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.

Equity Capital Markets

FineToday Holdings / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/finetoday-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:44092:1" rel="noopener">FineToday Holdings Co Ltd (289A JP)</a> is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.</li>
<li>In <strong><em><a href="https://www.smartkarma.com/insights/finetoday-holdings-289a-jp-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:167184" rel="noopener">FineToday Holdings (289A JP) IPO: The Bull Case</a></em></strong>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on the weak 3Q24 revenue performance, mid-tier revenue growth, leveraged balance sheet, share overhang and pre-IPO dividend.</li>
</ul>



FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.
In FineToday Holdings (289A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on the weak 3Q24 revenue performance, mid-tier revenue growth, leveraged balance sheet, share overhang and pre-IPO dividend.


FineToday Holdings (289A JP) IPO: The Bear Case

<ul>
<li>
<a href="https://www.smartkarma.com/entities/finetoday-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:44092:1" rel="noopener">FineToday Holdings Co Ltd (289A JP)</a> is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.   </li>
<li>FineToday has four product categories: Hair care, Skin care, Body care, and others. Hair care is the largest category, accounting for 49.0% of 9M24 revenue. </li>
<li>The bull case rests on return to revenue growth, three-pronged growth strategy, top-quartile profitability and top-tier FCF generation. </li>
</ul>



FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.   
FineToday has four product categories: Hair care, Skin care, Body care, and others. Hair care is the largest category, accounting for 49.0% of 9M24 revenue. 
The bull case rests on return to revenue growth, three-pronged growth strategy, top-quartile profitability and top-tier FCF generation. 


FineToday Holdings (289A JP) IPO: The Bull Case

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a> has increased the <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> tender offer price by 4.1% to JPY2,800 and extended the offer period to 28 August. The price is final.</li>
<li>Kirin tried to get the required acceptances by refusing to bump and extending the offer period. However, these tactics failed, as the shares continued to trade above terms.</li>
<li>The Board twice asked Kirin to raise its offer higher than JPY2,800, but eventually recommended the revised offer. Nevertheless, the bump should be sufficient for Kirin to succeed. </li>
</ul>



Kirin Holdings (2503 JP) has increased the Fancl Corp (4921 JP) tender offer price by 4.1% to JPY2,800 and extended the offer period to 28 August. The price is final.
Kirin tried to get the required acceptances by refusing to bump and extending the offer period. However, these tactics failed, as the shares continued to trade above terms.
The Board twice asked Kirin to raise its offer higher than JPY2,800, but eventually recommended the revised offer. Nevertheless, the bump should be sufficient for Kirin to succeed. 


Fancl (4921 JP): Kirin (2503 JP) Relents and Bumps to JPY2,800

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>’s JPY8,620 offer for <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.</li>
<li>MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer. </li>
<li>The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump. </li>
</ul>



Kirin Holdings (2503 JP)’s JPY8,620 offer for Fancl Corp (4921 JP) closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.
MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer. 
The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump. 


Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump

<ul>
<li>
<a href="https://www.smartkarma.com/entities/l-occitane-international-sa" target="_blank" data-smartkarma-citation="entities:6772:1" rel="noopener">L'Occitane (973 HK)</a> announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.</li>
<li>The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer. </li>
<li>Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).</li>
</ul>



L'Occitane (973 HK) announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.
The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer. 
Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).


L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional

Japan

ROHTO PHARMACEUTICAL CO., LTD. manufactures and markets pharmaceuticals and cosmetics products.  The Company's products include eyewash, bath soaps, gastrointestinal medicine, and hand cream.  Rohto Pharmaceutical also has a license agreement with its subsidiary, Mentholatum (US) to sell their brand products.  The Company also manufactures contact lenses and health foods.

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Rohto Pharmaceutical (4527 JP)

FineToday Holdings (289A JP) IPO: The Bear Case

The bear case rests on the weak 3Q24 revenue performance, mid-tier revenue growth, leveraged balance sheet, share overhang and pre-IPO dividend.

Arun George

FineToday Holdings (289A JP) IPO: The Bull Case

The bull case rests on return to revenue growth, three-pronged growth strategy, top-quartile profitability and top-tier FCF generation.

Arun George

Fancl (4921 JP): Kirin (2503 JP) Relents and Bumps to JPY2,800

MY.Alpha has increased its shareholding from 10.3m (8.51% ownership ratio) to 11.6m (9.58%) primarily due to purchasing 1.1m shares at JPY2,794 on...

Arun George

Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump

Kirin has extended the tender offer period from 29 July to 13 August (40 business days). Kirin believes the JPY2,690 offer sufficiently reflects...

Arun George

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52-week Range

Market Cap (USDm)

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FineToday Holdings (289A JP) IPO: The Bear Case

The bear case rests on the weak 3Q24 revenue performance, mid-tier revenue growth, leveraged balance sheet, share overhang and pre-IPO dividend.

Arun George

FineToday Holdings (289A JP) IPO: The Bull Case

The bull case rests on return to revenue growth, three-pronged growth strategy, top-quartile profitability and top-tier FCF generation.

Arun George

Fancl (4921 JP): Kirin (2503 JP) Relents and Bumps to JPY2,800

MY.Alpha has increased its shareholding from 10.3m (8.51% ownership ratio) to 11.6m (9.58%) primarily due to purchasing 1.1m shares at JPY2,794 on...

Arun George

Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump

Kirin has extended the tender offer period from 29 July to 13 August (40 business days). Kirin believes the JPY2,690 offer sufficiently reflects...

Arun George

L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional

An attractive offer and the share alternative facilitate meeting the 90% minimum acceptance condition. This looks like a done deal. At the current...

Arun George