) 

No February update




Engineers India (ENGR IN) 

No February update




INEOS Styrolution India Limited (INEOS IN) 

No February update




Vedanta Ltd (VEDL IN) 

19-Feb: Vedanta Soars Beyond Indicative Open Offer Level. Not Expensive










Japan


Comments (with links to announcements &amp; insights)




Cocokara Fine (3098 JP) 
2-Feb: Cocokara/​MatsuKiyo Deal Finally Coming?




Honshu Chemical Industry (4115 JP) 

14-Feb: Honshu Chemical - What WAS the Wrong Price Gets Wronger




Japan Asia (3751 JP) 

4-Feb: Overbid: JAG Special Committee Plays Stupid so Murakami Plays Hardball
20-Feb: Japan Asia Group MBO Fails, Now JAG Against Murakami's Higher Bid




Joban Kaihatsu (1782 JP) 

Tender Offer was successful.




Toa Oil Co Ltd (5008 JP) 

12-Feb: Toa Oil (5008) Tender - Has the Dog Caught the Car?
17-Feb: Toa Oil (5008) - The Dog Has Caught the Car, But Beware Mangalores 25 Feb: Toa Oil (5008) - Idemitsu Looking To The Next Attempt?




Tokyo Rope Mfg (5981 JP) 

3-Feb: Nippon Steel Corporation (5401 JP) replied to questions posed to it by Tokyo Rope Mfg (5981 JP) in the latter's Opinion Statement regarding NSC's tender offer.  It is quite clear, and quite non-combative, relatively speaking. 











Malaysia


Comments (with links to announcements)




Batu Kawan Bhd (BAK MK) 

5-Feb: Compulsory acquisition notice sent out




FGV Holdings Bhd (FGV MK) 

16-Feb: Offer extended until the 2 March 25-Feb: Offer extended until the 15 March












New Zealand


Comments (with links announcements)




Infratil Ltd (IFT NZ) 

4-Feb: Lots of interest in Tilt Renewables Ltd (TLT NZ) 












Philippines


Comments (with links announcements)




Lopez Holdings (LPZ PM) 

17-Feb:  There's been an amendment to the partial offer for Lopez Holdings (LPZ PM). The maximum to be acquired will now be 1.43bn shares or 31.5%.   
"the reduction is intended to address concerns and the risk that LPZ may still fall below the public ownership requirement despite the initial reduced maximum number of shares to be acquired."  The Tender Offer price remains at P3.85 per share. The Tender Offer period will be extended from February 19, 2021, to March 8, 2021.











Singapore


Comments (with links to announcements &amp; insights)




CEI Limited (CEI SP) 

15-Feb: Pre-cons met. Offer doc to be sent 14-21 from this date.
15-Feb: AEM's Privatization Deal for CEI Limited (CEI SP): Pre-Condition Satisfied




GL Ltd (GLL SP) 

4-Feb: Offer Doc for GL Ltd (GLL SP) is out. The Circular, which will include an IFA opinion, is expected to be despatched on or before the 18 Feb. 
18-Feb: The Circular is out for GL Ltd (GLL SP). The IFA says the Offer is not fair but reasonable.




Penguin International (PBS SP) 

24-Feb: Penguin International (PBS SP)'s Circular is out - independent directors and IFA recommend shareholders accept Emet Grace offer.




Soilbuild Business Space REIT (SBREIT SP) 

18-Feb: Soilbuild REIT: Scheme Doc Out. EGM Convened










Taiwan


Comments (with links to announcements &amp; insights)




Jih Sun Financial (5820 TT) 

24-Feb: The Taiwan Fair Trade Commission has "approved" the takeover of Jih Sun Financial (5820 TT) by Fubon Financial Holding Co (2881 TT). This is a little earlier than expected. Fubon Financial Deal for Jih Sun Gets TFTC Signoff





















North America


Comments (with links to announcements and insights)





51 Job Inc Adr (JOBS US) 

No February update




China Biologic Products (CBPO US) 

China Biologic calls EGM on 1 March to consider proposed take-private



HUYA Inc (HUYA US)
No February update



PNM Resources (PNM US) 
12-Feb: PNM Resources shareholders supported the integration with Avangrid, Iberdrola's US subsidiary. The approval represents another milestone in the integration process between the New Mexico and Texas power company and the Iberdrola group company.
The operation, which already has the approval of the Committee on Foreign Investments in the United States (CFIUS) and Hart Scott Rodino Clearance (HSR), expects to obtain all the necessary approvals at both the state and federal levels throughout 2021.




Sina Corp (Class A) (SINA US) 

22-Feb: What's Going On With Sina Corp?




Sogou Inc (SOGO US) 
4-Feb: FY20 results




Wanda Sports Group (WSG US) 
1-Feb: Offer to expire on the 26 Feb.






































Last week, the Carlyle/Chairman MBO for <a href="https://www.smartkarma.com/entities/japan-asia-group-ltd" target="_blank" data-smartkarma-citation="entities:12428:1" rel="noopener">Japan Asia (3751 JP)</a> failed, despite the price having been doubled from the original price. A doubling of the price by the original bidder is unheard of in my experience, but they did it. Unfortunately for them, after bidding JPY 600/share, then finding that noted Japan activist Yoshiaki Murakami and his currently most active entity City Index Eleventh had bought 20%, objected to the free money the chairman was trying to make off with, Murakami-san bid 40% higher at JPY 840/share. So the parties re-jiggered their bid, and made it JPY 1200/share. I discussed this in <a href="https://www.smartkarma.com/insights/japan-asia-group-3751-murakami-wins-the-mother-of-all-bumps-100" target="_blank" data-smartkarma-citation="insights:47437" rel="noopener">Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100%</a>.  The market expected a counter and went another 10% higher before falling back when Murakami-san's counter was JPY 1210/share. But it there, so the Carlyle MBO only got 10.4mm out of the 17.9mm shares needed to get to two-thirds. But the directors were happy to have supported the original deal at JPY 600 and the revised deal at JPY 1200. On Friday 19 February, however, the Board of Directors of Japan Asia Group decided they were against the Murakami bid at JPY 1210. And unlike the original short-form support, this time they have a <a href="https://www.japanasiagroup.jp/wordpress/wp-content/uploads/2021-2-19_2.pdf" target="_blank" rel="noopener">powerpoint deck</a>. <div class="content-highlight">
It's kind of a doozy.
One of the four principle reasons the Board says it rejects the bid is that it "disrespects minority shareholders". Somehow the highest bid out there at JPY 1210/share disrespects minority shareholders in a way that they were not disrespected by the Board itself supporting a JPY 600/share deal. 
One of the ways that minority investors are disrespected is that there is no minimum on the Tender Offer. Any shares they want to sell, they can sell. Everyone can be sure to sell their shares at that price - they do not have to hope that enough others tender. 
Another reason is that City Index Eleventh, which outlined its policies as being the same as the MBO's policies, but at a different price, is said not to have a management policy, and therefore it might mean minority shareholders are obliged to tender to avoid adverse effects. 
Yes. This is, indeed, a possibility. Investors who were asked to tender at JPY 600/share and at JPY 1200/share, with the intention of the originally supported MBOs being to force shareholders out, might find themselves not liking Murakami therefore feeling they have no choice but to accept the JPY 1210 deal which the Board doesn't like. 
Go figure.
</div>The presentation is worth a read.

Last week, the Carlyle/Chairman MBO for Japan Asia (3751 JP) failed, despite the price having been doubled from the original price. A doubling of the price by the original bidder is unheard of in my experience, but they did it. Unfortunately for them, after bidding JPY 600/share, then finding that noted Japan activist Yoshiaki Murakami and his currently most active entity City Index Eleventh had bought 20%, objected to the free money the chairman was trying to make off with, Murakami-san bid 40% higher at JPY 840/share. So the parties re-jiggered their bid, and made it JPY 1200/share. I discussed this in Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100%.  The market expected a counter and went another 10% higher before falling back when Murakami-san's counter was JPY 1210/share. But it there, so the Carlyle MBO only got 10.4mm out of the 17.9mm shares needed to get to two-thirds. But the directors were happy to have supported the original deal at JPY 600 and the revised deal at JPY 1200. On Friday 19 February, however, the Board of Directors of Japan Asia Group decided they were against the Murakami bid at JPY 1210. And unlike the original short-form support, this time they have a powerpoint deck. 
It's kind of a doozy.
One of the four principle reasons the Board says it rejects the bid is that it "disrespects minority shareholders". Somehow the highest bid out there at JPY 1210/share disrespects minority shareholders in a way that they were not disrespected by the Board itself supporting a JPY 600/share deal. 
One of the ways that minority investors are disrespected is that there is no minimum on the Tender Offer. Any shares they want to sell, they can sell. Everyone can be sure to sell their shares at that price - they do not have to hope that enough others tender. 
Another reason is that City Index Eleventh, which outlined its policies as being the same as the MBO's policies, but at a different price, is said not to have a management policy, and therefore it might mean minority shareholders are obliged to tender to avoid adverse effects. 
Yes. This is, indeed, a possibility. Investors who were asked to tender at JPY 600/share and at JPY 1200/share, with the intention of the originally supported MBOs being to force shareholders out, might find themselves not liking Murakami therefore feeling they have no choice but to accept the JPY 1210 deal which the Board doesn't like. 
Go figure.
The presentation is worth a read.

Japan Asia Group MBO Fails, Now JAG Against Murakami's Higher Bid

True to the sentiment expressed by the <a href="https://www.smartkarma.com/entities/idemitsu-kosan-co-ltd" target="_blank" data-smartkarma-citation="entities:109:1" rel="noopener">Idemitsu Kosan (5019 JP)</a> Finance Dept chief who spoke at the earnings news conference last week, Idemitsu Kosan did not change the price on its ¥2450/share Tender Offer for <a href="https://www.smartkarma.com/entities/toa-oil-co-ltd" target="_blank" data-smartkarma-citation="entities:11021:1" rel="noopener">Toa Oil Co Ltd (5008 JP)</a>.Yesterday, the Tender Offer closed without fanfare. Today Idemitsu announced the results (<a href="https://ssl4.eir-parts.net/doc/5019/ir_material9/154414/00.pdf" target="_blank" rel="noopener">English</a>, <a href="https://www.idss.co.jp/content/100034505.pdf" target="_blank" rel="noopener">Japanese</a>). Because Idemitsu already owned 50+% it only needed 2,058,875 shares which was 16+% or roughly a third of the minority to get to 66.7% to squeeze out remaining minority shareholders. Idemitsu got 470,668 shares, or 3.82%. In my first insight <a href="https://www.smartkarma.com/insights/idemitsu-launches-lowball-tender-offer-for-subsidiary-toa-oil-5008" target="_blank" data-smartkarma-citation="insights:46384" rel="noopener">Idemitsu Launches Lowball Tender Offer for Subsidiary Toa Oil (5008)</a>, I showed what I thought the shareholder structure breakdown for support looked like. In that table, I suggested at a minimum, it was likely to get support from financial and corporate crossholders 483,000 shares) and from directors (13,500 shares). They did not even get that much. Cornwall Capital, which had climbed from 18+% to 26.5+% during the course of the Tender Offer obviously did not tender, but neither did 99% of the other non-crossholder-held shares. This was an enormous failure for Idemitsu. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/093/original/Screenshot+2021-02-16+at+8.26.07+PM.png?1613478380" class="editor-image img-responsive" data-smartkarma-image-id="189093"></figure></section>What next? Read on.

True to the sentiment expressed by the Idemitsu Kosan (5019 JP) Finance Dept chief who spoke at the earnings news conference last week, Idemitsu Kosan did not change the price on its ¥2450/share Tender Offer for Toa Oil Co Ltd (5008 JP).Yesterday, the Tender Offer closed without fanfare. Today Idemitsu announced the results (English, Japanese). Because Idemitsu already owned 50+% it only needed 2,058,875 shares which was 16+% or roughly a third of the minority to get to 66.7% to squeeze out remaining minority shareholders. Idemitsu got 470,668 shares, or 3.82%. In my first insight Idemitsu Launches Lowball Tender Offer for Subsidiary Toa Oil (5008), I showed what I thought the shareholder structure breakdown for support looked like. In that table, I suggested at a minimum, it was likely to get support from financial and corporate crossholders 483,000 shares) and from directors (13,500 shares). They did not even get that much. Cornwall Capital, which had climbed from 18+% to 26.5+% during the course of the Tender Offer obviously did not tender, but neither did 99% of the other non-crossholder-held shares. This was an enormous failure for Idemitsu. What next? Read on.

Toa Oil (5008) - The Dog Has Caught the Car, But Beware Mangalores

At the end of January 2021 when <a href="https://www.smartkarma.com/entities/toa-oil-co-ltd" target="_blank" data-smartkarma-citation="entities:11021:1" rel="noopener">Toa Oil Co Ltd (5008 JP)</a> announced its Q3 results and very big full-year forecast revision (discussed in <a href="https://www.smartkarma.com/insights/toa-oil-5008-tender-offer-updated-update-still-looks-bumpity" target="_blank" data-smartkarma-citation="insights:47625" rel="noopener">Toa Oil (5008) Tender Offer Updated Update - STILL Looks Bumpity</a>), the share price of Toa Oil was trading at ¥2800 which was just off a two-plus year high, and lead shareholder Cornwall Capital had reported upping their stake to 22.98% the day before. The change in annual forecast required a change in the Opinion Statement of the Target Company and that required a change in the Tender Offer Registration statement by Idemitsu, which required them to extend the Tender Offer Closing Date by 8 days to 15 February. In my last piece, I mooted the possibility that Idemitsu could announce a change in price at the time of its earnings on 9 February. It did not. I also put forth the problem of The Dog Catching The Car. If the dog chases the car, it's all fun. If the car stops and the driver gets out, the dog has to figure out what to do.Thinking Dogs can read on.

At the end of January 2021 when Toa Oil Co Ltd (5008 JP) announced its Q3 results and very big full-year forecast revision (discussed in Toa Oil (5008) Tender Offer Updated Update - STILL Looks Bumpity), the share price of Toa Oil was trading at ¥2800 which was just off a two-plus year high, and lead shareholder Cornwall Capital had reported upping their stake to 22.98% the day before. The change in annual forecast required a change in the Opinion Statement of the Target Company and that required a change in the Tender Offer Registration statement by Idemitsu, which required them to extend the Tender Offer Closing Date by 8 days to 15 February. In my last piece, I mooted the possibility that Idemitsu could announce a change in price at the time of its earnings on 9 February. It did not. I also put forth the problem of The Dog Catching The Car. If the dog chases the car, it's all fun. If the car stops and the driver gets out, the dog has to figure out what to do.Thinking Dogs can read on.

Toa Oil (5008) Tender - Has the Dog Caught the Car?

Japan

Japan Asia Group Limited provides consulting services to both the private and public sectors relating to social infrastructure development. The Company also develops green communities as well as renewable energy plants. Japan Asia Group aditionally provides various financial services such as security brokerage.

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