Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.</p>
</div>
<div>
<p>I number 39, mostly firm, deals around the region.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 39, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: Chinese Estates, Pipedo, Intega, Dragon Crown

Travis Lundy

<p>When the bid was announced, in <a href="https://www.smartkarma.com/insights/eneos-to-steamroll-nippo-1881-jp-minorities" target="_blank" data-smartkarma-citation="insights:57299" rel="noopener">ENEOS To Steamroll Nippo (1881 JP) Minorities</a> I wrote about how in parent <a href="https://www.smartkarma.com/entities/eneos-holdings-inc" target="_blank" data-smartkarma-citation="entities:638:1" rel="noopener">ENEOS Holdings (5020 JP)</a> bid to buy out the minority holders of <a href="https://www.smartkarma.com/entities/nippo-corp" target="_blank" data-smartkarma-citation="entities:2583:1" rel="noopener">Nippo Corp (1881 JP)</a> despite being an all-time high price, the bid was still egregiously low. </p><p>NIPPO's independent panel and board, of course, agreed with its parent company that the convoluted construct where ENEOS would participate in a 3rd party buyout, then sell its ownership back to the company (taking the cash out) while still controlling the company (then eventually try to re-list the company after taking the money out) was all good for shareholders and the company itself. </p><p>Investors should not be under any illusion that NIPPO's Board will, when presented with numbers which suggest they are selling the company too cheaply for the benefit of ENEOS will suddenly say "aha, you are right, we didn't count the securities and real estate correctly."</p><p>If NIPPO's Board officially reviews the numbers and comes to the conclusion that they made a mistake, that upsets the entire ecosystem - the acquiror, the lawyers on both sides, the accountants and fair value assessors, and all the advisors who told them that this was fair and appropriate. Every single member of the ecosystem would be wrong.</p><p>And that can't happen, so it won't. </p><p>The only one who changes the outcome here is the buyer - who can raise the price - or the investor base - who can raise the price on the buyer, challenging them to pay more. </p><p>A short while ago, the CEO of Monex Oki Matsumoto in his role as CIO of the small activist-ish <em>Monex Activist Mother Fund</em> said that the ¥4,000/share TOB price was too cheap, and NIPPO should consider a special dividend to shareholders. This was discussed in <a href="https://www.smartkarma.com/insights/nippo-1881-jp-gets-some-cowbell-it-probably-needs-more" target="_blank" data-smartkarma-citation="insights:58103" rel="noopener">NIPPO (1881 JP) Gets Some Cowbell - It Probably Needs More</a> a bit over a week ago.  Three days later (27 Sep), Silchester International Investors - which says it is not an activist and generally does not make public comment - apparently said that generally agreed with what Matsumoto-san had to say. </p><p>What investors may not have realised if they did not read the fine print of the original announcement is that the Board of NIPPO has already agreed to support a huge distribution of the company's cash to shareholders. It is at the bottom of <a href="https://www.nippo-c.co.jp/english/images/aboutnippo/irinfo/2021_0910_5.pdf" target="_blank" rel="noopener">p5</a> and it says that NIPPO will distribute 194.098bn yen of the company's cash to shareholders.</p><p>Actually, it will only give that cash to one shareholder - ENEOS - but the principle is the same. This cash is not needed for its operations. Therefore, in the process of "raising corporate value through the transaction" it will give that cash to shareholders. </p><p>Investors have it in front of them. </p><p>This morning Asia time, activist investor Oasis Management Company issued a <a href="https://www.businesswire.com/news/home/20211004005747/en/Oasis-Statement-on-NIPPO-Corporation" target="_blank" rel="noopener">press release</a> calling on NIPPO to conduct an active market check to achieve a higher price, and says it believes NIPPO shares are worth "over JPY5,600" apiece. </p><p>I do not disagree. In my first insight, I said the ¥4,000/share TOB price was ¥1,500-2,000/share light. </p><p>For investors...</p><ol>
<li>The <a href="https://www.businesswire.com/news/home/20211004005747/en/Oasis-Statement-on-NIPPO-Corporation" target="_blank" rel="noopener">press release</a> is definitely worth reading. </li>
<li>The <a href="https://www.nippo-c.co.jp/english/images/aboutnippo/irinfo/2021_0910_5.pdf" target="_blank" rel="noopener">original announcement</a> is definitely worth re-reading</li>
<li>It is worth digging through the structure and process to figure out how ENEOS (and NIPPO and GS?) are taking advantage of minorities. The statements and the actions do not necessarily agree with each other and the fiduciary duties of ENEOS and NIPPO.</li>
<li>And as is usually the case in these situations, it is worth getting out your <a href="https://www.smartkarma.com/insights/japan-needs-more-cowbell" target="_blank" rel="noopener">cowbell</a>.</li>
</ol><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/233/564/original/will-ferrell-cowbell.gif?1633414041" class="editor-image img-responsive" data-smartkarma-image-id="233564"></figure></section><p></p><p>So below, I try to do #3.</p><hr><p><em>Separately, investors should have questions about the Sentaku article which came out discussing the coincidence that GS has just perhaps agreed to sell an asset to ENEOS at a price below other bidders, and is now being accorded the opportunity to participate in a separate transaction with ENEOS where they bring neither value nor net capital. </em></p>

When the bid was announced, in ENEOS To Steamroll Nippo (1881 JP) Minorities I wrote about how in parent ENEOS Holdings (5020 JP) bid to buy out the minority holders of Nippo Corp (1881 JP) despite being an all-time high price, the bid was still egregiously low. NIPPO's independent panel and board, of course, agreed with its parent company that the convoluted construct where ENEOS would participate in a 3rd party buyout, then sell its ownership back to the company (taking the cash out) while still controlling the company (then eventually try to re-list the company after taking the money out) was all good for shareholders and the company itself. Investors should not be under any illusion that NIPPO's Board will, when presented with numbers which suggest they are selling the company too cheaply for the benefit of ENEOS will suddenly say "aha, you are right, we didn't count the securities and real estate correctly."If NIPPO's Board officially reviews the numbers and comes to the conclusion that they made a mistake, that upsets the entire ecosystem - the acquiror, the lawyers on both sides, the accountants and fair value assessors, and all the advisors who told them that this was fair and appropriate. Every single member of the ecosystem would be wrong.And that can't happen, so it won't. The only one who changes the outcome here is the buyer - who can raise the price - or the investor base - who can raise the price on the buyer, challenging them to pay more. A short while ago, the CEO of Monex Oki Matsumoto in his role as CIO of the small activist-ish Monex Activist Mother Fund said that the ¥4,000/share TOB price was too cheap, and NIPPO should consider a special dividend to shareholders. This was discussed in NIPPO (1881 JP) Gets Some Cowbell - It Probably Needs More a bit over a week ago.  Three days later (27 Sep), Silchester International Investors - which says it is not an activist and generally does not make public comment - apparently said that generally agreed with what Matsumoto-san had to say. What investors may not have realised if they did not read the fine print of the original announcement is that the Board of NIPPO has already agreed to support a huge distribution of the company's cash to shareholders. It is at the bottom of p5 and it says that NIPPO will distribute 194.098bn yen of the company's cash to shareholders.Actually, it will only give that cash to one shareholder - ENEOS - but the principle is the same. This cash is not needed for its operations. Therefore, in the process of "raising corporate value through the transaction" it will give that cash to shareholders. Investors have it in front of them. This morning Asia time, activist investor Oasis Management Company issued a press release calling on NIPPO to conduct an active market check to achieve a higher price, and says it believes NIPPO shares are worth "over JPY5,600" apiece. I do not disagree. In my first insight, I said the ¥4,000/share TOB price was ¥1,500-2,000/share light. For investors...
The press release is definitely worth reading. 
The original announcement is definitely worth re-reading
It is worth digging through the structure and process to figure out how ENEOS (and NIPPO and GS?) are taking advantage of minorities. The statements and the actions do not necessarily agree with each other and the fiduciary duties of ENEOS and NIPPO.
And as is usually the case in these situations, it is worth getting out your cowbell.
So below, I try to do #3.Separately, investors should have questions about the Sentaku article which came out discussing the coincidence that GS has just perhaps agreed to sell an asset to ENEOS at a price below other bidders, and is now being accorded the opportunity to participate in a separate transaction with ENEOS where they bring neither value nor net capital. 

NIPPO (1881 JP) Gets MORE Cowbell as Oasis Objects

<div>
<p>This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.</p>
</div>
<div>
<p>I number 40, mostly firm, deals around the region.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 40, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: Shinsei Bank, Aussie Pharma, Ebook Initiative, Smartgroup

<p>Just under three weeks ago, <a href="https://www.smartkarma.com/entities/nippo-corp" target="_blank" data-smartkarma-citation="entities:2583:1" rel="noopener">Nippo Corp (1881 JP)</a> parent company <a href="https://www.smartkarma.com/entities/eneos-holdings-inc" target="_blank" data-smartkarma-citation="entities:638:1" rel="noopener">ENEOS Holdings (5020 JP)</a> announced a slightly convoluted takeover of Nippo which was announced at a decidedly low price of ¥4,000/share. </p><p>I wrote about this in <a href="https://www.smartkarma.com/insights/eneos-to-steamroll-nippo-1881-jp-minorities" target="_blank" data-smartkarma-citation="insights:57299" rel="noopener">ENEOS To Steamroll Nippo (1881 JP) Minorities</a>, calling the bid "egregiously low." I thought the "right price" was ¥1,500-2,000/share higher. </p><p>I also thought that because of ENEOS' starting point, anyone who wanted to block it needed to go big and public with their opposition. I have long thought the issue of parent-sub takeovers and MBOs required more active (and passive) investor stewardship, and have published <a href="https://www.smartkarma.com/insights/japan-needs-more-cowbell" target="_blank" data-smartkarma-citation="insights:41191" rel="noopener">Japan Needs More Cowbell</a> about active investors and a kind of open letter to the former GPIF CIO Hiro Mizuno in the Financial Times, about <a href="https://www.ft.com/content/dd680521-a9cc-4b1c-922d-4787d2a314f6" target="_blank" rel="noopener">The GPIF and the Complexity of Stewardship</a>.</p><p>On Friday we got a <em>little</em> noise as a small fund called the Monex Activist Mother Fund, managed by a fund management firm called Japan Catalyst, where the CIO is Oki Matsumoto, the current CEO of <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a>, put out a <a href="https://www.jiji.com/jc/article?k=000000005.000075293&amp;g=prt" target="_blank" rel="noopener">press release</a>.  </p><p>More discussion of the opportunity and its parameters to date below.</p>

Just under three weeks ago, Nippo Corp (1881 JP) parent company ENEOS Holdings (5020 JP) announced a slightly convoluted takeover of Nippo which was announced at a decidedly low price of ¥4,000/share. I wrote about this in ENEOS To Steamroll Nippo (1881 JP) Minorities, calling the bid "egregiously low." I thought the "right price" was ¥1,500-2,000/share higher. I also thought that because of ENEOS' starting point, anyone who wanted to block it needed to go big and public with their opposition. I have long thought the issue of parent-sub takeovers and MBOs required more active (and passive) investor stewardship, and have published Japan Needs More Cowbell about active investors and a kind of open letter to the former GPIF CIO Hiro Mizuno in the Financial Times, about The GPIF and the Complexity of Stewardship.On Friday we got a little noise as a small fund called the Monex Activist Mother Fund, managed by a fund management firm called Japan Catalyst, where the CIO is Oki Matsumoto, the current CEO of Monex Group Inc (8698 JP), put out a press release.  More discussion of the opportunity and its parameters to date below.

NIPPO (1881 JP) Gets Some Cowbell - It Probably Needs More

<div>
<p>This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.</p>
</div>
<div>
<p>I number 38, mostly firm, deals around the region.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 38, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: AusNet Services, Sembcorp Marine, Roxy Pacific

Japan

NIPPO CORPORATION paves a variety of roads.  The Company manufactures and sells asphalt paving mixture.  Nippo also builds commercial residential, and institutional buildings such as sports facilities and condominiums.  The Company operates real estate and resort businesses such as hotels and golf country clubs.

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Nippo Corp (1881 JP)

Asia-Pac Weekly Risk Arb Summary: Chinese Estates, Pipedo, Intega, Dragon Crown

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

NIPPO (1881 JP) Gets MORE Cowbell as Oasis Objects

NIPPO is getting more cowbell. We now have three investors complaining about the price. That is more. It is probably not enough. I expect sustained...

Travis Lundy

Asia-Pac Weekly Risk Arb Summary: Shinsei Bank, Aussie Pharma, Ebook Initiative, Smartgroup

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

NIPPO (1881 JP) Gets Some Cowbell - It Probably Needs More

A relatively little-known activistish-if-not-wholly-activist DOMESTIC fund has called out the ENEOS takeover of NIPPO as being under-priced with a...

Travis Lundy

Asia-Pac Weekly Risk Arb Summary: AusNet Services, Sembcorp Marine, Roxy Pacific

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)