Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/kito-corporation" target="_blank" data-smartkarma-citation="entities:19512:1" rel="noopener">Kito Corporation (6409 JP)</a> take-private by KKR which is in process started with an interesting register. It has become interestinger.</li>
<li>One possibly-strategic "pure investment" holder has gone 10+%. A "friendly activist" has gone below. Another large friendly holder sold 4%. Volume since it achieved near-deal-price has been 24.7% of votes. </li>
<li>The register has likely become more arb-y and possibly strategic, and less friendly to Kito, but it is up to the holders to follow up. And there is a warning.</li>
</ul>


The Kito Corporation (6409 JP) take-private by KKR which is in process started with an interesting register. It has become interestinger.
One possibly-strategic "pure investment" holder has gone 10+%. A "friendly activist" has gone below. Another large friendly holder sold 4%. Volume since it achieved near-deal-price has been 24.7% of votes. 
The register has likely become more arb-y and possibly strategic, and less friendly to Kito, but it is up to the holders to follow up. And there is a warning.


Kito (6409) - Shareholder Register Quirks Evolving - Becoming More Arb-Y Less Friendly

<ul>
<li>Yesterday after the close, 500+ store home centre operator <a href="https://www.smartkarma.com/entities/kohnan-shoji-co-ltd" target="_blank" data-smartkarma-citation="entities:5662:1" rel="noopener">Kohnan Shoji (7516 JP)</a> announced full-year earnings (revs -0.2%, OP -16.6%, NP -16.4%yoy) and a buyback. </li>
<li>The buyback is for up to 1.2mm shares and up to ¥4bn to spend from here to end Sep 2022.</li>
<li>The shareholder register is interesting, diverse, and makes one wonder whether the buyback is to soften the blow of lower income, defence against an activist, or something else.</li>
</ul>


Yesterday after the close, 500+ store home centre operator Kohnan Shoji (7516 JP) announced full-year earnings (revs -0.2%, OP -16.6%, NP -16.4%yoy) and a buyback. 
The buyback is for up to 1.2mm shares and up to ¥4bn to spend from here to end Sep 2022.
The shareholder register is interesting, diverse, and makes one wonder whether the buyback is to soften the blow of lower income, defence against an activist, or something else.


Kohnan Shoji (7516) Buyback - Shareholder Return? Activist Defense? Future MBO? All of the Above?

<ul>
<li>UK-Based Japanese share activist AVI said publicly yesterday that the price Mitsui OSK announced to take out minorities in <a href="https://www.smartkarma.com/entities/daibiru-corp" target="_blank" data-smartkarma-citation="entities:19065:1" rel="noopener">Daibiru Corp (8806 JP)</a> should be ¥3,000/share not ¥2,200/share.</li>
<li>Today AVI launched a website at <a href="https://www.assetvalueinvestors.com/stopexploitingdaibiru/" target="_blank" rel="noopener">https://www.assetvalueinvestors.com/stopexploitingdaibiru/</a> in which they make their <a href="https://www.assetvalueinvestors.com/content/uploads/2021/12/Daibiru-Public-Presentation_202112_ENG_vF.pdf" target="_blank" rel="noopener">case</a>. </li>
<li>They've got a point. And it is definitely a good point. But the shareholder structure means this is a short-gamma situation for bumpitrageurs.</li>
</ul>


UK-Based Japanese share activist AVI said publicly yesterday that the price Mitsui OSK announced to take out minorities in Daibiru Corp (8806 JP) should be ¥3,000/share not ¥2,200/share.
Today AVI launched a website at https://www.assetvalueinvestors.com/stopexploitingdaibiru/ in which they make their case. 
They've got a point. And it is definitely a good point. But the shareholder structure means this is a short-gamma situation for bumpitrageurs.


Mitsui OSK TOB for Daibiru (8806) Gets Loose from Its Mooring

Last night, Singapore-based fund Aslead Capital Pte announced that it would launch a Tender Offer on <a href="https://www.smartkarma.com/entities/fuji-kosan-company-ltd" target="_blank" data-smartkarma-citation="entities:17867:1" rel="noopener">Fuji Kosan Company (5009 JP)</a> to take at least a 40% stake and possibly full control after ownership and approaches did not lead to "satisfactory" measures to improve corporate value. 
The shareholder had been acquiring shares since last year. It first went above 5% in August 2020 and until yesterday had most recently reported a 14.83% stake on 4 February. 
The stock has an interesting set of investors, and was for many years in the early to mid-2010s a poster child for tiny cap deep value investment targets. 
As of the announcement, Aslead states that it owns 16.8% which means to get to 40.0%, it needs only 23.2% of shares out - of the 83.2% it does not own. 
The company has been building an 'interesting' set of shareholders and relationships. One activist sold last year to be replaced by another. There is someone infamous from the tabloids. This could be fun to watch. It will certainly trade through terms early. The question then is what next?
There is a behind-the-scenes link to the family office responsible for the single most fun <a href="https://www.smartkarma.com/messages/%20https:/y-n10.com/" target="_blank" rel="noopener">family office website</a> ever made (after you press enter, check on the left side to see the sound is on and if you need to read the text more smoothly switch from angled to vertical just above the sound on/off section).

Last night, Singapore-based fund Aslead Capital Pte announced that it would launch a Tender Offer on Fuji Kosan Company (5009 JP) to take at least a 40% stake and possibly full control after ownership and approaches did not lead to "satisfactory" measures to improve corporate value. 
The shareholder had been acquiring shares since last year. It first went above 5% in August 2020 and until yesterday had most recently reported a 14.83% stake on 4 February. 
The stock has an interesting set of investors, and was for many years in the early to mid-2010s a poster child for tiny cap deep value investment targets. 
As of the announcement, Aslead states that it owns 16.8% which means to get to 40.0%, it needs only 23.2% of shares out - of the 83.2% it does not own. 
The company has been building an 'interesting' set of shareholders and relationships. One activist sold last year to be replaced by another. There is someone infamous from the tabloids. This could be fun to watch. It will certainly trade through terms early. The question then is what next?
There is a behind-the-scenes link to the family office responsible for the single most fun family office website ever made (after you press enter, check on the left side to see the sound is on and if you need to read the text more smoothly switch from angled to vertical just above the sound on/off section). 

Aslead Capital Hostile Offer for Fuji Kosan (5009)

At 9pm last night, basically a full day after Kyodo carried a news story that <a href="https://www.smartkarma.com/entities/kirindo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20564:1" rel="noopener">Kirindo Holdings (3194 JP)</a> was going to be taken private by Bain, the company dropped a load of documents onto the TDNet exchange document filing system indicating that indeed Bain would conduct a Tender Offer to privatise the company and delist it. I imagine bankers spent all day putting the information together. It's kind of a complicated document and structure - more so than normal. But at heart, it is an MBO where at the end, Bain Capital will have about 60% of the resultant enterprise, and the Teranishi family will have about 40%. Given that the two familymembers who will The founder and current chairman Teranishi Tadayuki (91) does not appear to be selling in the end, but his son Teranishi Toyohiko, the president (63) appears to be the solid leader through the next stage. This appears to be a kind of succession planning construct, not unlike the <a href="https://www.smartkarma.com/entities/nichii-gakkan-co" target="_blank" data-smartkarma-citation="entities:6790:1" rel="noopener">Nichii Gakkan Co (9792 JP)</a> MBO and several others in the past couple of years.Succession-planning MBOs are all the rage. There are good reasons for this. I expect this trend to only accelerate from here. More below the fold.

At 9pm last night, basically a full day after Kyodo carried a news story that Kirindo Holdings (3194 JP) was going to be taken private by Bain, the company dropped a load of documents onto the TDNet exchange document filing system indicating that indeed Bain would conduct a Tender Offer to privatise the company and delist it. I imagine bankers spent all day putting the information together. It's kind of a complicated document and structure - more so than normal. But at heart, it is an MBO where at the end, Bain Capital will have about 60% of the resultant enterprise, and the Teranishi family will have about 40%. Given that the two familymembers who will The founder and current chairman Teranishi Tadayuki (91) does not appear to be selling in the end, but his son Teranishi Toyohiko, the president (63) appears to be the solid leader through the next stage. This appears to be a kind of succession planning construct, not unlike the Nichii Gakkan Co (9792 JP) MBO and several others in the past couple of years.Succession-planning MBOs are all the rage. There are good reasons for this. I expect this trend to only accelerate from here. More below the fold. 

Kirindo (3194) - Another Cheap Bain MBO With Weak Adherence to Fair M&A Guidelines

Japan

NICHII GAKKAN COMPANY provides hospital administration services for medical facilities.  The Company also offers home nursing services and home helper training courses.

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Nichii Gakkan Co (9792 JP)

Kito (6409) - Shareholder Register Quirks Evolving - Becoming More Arb-Y Less Friendly

The shareholder register of Kito (6409) is evolving rapidly. With many months to go, in 3 weeks 25% of the shares out have traded. Two large...

Travis Lundy

Kohnan Shoji (7516) Buyback - Shareholder Return? Activist Defense? Future MBO? All of the Above?

A Kohnan Shoji (7516) buyback announcement allows for decent market impact, on top of relatively cheap look-through PE-style valuation and activist...

Travis Lundy

Mitsui OSK TOB for Daibiru (8806) Gets Loose from Its Mooring

Mitsui OSK's Tender Offer for Daibiru was low but supported by a substantial cross-held position - likely enough to get this past 2/3 IF the shares...

Travis Lundy

Aslead Capital Hostile Offer for Fuji Kosan (5009)

Fuji Kosan (5009) is the lastest smallcap value name to attract a hostile bidder putting a shot across the bow of recalcitrant management. A wake...

Travis Lundy

Kirindo (3194) - Another Cheap Bain MBO With Weak Adherence to Fair M&A Guidelines

At 9pm last night, basically a full day after Kyodo carried a news story that Kirindo Holdings (3194 JP) was going to be taken private by

Travis Lundy

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