Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>After the close today, the Nikkei reported (<a href="https://www.nikkei.com/article/DGXZQOUC088IW0Y6A400C2000000/" target="_blank" rel="noopener">Japanese</a>, <a href="https://asia.nikkei.com/business/business-deals/japan-s-dentsu-to-take-subsidiary-private" target="_blank" rel="noopener">English</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> had finalised plans to take its system integrator subsidiary <a href="https://www.smartkarma.com/entities/info-services-intl-dentsu" target="_blank" data-smartkarma-citation="entities:20535:1" rel="noopener">Info Services Intl Dentsu (4812 JP)</a>.</li>
<li>Articles are still updating but the idea is Dentsu will keep its 61.8% stake. Fujitsu and Unnamed Trading Houses will buy the rest for "around ¥200bn" implying +13.1% to ¥2,675/share.</li>
<li>Dentsu responded with a TDNet filing. It's less smokey than many other releases are. BUT... we take a look anyway at the parameters.</li>
</ul>


After the close today, the Nikkei reported (Japanese, English) that Dentsu Inc (4324 JP) had finalised plans to take its system integrator subsidiary Info Services Intl Dentsu (4812 JP).
Articles are still updating but the idea is Dentsu will keep its 61.8% stake. Fujitsu and Unnamed Trading Houses will buy the rest for "around ¥200bn" implying +13.1% to ¥2,675/share.
Dentsu responded with a TDNet filing. It's less smokey than many other releases are. BUT... we take a look anyway at the parameters.


[Japan M&A] Nikkei Reports Dentsu To Lead Buyout of System Integrator Sub Dentsu Soken (4812)

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

<ul>
<li>Our outlook remains bullish on global equities (MSCI ACWI) with ACWI-US and the S&amp;P 500 holding above their respective bases at $117 and 5650-5670.</li>
<li>As long as these base supports hold, we would use any election-related pullback as an opportunity to add exposure.</li>
<li>Following the election, we see a high probability of significant upside going into year-end.</li>
</ul>


Our outlook remains bullish on global equities (MSCI ACWI) with ACWI-US and the S&amp;P 500 holding above their respective bases at $117 and 5650-5670.
As long as these base supports hold, we would use any election-related pullback as an opportunity to add exposure.
Following the election, we see a high probability of significant upside going into year-end.


Bullish Outlook Intact on MSCI ACWI & SPX; Buys in Services, Technology, Discretionary, Gold Miners

<ul>
<li>Deal details are much as the Nikkei and Dentsu Soken reported. ¥2,880 for the 38.2% not owned by Dentsu. Dentsu and Itochu will be partners with Dentsu consolidating. </li>
<li>The price is not very high considering the growth, especially when synergies are not included. The price is below the TargetCo FA's DCF range midpoint w/o synergies.</li>
<li>But there was a rival bidder in the selection process and they had a lower bid. So it isn't clear who or what overbidder might come out. This gets done.</li>
</ul>


Deal details are much as the Nikkei and Dentsu Soken reported. ¥2,880 for the 38.2% not owned by Dentsu. Dentsu and Itochu will be partners with Dentsu consolidating. 
The price is not very high considering the growth, especially when synergies are not included. The price is below the TargetCo FA's DCF range midpoint w/o synergies.
But there was a rival bidder in the selection process and they had a lower bid. So it isn't clear who or what overbidder might come out. This gets done.


[Japan M&A] Itochu Deal Details for Dentsu Soken (4812); ¥2,880 Is Better than Rival Bid, But...

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.

<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

Japan

NEC Networks & System Integration Corporation designs, constructs, and maintains communication systems.  The Company's services include system integration services for digital switching, local area network (LAN), and mobile communication systems.  NEC Networks & System Integration also constructs information infrastructure and intelligent building facilities.

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Nec Networks & System Integr (1973 JP)

[Japan M&A] Nikkei Reports Dentsu To Lead Buyout of System Integrator Sub Dentsu Soken (4812)

Dentsu Soken has flatlined since popping on the Nikkei article. Q2 earnings were salutary. The question for a partner is valuation. It's not cheap....

Travis Lundy

Bullish Outlook Intact on MSCI ACWI & SPX; Buys in Services, Technology, Discretionary, Gold Miners

Bullish Outlook Intact on MSCI $ACWI and $SPX as they hold above their respective bases at $117 and 5650-5670; Buys in Services, Technology,...

Vermilion Research

[Japan M&A] Itochu Deal Details for Dentsu Soken (4812); ¥2,880 Is Better than Rival Bid, But...

Itochu is buying the minorities of Dentsu IT sub Dentsu Soken. Dentsu is staying in. The deal is not expensive. I think it too cheap. But I don't...

Travis Lundy

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

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