IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dentsu-soken-inc" target="_blank" data-smartkarma-citation="entities:20535:1" rel="noopener">Dentsu Soken (4812 JP)</a> announced a preconditional tender offer from <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> at JPY2,880, a 35.0% premium to the undisturbed price but below Nikkei’s rumoured JPY250 billion valuation.</li>
<li>The precondition concerns approvals from Japan, China, and the EU. The offer is expected to commence in early November.</li>
<li>While the offer represents a pre-announcement all-time high, it is below the midpoint of the target IFA valuation range. However, activists face a formidable task to force a bump. </li>
</ul>



Dentsu Soken (4812 JP) announced a preconditional tender offer from Itochu Corp (8001 JP) at JPY2,880, a 35.0% premium to the undisturbed price but below Nikkei’s rumoured JPY250 billion valuation.
The precondition concerns approvals from Japan, China, and the EU. The offer is expected to commence in early November.
While the offer represents a pre-announcement all-time high, it is below the midpoint of the target IFA valuation range. However, activists face a formidable task to force a bump. 


Dentsu Soken (4812 JP): Itochu (8001 JP)’s Offer Deflates Expectations

<ul>
<li>Nikkei <a href="https://asia.nikkei.com/business/business-deals/japan-s-itochu-to-take-1.5bn-stake-in-dentsu-group-system-developer-unit" target="_blank" rel="noopener">reported</a> that <a href="https://www.smartkarma.com/entities/dentsu-inc" target="_blank" data-smartkarma-citation="entities:12434:1" rel="noopener">Dentsu Inc (4324 JP)</a> and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> will privatise <a href="https://www.smartkarma.com/entities/dentsu-soken-inc" target="_blank" data-smartkarma-citation="entities:20535:1" rel="noopener">Dentsu Soken (4812 JP)</a> at a total cost of around JPY250 billion.</li>
<li>The rumoured JPY250 billion valuation for the 38.12% stake not owned by Dentsu suggests an offer of JPY3,360 per share, a 22.7% premium to the last close.</li>
<li>Oasis’s emergence as a substantial shareholder ensured a generous offer. The rumoured offer represents an all-time high and is attractive compared to precedent transactions and peer multiples.</li>
</ul>


Nikkei reported that Dentsu Inc (4324 JP) and Itochu Corp (8001 JP) will privatise Dentsu Soken (4812 JP) at a total cost of around JPY250 billion.
The rumoured JPY250 billion valuation for the 38.12% stake not owned by Dentsu suggests an offer of JPY3,360 per share, a 22.7% premium to the last close.
Oasis’s emergence as a substantial shareholder ensured a generous offer. The rumoured offer represents an all-time high and is attractive compared to precedent transactions and peer multiples.


Dentsu Soken (4812 JP): Oasis’s Presence Results in Itochu's Rumoured Generous Offer

<ul>
<li>
<a href="https://www.smartkarma.com/entities/future-corporation" target="_blank" data-smartkarma-citation="entities:5485:1" rel="noopener">Future Corporation (4722 JP)</a> announced a Chairman-led MBO at JPY2,451, a 2.9% premium to the last close of JPY2,382.  </li>
<li>The low takeover premium could be explained by the mysterious 65.13% share price surge from 24 June to 27 July. Also, the offer represents an all-time high. </li>
<li>However, the offer is below the midpoint of the special committee's IFA DCF valuation range and is light relative to precedent transactions, potentially attracting activists.</li>
</ul>



Future Corporation (4722 JP) announced a Chairman-led MBO at JPY2,451, a 2.9% premium to the last close of JPY2,382.  
The low takeover premium could be explained by the mysterious 65.13% share price surge from 24 June to 27 July. Also, the offer represents an all-time high. 
However, the offer is below the midpoint of the special committee's IFA DCF valuation range and is light relative to precedent transactions, potentially attracting activists.


Future Corp (4722 JP): A Chairman-Led MBO Could Invite Activism

<ul>
<li>On 2 July, Nikkei reported that <a href="https://www.smartkarma.com/entities/dentsu-inc" target="_blank" data-smartkarma-citation="entities:12434:1" rel="noopener">Dentsu Inc (4324 JP)</a> plans to take <a href="https://www.smartkarma.com/entities/dentsu-soken-inc" target="_blank" data-smartkarma-citation="entities:20535:1" rel="noopener">Dentsu Soken (4812 JP)</a> private by partnering with Fujitsu and other general trading companies.</li>
<li>The rumoured JPY200 billion valuation for the 38.12% stake not owned by Dentsu suggests an offer of JPY2,688 per share, a 26.0% premium to the undisturbed price.</li>
<li>Due to Dentsu’s large stake, a generous offer is unnecessary. Nevertheless, the rumoured offer is attractive compared to precedent transactions and peer multiples.</li>
</ul>


On 2 July, Nikkei reported that Dentsu Inc (4324 JP) plans to take Dentsu Soken (4812 JP) private by partnering with Fujitsu and other general trading companies.
The rumoured JPY200 billion valuation for the 38.12% stake not owned by Dentsu suggests an offer of JPY2,688 per share, a 26.0% premium to the undisturbed price.
Due to Dentsu’s large stake, a generous offer is unnecessary. Nevertheless, the rumoured offer is attractive compared to precedent transactions and peer multiples.


Dentsu Soken (4812 JP): Dentsu’s Potential Privatisation Offer

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 style="text-align: justify;">Our weight of the evidence approach leads us to believe the market remains in the early stages of a broad-based advance, meaning a buy-the-dip mentality is warranted. While we want to acknowledge that the potential for a US-China tariff escalation remains a risk for the market, we believe this is likely to be the case for the foreseeable future. In our December International Strategy, we highlight various themes which lead to our positive outlook, including actionable trade ideas in technology, health care and manufacturing.</p>

Our weight of the evidence approach leads us to believe the market remains in the early stages of a broad-based advance, meaning a buy-the-dip mentality is warranted. While we want to acknowledge that the potential for a US-China tariff escalation remains a risk for the market, we believe this is likely to be the case for the foreseeable future. In our December International Strategy, we highlight various themes which lead to our positive outlook, including actionable trade ideas in technology, health care and manufacturing.

Global Equities Headed Up and to the Right: Technology, Health Care Leading

Japan

KANEMATSU ELECTRONICS LTD. imports, exports, and wholesales printers and other computer related peripherals as a subsidiary of Kanematsu Corporation. The Company provides network-related equipment and industrial machinery.  Kanematsu Electronics operates maintenance of those products as well.

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Kanematsu Electronics (8096 JP)

Dentsu Soken (4812 JP): Itochu (8001 JP)’s Offer Deflates Expectations

While the offer represents a pre-announcement all-time high, it is below the midpoint of the target IFA valuation range. However, activists face a...

Arun George

Dentsu Soken (4812 JP): Oasis’s Presence Results in Itochu's Rumoured Generous Offer

Oasis’s emergence as a substantial shareholder ensured a generous offer. The rumoured offer represents an all-time high and is attractive compared...

Arun George

Future Corp (4722 JP): A Chairman-Led MBO Could Invite Activism

While an all-time high, the offer is below the midpoint of the special committee's IFA DCF valuation range and is light relative to precedent...

Arun George

Dentsu Soken (4812 JP): Dentsu’s Potential Privatisation Offer

Due to Dentsu’s large stake, a generous offer is unnecessary. Nevertheless, the rumoured offer is attractive compared to precedent transactions and...

Arun George

Global Equities Headed Up and to the Right: Technology, Health Care Leading

Our weight of the evidence approach leads us to believe the market remains in the early stages of a broad-based advance, meaning a buy-the-dip...

Vermilion Research

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52-week Range

Market Cap (USDm)

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