Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Back on the 27 August, <a href="https://www.smartkarma.com/entities/leyou-technologies-holdings" target="_blank" data-smartkarma-citation="entities:5831:1" rel="noopener">Leyou Technologies (1089 HK)</a>  <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0827/2020082701826.pdf" target="_blank" rel="noopener">announced</a> a take-private transaction by way of a Scheme from <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> at $3.3219/share, a 30.27% premium over the closing price of HK$2.55/share on 19 September 2019, the last trading day prior to Leyou's <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0525/2020052501310.pdf" target="_blank" rel="noopener">announcing</a> it was in preliminary discussions with various independent potential investors.</p>
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<p>70.02% of shares out - primarily comprising chairman Charles Yuk's stake - have given irrevocables to vote in favour of the Scheme. Disinterested Shareholders comprise all shares out, therefore the blocking stake at the Scheme Meeting is 308.5mn shares or 10% of shares out. No single shareholder has such a stake. The headcount test applies. </p>
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<p>This is a very clean deal. </p>
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<p>Leyou's shares wobbled a little in September after gaming companies were asked by Committee on Foreign Investment in the United States on their security protocols in handling Americans' personal data. Those concerns were unfounded, and Canadian and US regulatory bodies <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1008/2020100801134.pdf" target="_blank" rel="noopener">signed off</a> on the Offer on the 8 October.</p>
<p>The Scheme Document has now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1111/2020111100047.pdf" target="_blank" rel="noopener">despatched</a>. The Court Meeting/EGM will be held on the 11 December. Assuming all falls into place, consideration under the Offer will be paid on or before the 31 December.</p>
<p>The IFA (Optima Capital) considers the Offer to be fair and reasonable.</p>
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<p>More below the fold.</p>
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Back on the 27 August, Leyou Technologies (1089 HK)  announced a take-private transaction by way of a Scheme from Tencent Holdings (700 HK) at $3.3219/share, a 30.27% premium over the closing price of HK$2.55/share on 19 September 2019, the last trading day prior to Leyou's announcing it was in preliminary discussions with various independent potential investors.


70.02% of shares out - primarily comprising chairman Charles Yuk's stake - have given irrevocables to vote in favour of the Scheme. Disinterested Shareholders comprise all shares out, therefore the blocking stake at the Scheme Meeting is 308.5mn shares or 10% of shares out. No single shareholder has such a stake. The headcount test applies. 


This is a very clean deal. 


Leyou's shares wobbled a little in September after gaming companies were asked by Committee on Foreign Investment in the United States on their security protocols in handling Americans' personal data. Those concerns were unfounded, and Canadian and US regulatory bodies signed off on the Offer on the 8 October.
The Scheme Document has now been despatched. The Court Meeting/EGM will be held on the 11 December. Assuming all falls into place, consideration under the Offer will be paid on or before the 31 December.
The IFA (Optima Capital) considers the Offer to be fair and reasonable.


More below the fold.


Leyou Tech (1089 HK): Offer Doc Despatched

<p>On the 30 September, <a href="https://www.smartkarma.com/entities/wanda-sports-group-co-ltd" target="_blank" data-smartkarma-citation="entities:28119:1" rel="noopener">Wanda Sports Group (WSG US)</a> announced Dalian Wanda Group (DWG) had submitted a preliminary non-binding <a href="https://investor.wsg.cn/news-releases/news-release-details/wanda-sports-group-company-limited-announces-receipt-preliminary" target="_blank" rel="noopener">proposal</a> at US$2.50/ADS, a 38.9% premium to last close.</p>
<p>DWG currently owns all the Class B ordinary shares of WSG, representing ~71.68% of all the issued shares, and  ~91.01% of the voting power of the Company. </p>
<p>At this juncture, one would assume a "<em>going private transaction</em>" would be done via a short-form merger - therefore there will be no shareholder vote and no dissenting.</p>
<p>But the twist here is that WSG is incorporated in Hong Kong (one of the very few  US-listed Chinese companies incorporated in HK), therefore a take-private transaction <em>must</em> adhere to the law of their jurisdiction of incorporation. That raises the bar on DWG taking WSG private.</p>
<p>As always, more below the fold.</p>

On the 30 September, Wanda Sports Group (WSG US) announced Dalian Wanda Group (DWG) had submitted a preliminary non-binding proposal at US$2.50/ADS, a 38.9% premium to last close.
DWG currently owns all the Class B ordinary shares of WSG, representing ~71.68% of all the issued shares, and  ~91.01% of the voting power of the Company. 
At this juncture, one would assume a "going private transaction" would be done via a short-form merger - therefore there will be no shareholder vote and no dissenting.
But the twist here is that WSG is incorporated in Hong Kong (one of the very few  US-listed Chinese companies incorporated in HK), therefore a take-private transaction must adhere to the law of their jurisdiction of incorporation. That raises the bar on DWG taking WSG private.
As always, more below the fold.

Wanda Sports (WSG US): Preliminary Proposal From Dalian Wanda

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<p>On the 27 August, Leyou <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0827/2020082701826.pdf" target="_blank" rel="noopener">announced</a> a Scheme from <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> at $3.3219/share.</p>
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<p>The Offer Price represents a 30.27% premium over the closing price of HK$2.55/share on 19 September 2019, which was the last trading day prior to Leyou's <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0525/2020052501310.pdf" target="_blank" rel="noopener">announcing</a> it was in preliminary discussions with various independent potential investors.</p>
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<p>Irrevocables in favour of the Scheme total 70.02% of shares out - primarily comprising Charles Yuk's stake - and the Scheme is conditional on 75% of shares out voting in favour of the Scheme.  Disinterested Shareholders comprise <em>all </em>shares out. Therefore the blocking stake at the Scheme Meeting is 308.5mn shares or 10% of shares out. No single shareholder has such a blocking stake. The headcount test applies as Leyou is Cayman-incorporated. </p>
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<p>This looks done.</p>
<p>But politics can be a fickle beast. Social media app WeChat was in Trump's crosshairs over what is deemed a possible risk to the national security of the US, concerning personal information making its way to China.  That perceived data risk has now spilled over into gaming platforms operating in the US.</p>
<p>Leyou's shares wobbled a little after gaming companies were asked by Committee on Foreign Investment in the United States (CFIUS) on their security protocols in handling Americans' personal data.</p>
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<p>Shares have now righted themselves - and indeed  - trade closer to terms. </p>
<p>As always, more below the fold.</p>
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On the 27 August, Leyou announced a Scheme from Tencent Holdings (700 HK) at $3.3219/share.


The Offer Price represents a 30.27% premium over the closing price of HK$2.55/share on 19 September 2019, which was the last trading day prior to Leyou's announcing it was in preliminary discussions with various independent potential investors.


Irrevocables in favour of the Scheme total 70.02% of shares out - primarily comprising Charles Yuk's stake - and the Scheme is conditional on 75% of shares out voting in favour of the Scheme.  Disinterested Shareholders comprise all shares out. Therefore the blocking stake at the Scheme Meeting is 308.5mn shares or 10% of shares out. No single shareholder has such a blocking stake. The headcount test applies as Leyou is Cayman-incorporated. 


This looks done.
But politics can be a fickle beast. Social media app WeChat was in Trump's crosshairs over what is deemed a possible risk to the national security of the US, concerning personal information making its way to China.  That perceived data risk has now spilled over into gaming platforms operating in the US.
Leyou's shares wobbled a little after gaming companies were asked by Committee on Foreign Investment in the United States (CFIUS) on their security protocols in handling Americans' personal data.


Shares have now righted themselves - and indeed  - trade closer to terms. 
As always, more below the fold.




Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

O-Net Technologies (Group)  / Event-Driven

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<p>On the 8 July, <a href="https://www.smartkarma.com/entities/o-net-technologies-group-limited" target="_blank" data-smartkarma-citation="entities:16122:1" rel="noopener">O-Net Technologies (Group) (877 HK)</a>, a leader in the provision of high-technology products and optical networking components,  <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0708/2020070800600.pdf" target="_blank" rel="noopener">announced</a> an Offer by way of a Scheme, with a cancellation price of HK$6.50/share, a 23.57% premium to last close and a 43.18% premium to the six-month average close. The Offer price was final.</p>
<p>Na Qinglin (chairman of O-Net) (34.5% of shares out), <a href="https://www.smartkarma.com/entities/shenzhen-kaifa-technology-a" target="_blank" data-smartkarma-citation="entities:20393:1" rel="noopener">Shenzhen Kaifa Technology A (000021 CH)</a> (20.52%) and HC Capital (0.33%) are acting in concert, leaving 44.65% (372.408mn shares) in the hands of Disinterested Shareholders.</p>
<p>Therefore the blocking stake at the Scheme Meeting is 37.24mn shares or 4.465% of shares out. The 10% blocking stake is attached to ALL of the Scheme Shares held by the Disinterested Shareholders. The headcount test applies as O-Net is Cayman incorporated. </p>
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<p>The Scheme Document is now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0901/2020090101388.pdf" target="_blank" rel="noopener">out</a>. The Scheme Meeting will be held on 25 September with expected payment (assuming shareholders approve the Scheme) on the 27 October, just under a week past my initial timetable expectation. The IFA (Somerley) considers the offer to be "fair and reasonable."</p>
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<p>This is a pretty clean deal. I'd get involved at a gross/annualised spread at 2.7%/19.2%.</p>
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<p>As always, more below the fold.</p>
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<p><em>Past insights on O-Net</em></p>
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<h3>Date</h3>
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<td style="width: 484.782px;">
<h3>Insight</h3>
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<td style="width: 218.75px;">7-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/nqHJk" target="_blank" rel="noopener">O-Net Tech (877 HK): Tripping The Light Fantastic</a></td>
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<td style="width: 218.75px;">9-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/8Bd58" target="_blank" rel="noopener">O-Net (877 HK): Swish Switches Offer</a></td>
</tr>
</tbody>
</table>
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On the 8 July, O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components,  announced an Offer by way of a Scheme, with a cancellation price of HK$6.50/share, a 23.57% premium to last close and a 43.18% premium to the six-month average close. The Offer price was final.
Na Qinglin (chairman of O-Net) (34.5% of shares out), Shenzhen Kaifa Technology A (000021 CH) (20.52%) and HC Capital (0.33%) are acting in concert, leaving 44.65% (372.408mn shares) in the hands of Disinterested Shareholders.
Therefore the blocking stake at the Scheme Meeting is 37.24mn shares or 4.465% of shares out. The 10% blocking stake is attached to ALL of the Scheme Shares held by the Disinterested Shareholders. The headcount test applies as O-Net is Cayman incorporated. 


The Scheme Document is now out. The Scheme Meeting will be held on 25 September with expected payment (assuming shareholders approve the Scheme) on the 27 October, just under a week past my initial timetable expectation. The IFA (Somerley) considers the offer to be "fair and reasonable."


This is a pretty clean deal. I'd get involved at a gross/annualised spread at 2.7%/19.2%.


As always, more below the fold.


Past insights on O-Net







Date


Insight



7-Jul-20
O-Net Tech (877 HK): Tripping The Light Fantastic


9-Jul-20
O-Net (877 HK): Swish Switches Offer







O-Net (877 HK): Offer Doc Out. Priced To Complete

China

Leyou Technologies Holdings Limited is a video game developer. The Company also engages in the sales of chicken meat products.

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Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

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O-Net (877 HK): Offer Doc Out. Priced To Complete

On the 6 July, O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components,...

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