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.

Event-Driven

<ul>
<li>Despite <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>'s rejection, <a href="https://www.smartkarma.com/entities/alimentation-couche-tard-inc" target="_blank" data-smartkarma-citation="entities:25103:1" rel="noopener">Alimentation Couche-Tard (ATD CN)</a> remains prepared to enter collaborative and friendly discussions to focus on finding greater value for 7&amp;i shareholders. </li>
<li>Couche-Tard’s options are to return with a revised offer, go hostile or walk away. Couche-Tard will likely test the Board’s resolve by returning with a higher offer.</li>
<li>The Board’s options are to go through the motions (appointing IFAs), conduct a market check or launch a more aggressive action plan to placate restive shareholders. </li>
</ul>


Despite Seven &amp; I Holdings (3382 JP)'s rejection, Alimentation Couche-Tard (ATD CN) remains prepared to enter collaborative and friendly discussions to focus on finding greater value for 7&amp;i shareholders. 
Couche-Tard’s options are to return with a revised offer, go hostile or walk away. Couche-Tard will likely test the Board’s resolve by returning with a higher offer.
The Board’s options are to go through the motions (appointing IFAs), conduct a market check or launch a more aggressive action plan to placate restive shareholders. 


Seven & I Holdings (3382 JP): State of Play

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Late last week, the Nikkei reported <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> would send a letter to Couche-Tard saying they reviewed ACT's Proposal and deemed it "inadequate." Indeed it was.</li>
<li>7&amp;i then <a href="https://www.7andi.com/library/dbps_data/_material_/localhost/en/release_pdf/2024_0906_ir01en.pdf" target="_blank" rel="noopener">published</a> the Board's letter, saying 7&amp;i remained open to discussions but ACT's Offer "grossly undervalued" 7&amp;i's intrinsic value and lacked in other areas. ACT responded with a "letter."</li>
<li>But ACT's "letter" was a <a href="https://www.prnewswire.com/news-releases/alimentation-couche-tard-comments-on-seven--i-holdings-response-not-to-engage-in-friendly-discussions-regarding-a-value-creating-combination-302241320.html" target="_blank" rel="noopener">press release</a> aimed not at 7&amp;i but the public. 7&amp;i released a terse response today. ACT is the suitor. It needs to act like it.</li>
</ul>


Late last week, the Nikkei reported Seven &amp; I Holdings (3382 JP) would send a letter to Couche-Tard saying they reviewed ACT's Proposal and deemed it "inadequate." Indeed it was.
7&amp;i then published the Board's letter, saying 7&amp;i remained open to discussions but ACT's Offer "grossly undervalued" 7&amp;i's intrinsic value and lacked in other areas. ACT responded with a "letter."
But ACT's "letter" was a press release aimed not at 7&amp;i but the public. 7&amp;i released a terse response today. ACT is the suitor. It needs to act like it.


7&I Rejects ACT's Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>Last Friday, <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> issued a response to <a href="https://www.smartkarma.com/entities/alimentation-couche-tard-inc" target="_blank" data-smartkarma-citation="entities:25103:1" rel="noopener">Alimentation Couche-Tard (ATD CN)</a>’s non-binding acquisition proposal.</li>
<li>At $14.86 per share, Seven &amp; I’s special committee stated that the offer significantly undervalues the company.</li>
<li>The response also highlighted that the proposal fails to address the numerous and substantial regulatory challenges the transaction would encounter from U.S. competition authorities.</li>
</ul>


Last Friday, Seven &amp; I Holdings (3382 JP) issued a response to Alimentation Couche-Tard (ATD CN)’s non-binding acquisition proposal.
At $14.86 per share, Seven &amp; I’s special committee stated that the offer significantly undervalues the company.
The response also highlighted that the proposal fails to address the numerous and substantial regulatory challenges the transaction would encounter from U.S. competition authorities.


Seven & I Says Not Enough to Alimentation Couche-Tard, Warns of US FTC Barriers

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>The US released its framework for further semiconductor related export restrictions to China late last week, including access to quantum computers and components, chipmaking tools including gate all-around (GAA) technologies.</li>
<li>US homebuilders jumped after a survey showed new home orders rebounded sharply in August ahead of the expected rate cuts in September.</li>
<li>Plenty of positive headlines for Alimentation Couche-Tard's bid for 7&amp;I, including comments that they are confident financing the deal in cash, and ready and willing to advance friendly discussions.</li>
</ul>


The US released its framework for further semiconductor related export restrictions to China late last week, including access to quantum computers and components, chipmaking tools including gate all-around (GAA) technologies.
US homebuilders jumped after a survey showed new home orders rebounded sharply in August ahead of the expected rate cuts in September.
Plenty of positive headlines for Alimentation Couche-Tard's bid for 7&amp;I, including comments that they are confident financing the deal in cash, and ready and willing to advance friendly discussions.


Japan Morning Connection: US Export Curbs Tighten on China

David Blennerhassett

<ul>
<li>Buy dips on the possibility that 3DIP would not agree to Bain. Otherwise, at ¥9,000 <a href="https://www.smartkarma.com/entities/fuji-soft-inc" target="_blank" data-smartkarma-citation="entities:17504:1" rel="noopener">Fuji Soft (9749 JP)</a> is a buy, and at ¥9,500, it's probably a sell near-term.</li>
<li>Drilling down into its balance sheet uncovers additional value for <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>; but not enough to move the needle</li>
<li>
<a href="https://www.smartkarma.com/entities/exedy-corp" target="_blank" data-smartkarma-citation="entities:6516:1" rel="noopener">Exedy Corp (7278 JP)</a> completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There's LOTS of cash left.</li>
</ul>


Buy dips on the possibility that 3DIP would not agree to Bain. Otherwise, at ¥9,000 Fuji Soft (9749 JP) is a buy, and at ¥9,500, it's probably a sell near-term.
Drilling down into its balance sheet uncovers additional value for Jardine Matheson Holdings (JM SP); but not enough to move the needle

Exedy Corp (7278 JP) completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There's LOTS of cash left.


Last Week in Event SPACE: Fuji Soft, Jardine Matheson, Exedy, Henderson

Japan

Seven & i Holdings Co., Ltd. is a holding company which was established through the merger of Ito-Yokado Co., Seven Eleven Japan Co., and Denny's Japan. The Company plans, manages, and operates mainly convenience stores, supermarkets, and department stores.

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Seven & I Holdings (3382 JP)