Equity Analyst, Event-driven, Quiddity Advisors

Janaghan Jeyakumar, CFA

Equity Analyst, Event-driven

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Medical & Biological Laboratories / Event-Driven

On 27th October 2020, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> ("JSR") announced a <a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1892862/00.pdf" target="_blank" rel="noopener">Tender Offer</a> to acquire the remaining shares in its 50.8%-owned subsidiary <a href="https://www.smartkarma.com/entities/medical-biological-labs-co" target="_blank" data-smartkarma-citation="entities:12811:1" rel="noopener">Medical &amp; Biological Labs Co (4557 JP)</a> ("MBL") in an all-cash Deal that valued the company at a market cap of ~¥ 23bn (US$218mn). The Offer Price was ¥4400/share in cash. MBL was founded in 1969 as the first manufacturer of antibodies in Japan. Having evolved over time, the company now offers clinical diagnostics and research reagents designed for analysis of proteins and/or genes associated primarily with autoimmune disorders, cancer, gynecological diseases, and infectious diseases. Most importantly, MBL also develops substances that could be used in COVID-19 research and has other COVID-19 related products in its product portfolio such as PCR kits for detecting new coronavirus, Antibody test kits for checking infection history, and Gene extraction kits to extract RNA samples from the upper respiratory tract samples (nasopharyngeal swab samples).Previously, I covered this Deal in <a href="https://www.smartkarma.com/insights/jsr-4185-jp-tender-offer-for-medical-biological-labs-4557-jp" target="_blank" data-smartkarma-citation="insights:44617" rel="noopener">JSR (4185 JP) Tender Offer for Medical &amp; Biological Labs (4557 JP)</a>. The Offer came at a premium of 23.8% to the undisturbed price and was below the mid-points of the DCF and Peer Comp Valuation ranges suggested by the Acquirer Advisor. On the other hand, according to Target Advisor's forecasts, the Offer Price translated to EV/Rev and EV/EBITDA multiples of 2.1x, and 9.2x respectively 2021E. Furthermore, the offer was opportunistically timed when MBL's EV/EBITDA (LTM) multiple was close to its 3-year low. Considering these facts and that the company's financial performance could directly benefit from COVID-19 driven demand for testing and research, the Offer Price seemed light. Regardless of the lightness of the Offer, I concluded "there might be enough friendly shareholders to get this Deal over line" and that is what has happened. On Friday after market close, on the day following the end of the Tender Offer Period, both the Acquirer (<a href="https://ssl4.eir-parts.net/doc/4185/tdnet/1912460/00.pdf" target="_blank" rel="noopener">J-only</a>) and the Target (<a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1912400/00.pdf" target="_blank" rel="noopener">J-only</a>) provided updates on the Transaction. What next? Read on.

On 27th October 2020, JSR Corp (4185 JP) ("JSR") announced a Tender Offer to acquire the remaining shares in its 50.8%-owned subsidiary Medical &amp; Biological Labs Co (4557 JP) ("MBL") in an all-cash Deal that valued the company at a market cap of ~¥ 23bn (US$218mn). The Offer Price was ¥4400/share in cash. MBL was founded in 1969 as the first manufacturer of antibodies in Japan. Having evolved over time, the company now offers clinical diagnostics and research reagents designed for analysis of proteins and/or genes associated primarily with autoimmune disorders, cancer, gynecological diseases, and infectious diseases. Most importantly, MBL also develops substances that could be used in COVID-19 research and has other COVID-19 related products in its product portfolio such as PCR kits for detecting new coronavirus, Antibody test kits for checking infection history, and Gene extraction kits to extract RNA samples from the upper respiratory tract samples (nasopharyngeal swab samples).Previously, I covered this Deal in JSR (4185 JP) Tender Offer for Medical &amp; Biological Labs (4557 JP). The Offer came at a premium of 23.8% to the undisturbed price and was below the mid-points of the DCF and Peer Comp Valuation ranges suggested by the Acquirer Advisor. On the other hand, according to Target Advisor's forecasts, the Offer Price translated to EV/Rev and EV/EBITDA multiples of 2.1x, and 9.2x respectively 2021E. Furthermore, the offer was opportunistically timed when MBL's EV/EBITDA (LTM) multiple was close to its 3-year low. Considering these facts and that the company's financial performance could directly benefit from COVID-19 driven demand for testing and research, the Offer Price seemed light. Regardless of the lightness of the Offer, I concluded "there might be enough friendly shareholders to get this Deal over line" and that is what has happened. On Friday after market close, on the day following the end of the Tender Offer Period, both the Acquirer (J-only) and the Target (J-only) provided updates on the Transaction. What next? Read on.

JSR Deal Tender Results for MBL (4557 JP) Imply Faster Squeeze-Out

Today after market-close, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> ("JSR") announced a <a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1892862/00.pdf" target="_blank" rel="noopener">Tender Offer</a> to acquire the remaining shares in its 50.8%-owned subsidiary <a href="https://www.smartkarma.com/entities/medical-biological-labs-co" target="_blank" data-smartkarma-citation="entities:12811:1" rel="noopener">Medical &amp; Biological Labs Co (4557 JP)</a> ("MBL").MBL specializes in clinical diagnostics and research reagents and has recently added COVID-19 research/testing-related products to its portfolio. The Offer Price would be ¥4400/share in cash which translates to a deal size of ¥11.2bn (~US$107mn). The Tender Offer Period will be from 28th Oct-2020 to 10th Dec-2020. The Deal has a minimum acceptance condition which requires the Acquirer to reach two-thirds control.More below the fold.

Today after market-close, JSR Corp (4185 JP) ("JSR") announced a Tender Offer to acquire the remaining shares in its 50.8%-owned subsidiary Medical &amp; Biological Labs Co (4557 JP) ("MBL").MBL specializes in clinical diagnostics and research reagents and has recently added COVID-19 research/testing-related products to its portfolio. The Offer Price would be ¥4400/share in cash which translates to a deal size of ¥11.2bn (~US$107mn). The Tender Offer Period will be from 28th Oct-2020 to 10th Dec-2020. The Deal has a minimum acceptance condition which requires the Acquirer to reach two-thirds control.More below the fold. 

JSR (4185 JP) Tender Offer for Medical & Biological Labs (4557 JP)

Japan

MEDICAL & BIOLOGICAL LABORATORIES CO., LTD. researches, develops, and sells clinical reagents and basic research reagents.  The Company sells related medical tools and equipment as well as producing reagents for genetic research. Medical & Biological Laboratories also conducts research in the area of antigen and antibody.

Medical & Biological Laboratories (4557 JP)

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Medical & Biological Laboratories (4557 JP)

JSR Deal Tender Results for MBL (4557 JP) Imply Faster Squeeze-Out

The JSR (4185) deal for (MBL) got 92+%. That leaves a roughly riskless Rate Of Return Residual Trade for the next 3 months.

Janaghan Jeyakumar, CFA

JSR (4185 JP) Tender Offer for Medical & Biological Labs (4557 JP)

JSR (4185) launches a deal to buy in minorities in Medical & Biological Labs (4557 JP), a medical research, diagnostics, and reagent business. The...

Janaghan Jeyakumar, CFA

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