Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

This is shaping up to be the week when the sanctioning of Schemes by the Courts goes awry.
Last Friday, Hong Kong's High Court <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1005/2020100502577.pdf" target="_blank" rel="noopener">declined to sanction</a> <a href="https://www.smartkarma.com/entities/allied-properties-h-k-limited" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties (H.K.) (56 HK)</a>'s Scheme. (<a href="https://skr.ma/Utws3" target="_blank" rel="noopener">Allied Properties (56 HK): Amateur Hour</a>). I would expect the Offeror, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied (373 HK)</a>, to appeal the decision,  especially noting the irrelevancy of the headcount test discussed at length in the judgment, which likely influenced the judge's final opinion.
Tomorrow there is a high likelihood that New Zealand's High Court postpones the final hearing on the <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a>'s Scheme.
At MET's Scheme Meeting on the <a href="https://www.metlifecare.co.nz/wp-content/uploads/2020/10/NZX-Release-and-Results-Announcement.pdf" target="_blank" rel="noopener">2 October</a>, 90.7% of the votes case voted for the Scheme. 9.14% (or 14.96mn shares) voted against. 
Of those naysayers, 1,000 shares are held by ResIL Investments Limited, who has, in a detailed letter (attached at the end of this insight) flagged what it perceives as breaches in the Takeovers Code, with reference to the valuation methodology in the Scheme Booklet
Those perceived breaches have been submitted to the Takeovers Panel.
Ahead of tomorrow's hearing, the Panel will need to consider ResIL's objections and whether the standard of disclosure is consistent with that required under the Code. If no objection, the Panel will issue a no-objection statement to approve the Scheme.
Yet merely obtaining a no-objection statement from the Takeovers Panel does not necessarily mean that the Court will approve a scheme.
There are no dissent or buy-out rights for shareholders who do not support Schemes in New Zealand. In effect, this is a statutory vacuum. It would be a dangerous precedent if this Scheme is not sanctioned after a disgruntled shareholder contends the contents of the Scheme Booklet are flawed - after the shareholder lost the vote.

This is shaping up to be the week when the sanctioning of Schemes by the Courts goes awry.
Last Friday, Hong Kong's High Court declined to sanction Allied Properties (H.K.) (56 HK)'s Scheme. (Allied Properties (56 HK): Amateur Hour). I would expect the Offeror, Allied (373 HK), to appeal the decision,  especially noting the irrelevancy of the headcount test discussed at length in the judgment, which likely influenced the judge's final opinion.
Tomorrow there is a high likelihood that New Zealand's High Court postpones the final hearing on the Metlifecare Ltd (MET NZ)'s Scheme.
At MET's Scheme Meeting on the 2 October, 90.7% of the votes case voted for the Scheme. 9.14% (or 14.96mn shares) voted against. 
Of those naysayers, 1,000 shares are held by ResIL Investments Limited, who has, in a detailed letter (attached at the end of this insight) flagged what it perceives as breaches in the Takeovers Code, with reference to the valuation methodology in the Scheme Booklet
Those perceived breaches have been submitted to the Takeovers Panel.
Ahead of tomorrow's hearing, the Panel will need to consider ResIL's objections and whether the standard of disclosure is consistent with that required under the Code. If no objection, the Panel will issue a no-objection statement to approve the Scheme.
Yet merely obtaining a no-objection statement from the Takeovers Panel does not necessarily mean that the Court will approve a scheme.
There are no dissent or buy-out rights for shareholders who do not support Schemes in New Zealand. In effect, this is a statutory vacuum. It would be a dangerous precedent if this Scheme is not sanctioned after a disgruntled shareholder contends the contents of the Scheme Booklet are flawed - after the shareholder lost the vote.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

The S&amp;P/NZX 50 Index is designed to measure the performance of the 50 largest stocks listed on the Main Board of the NZX by float-adjusted market capitalization. The index is float-adjusted, covering approximately 90% of New Zealand equity market capitalization.Last evening, S&amp;P SJI announced the deletion of <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a> following its acquisition by Asia Pacific Village Group Limited. <a href="https://www.smartkarma.com/entities/pacific-edge-ltd" target="_blank" data-smartkarma-citation="entities:20261:1" rel="noopener">Pacific Edge (PEB NZ)</a> will be included in the index to keep the number of constituents at 50. The changes will be effective after the close of trading on 20 October.Based on assets tracking the index, we estimate passive funds will need to buy 9.1m shares of <a href="https://www.smartkarma.com/entities/pacific-edge-ltd" target="_blank" data-smartkarma-citation="entities:20261:1" rel="noopener">Pacific Edge (PEB NZ)</a> which is around 12 days of ADV. The stock was trading 12% higher earlier today, was then halted, then traded 20% higher and is now 15% higher on volumes of just over 3m shares. The stock could move higher over the next few days as passive investors step in to buy the stock.

The S&amp;P/NZX 50 Index is designed to measure the performance of the 50 largest stocks listed on the Main Board of the NZX by float-adjusted market capitalization. The index is float-adjusted, covering approximately 90% of New Zealand equity market capitalization.Last evening, S&amp;P SJI announced the deletion of Metlifecare Ltd (MET NZ) following its acquisition by Asia Pacific Village Group Limited. Pacific Edge (PEB NZ) will be included in the index to keep the number of constituents at 50. The changes will be effective after the close of trading on 20 October.Based on assets tracking the index, we estimate passive funds will need to buy 9.1m shares of Pacific Edge (PEB NZ) which is around 12 days of ADV. The stock was trading 12% higher earlier today, was then halted, then traded 20% higher and is now 15% higher on volumes of just over 3m shares. The stock could move higher over the next few days as passive investors step in to buy the stock.

S&P/NZX 50 Index Rebalance: Pacific Edge IN With A Lot to Buy

Last Week in Event SPACE: NTT Docomo, Evergrande Properties/Auto, Wilmar, Swire, Immunomedics

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

Bernard Arnault, <a href="https://www.smartkarma.com/entities/lvmh-moet-hennessy-louis-vuitton-se-unsp-adr" target="_blank" data-smartkarma-citation="entities:28477:1" rel="noopener">LVMH Moet Hennessy Louis Vuitton SE-UNSP ADR (LVMUY US)</a>'s Chairman/CEO, must rue the day his company pitched an Offer for <a href="https://www.smartkarma.com/entities/tiffany-co" target="_blank" data-smartkarma-citation="entities:14729:1" rel="noopener">Tiffany &amp; Co (TIF US)</a>, a little under two months before COVID-19 first hit the news. 
LVMH and Tiffany reached a definite agreement on the <a href="https://investor.tiffany.com/static-files/9a8842f4-4f7b-438f-a6c6-4d768c2d6546" target="_blank" rel="noopener">25 November 2019</a>, wherein LVMH would acquire Tiffany for $135/share (7.7% premium to last close) in a US$16.2bn transaction. Tiffany shareholders approved the merger on the <a href="https://investor.tiffany.com/node/22081/pdf" target="_blank" rel="noopener">4 February</a>.
The two parties had initially set August 24 as the first deadline for completing the transaction,  with the possibility of extending the deadline to November 24 at the latest (see <a href="https://www.sec.gov/Archives/edgar/data/98246/000119312519299997/d840067dex21.htm" target="_blank" rel="noopener">page 62</a> of the Merger Agreement lodged with the SEC) - one year from the initial agreement<a href="https://www.sec.gov/" target="_blank" rel="noopener">.</a> This "Outside Date" was extended to the 24 November after the merger failed to close on the 24 August.
In a very brief <a href="https://r.lvmh-static.com/uploads/2020/09/lvmh_press-release-9-september-2020.pdf" target="_blank" rel="noopener">press release</a> yesterday, LVMH said it will not be able to complete the Tiffany acquisition, in compliance with a directive from the French European and Foreign Affairs Minister to defer the merger. LVMH also said Tiffany had undergone a Material Adverse Affect (MAE).
In a strongly-worded, detailed response, Tiffany said it has no choice but to file a lawsuit to <a href="https://investor.tiffany.com/node/22406/pdf" target="_blank" rel="noopener">enforce the Merger</a>.
LVMH seeking non-compliance with its contractual obligation on account of a MAE, takes a leaf out of EQT's gameplay for <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a>. And as in MET's case (<a href="https://skr.ma/8sLe8" target="_blank" rel="noopener">Metlifecare/EQT: The Retirement Solution</a>), LVMH may find itself having to reconsider a new Offer.
More comment below the fold.

Bernard Arnault, LVMH Moet Hennessy Louis Vuitton SE-UNSP ADR (LVMUY US)'s Chairman/CEO, must rue the day his company pitched an Offer for Tiffany &amp; Co (TIF US), a little under two months before COVID-19 first hit the news. 
LVMH and Tiffany reached a definite agreement on the 25 November 2019, wherein LVMH would acquire Tiffany for $135/share (7.7% premium to last close) in a US$16.2bn transaction. Tiffany shareholders approved the merger on the 4 February.
The two parties had initially set August 24 as the first deadline for completing the transaction,  with the possibility of extending the deadline to November 24 at the latest (see page 62 of the Merger Agreement lodged with the SEC) - one year from the initial agreement. This "Outside Date" was extended to the 24 November after the merger failed to close on the 24 August.
In a very brief press release yesterday, LVMH said it will not be able to complete the Tiffany acquisition, in compliance with a directive from the French European and Foreign Affairs Minister to defer the merger. LVMH also said Tiffany had undergone a Material Adverse Affect (MAE).
In a strongly-worded, detailed response, Tiffany said it has no choice but to file a lawsuit to enforce the Merger.
LVMH seeking non-compliance with its contractual obligation on account of a MAE, takes a leaf out of EQT's gameplay for Metlifecare Ltd (MET NZ). And as in MET's case (Metlifecare/EQT: The Retirement Solution), LVMH may find itself having to reconsider a new Offer.
More comment below the fold.

LVMH/Tiffany: In The Rough. Acts of God and Legal Restraint

New Zealand

Metlifecare Limited provides private health care services through its ownership, operation and management of retirement villages, nursing homes and geriatric hospitals along with the marketing of services allied to these facilities throughout New Zealand.

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Metlifecare Ltd (MET NZ)

Metlifecare: Statutory Vacuum

A small Metlifecare shareholder strongly believes the deal needs to be blocked and has lodged an opposition with the Takeovers Panel. This would...

David Blennerhassett

S&P/NZX 50 Index Rebalance: Pacific Edge IN With A Lot to Buy

Ad hoc changes have been announced to the S&P/NZX50 index following APVG's acquisition of Metlifecare. The real impact is on Pacific Edge, the...

Brian Freitas

Last Week in Event SPACE: NTT Docomo, Evergrande Properties/Auto, Wilmar, Swire, Immunomedics

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

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

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

LVMH/Tiffany: In The Rough. Acts of God and Legal Restraint

Taking a leaf out of the EQT's gamplay for Metlifecare Ltd (MET NZ)

David Blennerhassett

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