Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Concurrent with its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0429/2024042905713.pdf" target="_blank" rel="noopener">HK$34/share VGO</a>, <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>'s disinterested shareholders may be entitled to a share scrip alternative. IF afforded, up to 5% of shares out can participate.</li>
<li>The big unknown is whether you receive shares of the levered-up Bidco, at some as yet undetermined scrip ratio; or keep shares of L’Occitane as-is.</li>
<li>To trigger the rollover option, 10% of disinterested shareholders need to express interest by the 15th May (a Hong Kong holiday btw). A deadline without details. </li>
</ul>


Concurrent with its HK$34/share VGO, L'Occitane (973 HK)'s disinterested shareholders may be entitled to a share scrip alternative. IF afforded, up to 5% of shares out can participate.
The big unknown is whether you receive shares of the levered-up Bidco, at some as yet undetermined scrip ratio; or keep shares of L’Occitane as-is.
To trigger the rollover option, 10% of disinterested shareholders need to express interest by the 15th May (a Hong Kong holiday btw). A deadline without details. 


L'Occitane (973 HK): The Rollover Option, And Alternate Listing Valuations

Thematic (Sector/Industry)

<ul>
<li>In officially decided cases concerning dissentient shareholders in privatised US-listed China plays, the uplift to the merger price versus time value of money and legal costs, is less than ideal. </li>
<li>The outcome for each case will turn on the underlying facts. But it would appear <a href="https://www.smartkarma.com/entities/ikang-healthcare-group-adr" target="_blank" data-smartkarma-citation="entities:741:1" rel="noopener">iKang Healthcare Group (ADR) (KANG US)</a> is following a similar trend.  </li>
<li>Reportedly the uplift to the iKang merger price is just 10%. Dissenters can still lodge an appeal.</li>
</ul>


In officially decided cases concerning dissentient shareholders in privatised US-listed China plays, the uplift to the merger price versus time value of money and legal costs, is less than ideal. 
The outcome for each case will turn on the underlying facts. But it would appear iKang Healthcare Group (ADR) (KANG US) is following a similar trend.  
Reportedly the uplift to the iKang merger price is just 10%. Dissenters can still lodge an appeal.


IKang Healthcare (KANG US): Another Setback For Dissenters

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Zhangyue Technologies, the creators of IReader app, is filing to list on the A-share market. The timing to list coincides with another major player <a href="https://www.smartkarma.com/entities/24388" target="_blank" data-smartkarma-citation="entities:24388:1">China Literature Ltd (1522280D HK)</a>, which we covered in an earlier piece <a href="https://www.smartkarma.com/insights/china-literature-ipo-preview-time-to-monetize-its-rich-content-library" target="_blank" data-smartkarma-citation="insights:12582">China Literature IPO Preview: Time to Monetize Its Rich Content Library</a>.In order to watch the duel for online readers between these major players, we needed to compare their swordsplay (ie. business model) and cross-reference some industry growth figures. The sections in this article are as follows:<ol><li>Brief company background</li><li>A comparison with China Literature's business model</li><li>Cross referencing industry growth and both companies' market positions</li><li>A comparison of user metrics and financial overview</li><li>Concluding thoughts</li></ol>

Zhangyue Technologies, the creators of IReader app, is filing to list on the A-share market. The timing to list coincides with another major player China Literature Ltd (1522280D HK), which we covered in an earlier piece China Literature IPO Preview: Time to Monetize Its Rich Content Library.In order to watch the duel for online readers between these major players, we needed to compare their swordsplay (ie. business model) and cross-reference some industry growth figures. The sections in this article are as follows:Brief company backgroundA comparison with China Literature's business modelCross referencing industry growth and both companies' market positionsA comparison of user metrics and financial overviewConcluding thoughts

China Literature Vs Zhangyue IPO: A Duel Between Crouching Tiger and Hidden Dragon?

As discussed in <a href="https://skr.ma/yN7Jw" target="_blank" rel="noopener">Jardine Matheson: Strategic Buyout Done</a>, after <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> shareholders <a href="https://links.sgx.com/FileOpen/JSH.ashx?App=Announcement&amp;FileID=659247" target="_blank" rel="noopener">voted through</a>, as expected, the Offer from <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>, after the vote, Matheson said a number of shareholders in Strategic voted against the acquisition, but also that:
<div>
<blockquote>
a large number of shares voted against the resolution were held by investors who were not shareholders at the time of the announcement of the Acquisition on 8 March 2021. Some investors have indicated an intention to apply to the Court in Bermuda to appraise the fair value of their shares, in accordance with the process described in the shareholder circular issued by Jardine Strategic in connection with the Acquisition.
</blockquote>
</div>
I initially wrote "Matheson appears to be suggesting that those who held shares before the announcement, and those who held after, potentially have different cases to argue."
But after consulting with my colleague <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a>, I omitted this line, as it was effectively moot.
Matheson would have singled out these short-term investors - hedge funds - irrespectively. Yet, such a statement is irrelevant. All shareholders, as at the record date of the Special General Meeting, have the same rights to be treated fairly and rights to dissension.
I note some recent commentary in the media addressing Matheson's oblique reference to hedge funds, so I'll provide some commentary sourced from legal references.
Of greater importance is what these dissenters will cost Matheson at the end of the day.
More below the fold.
<hr>
I've extensively dealt with appraisal rights in the Cayman Islands in past insights, which can also provide guidance as to how dissension may be interpreted in Bermuda (where Strategic is incorporated):
<a href="https://skr.ma/TDg1T" target="_blank" rel="noopener">Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value</a>
<a href="https://skr.ma/Hy3JW" target="_blank" rel="noopener">Trina Solar: Appraisal Rights Judgment Another Setback for Dissenters</a>
<a href="https://skr.ma/H7E1t" target="_blank" rel="noopener">Changyou (CYOU US): Short-Form Merger Dissent Now Permitted</a>

As discussed in Jardine Matheson: Strategic Buyout Done, after Jardine Strategic Holdings (JS SP) shareholders voted through, as expected, the Offer from Jardine Matheson Holdings (JM SP), after the vote, Matheson said a number of shareholders in Strategic voted against the acquisition, but also that:


a large number of shares voted against the resolution were held by investors who were not shareholders at the time of the announcement of the Acquisition on 8 March 2021. Some investors have indicated an intention to apply to the Court in Bermuda to appraise the fair value of their shares, in accordance with the process described in the shareholder circular issued by Jardine Strategic in connection with the Acquisition.


I initially wrote "Matheson appears to be suggesting that those who held shares before the announcement, and those who held after, potentially have different cases to argue."
But after consulting with my colleague Travis Lundy, I omitted this line, as it was effectively moot.
Matheson would have singled out these short-term investors - hedge funds - irrespectively. Yet, such a statement is irrelevant. All shareholders, as at the record date of the Special General Meeting, have the same rights to be treated fairly and rights to dissension.
I note some recent commentary in the media addressing Matheson's oblique reference to hedge funds, so I'll provide some commentary sourced from legal references.
Of greater importance is what these dissenters will cost Matheson at the end of the day.
More below the fold.

I've extensively dealt with appraisal rights in the Cayman Islands in past insights, which can also provide guidance as to how dissension may be interpreted in Bermuda (where Strategic is incorporated):
Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value
Trina Solar: Appraisal Rights Judgment Another Setback for Dissenters
Changyou (CYOU US): Short-Form Merger Dissent Now Permitted

Back on the 6 July last year, <a href="https://www.smartkarma.com/entities/sina-corp-china" target="_blank" data-smartkarma-citation="entities:22691:1" rel="noopener">Sina Corp (Class A) (SINA US)</a> <a href="http://ir.sina.com/index.php/static-files/69e95aee-2729-457f-be56-73628090b8ea" target="_blank" rel="noopener">announced</a> the receipt of a preliminary non-binding “going private” proposal from New Wave MMXV - a company controlled by its chairman/CEO Charles Chao - at US$41/share. This was followed by an <a href="http://ir.sina.com/static-files/de1ddd0f-354f-42de-9b33-b1bc414ab1b4" target="_blank" rel="noopener">Agreement and Plan of Merger</a> pursuant to which New Wave will acquire all of the outstanding ordinary shares not owned at US$43.30/share.
Despite an undemanding Offer price, shareholders approved (93.6% of the total votes) the merger on the <a href="http://ir.sina.com/static-files/ea4a5614-30e8-472c-895c-31e120de3261" target="_blank" rel="noopener">23 December</a>.
Completion of the merger was contingent on the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, including no more than 10% of the ordinary shares dissenting.
Prior to the  EGM, <a href="http://ir.sina.com/static-files/722deb54-0426-4b43-a58a-1c8be8b59b61" target="_blank" rel="noopener">21.5mn shares or 35.9%</a> of the total issued and outstanding shares of Sina issued notices of objections to the company. 
On or prior to January 12, 2021, Sina intended to issue written notices of authorization to all the objecting shareholders. Within 20 days immediately after the date on which these notices were given, any objecting shareholder was required to give written notice of its decision to dissent.
There has been no update on the merger from Sina since the 28 December. Behind the scenes, Charles Chao can choose to walk, negotiate a superior price with dissentient shareholders, or waive the condition.  Should he waive the condition, dissentient shareholders have the right to be paid fair value for their shares, as determined by the Cayman Island's Grand Court.
More below the fold.<a href="https://www.collascrill.com/news-updates/articles/grand-court-confirms-that-dissent-rights-are-available-to-minority-shareholders-in-short-form-mergers/" target="_blank" rel="noopener"></a>

Back on the 6 July last year, Sina Corp (Class A) (SINA US) announced the receipt of a preliminary non-binding “going private” proposal from New Wave MMXV - a company controlled by its chairman/CEO Charles Chao - at US$41/share. This was followed by an Agreement and Plan of Merger pursuant to which New Wave will acquire all of the outstanding ordinary shares not owned at US$43.30/share.
Despite an undemanding Offer price, shareholders approved (93.6% of the total votes) the merger on the 23 December.
Completion of the merger was contingent on the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, including no more than 10% of the ordinary shares dissenting.
Prior to the  EGM, 21.5mn shares or 35.9% of the total issued and outstanding shares of Sina issued notices of objections to the company. 
On or prior to January 12, 2021, Sina intended to issue written notices of authorization to all the objecting shareholders. Within 20 days immediately after the date on which these notices were given, any objecting shareholder was required to give written notice of its decision to dissent.
There has been no update on the merger from Sina since the 28 December. Behind the scenes, Charles Chao can choose to walk, negotiate a superior price with dissentient shareholders, or waive the condition.  Should he waive the condition, dissentient shareholders have the right to be paid fair value for their shares, as determined by the Cayman Island's Grand Court.
More below the fold.

China

Shanda Games Limited develops, operates, and publishes online games in the Peoples Republic of China and internationally. It offers massively multi-player online role-playing games in various genres, including martial arts adventure, fantasy...

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Shanda Games Ltd Spons Adr (GAME US)

L'Occitane (973 HK): The Rollover Option, And Alternate Listing Valuations

If you are an arbitrageur, I'd be buying here. If you a LO, at a 5.4% gross yield, hold for completion. If you are willing to hold unlisted scrip,...

David Blennerhassett

IKang Healthcare (KANG US): Another Setback For Dissenters

In officially decided cases concerning dissentient shareholders in privatised US-listed China plays, the uplift to the takeover price versus time...

David Blennerhassett

China Literature Vs Zhangyue IPO: A Duel Between Crouching Tiger and Hidden Dragon?

Zhangyue Technologies, the creators of IReader app, is filing to list on the A-share market. The timing to list coincides with another major player...

Valerie Law, CFA

Jardine Matheson: Lessons in Dissent

At a 13% discount to NAV, this not attractive for a complicated holding company structure. In all likelihood, near-term news may focus on these...

David Blennerhassett

What's Going On With Sina Corp?

Currently trading to terms. This is an avoid. The Offer is being done too cheaply, But unless you have already dissented, you are effectively...

David Blennerhassett

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