European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Silver Lake announced it waived the minimum acceptance threshold of 50% + 1 share in  its offer for <a href="https://www.smartkarma.com/entities/software-ag" target="_blank" data-smartkarma-citation="entities:21717:1" rel="noopener">Software AG (SOW GR)</a> . The acceptance period has been extended until 28 June.</li>
<li>Bain Capital abandons the pursuit and will sell its 10.01% stake to Silver Lake, which will now controls 41%, plus another 10% from a convertible bond.</li>
<li>Silver Lake is now pressing the minority shareholders to tender. Spread is 1.44%/15.13% (gross/annualised), assuming settlement on 31 July. I believe that Silver Lake will be successful. Long and tender.</li>
</ul>


Silver Lake announced it waived the minimum acceptance threshold of 50% + 1 share in  its offer for Software AG (SOW GR) . The acceptance period has been extended until 28 June.
Bain Capital abandons the pursuit and will sell its 10.01% stake to Silver Lake, which will now controls 41%, plus another 10% from a convertible bond.
Silver Lake is now pressing the minority shareholders to tender. Spread is 1.44%/15.13% (gross/annualised), assuming settlement on 31 July. I believe that Silver Lake will be successful. Long and tender.


Silver Lake/Software AG: Bain Clears the Way

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The June 2023 index changes for the DAX index family were confirmed after the close yesterday.</li>
<li>As expected, there were no changes announced for the DAX index.</li>
<li>There will be four changes for MDAX, one change for SDAX, and one change for TecDAX.</li>
</ul>


The June 2023 index changes for the DAX index family were confirmed after the close yesterday.
As expected, there were no changes announced for the DAX index.
There will be four changes for MDAX, one change for SDAX, and one change for TecDAX.


Quiddity Flow Expectations for DAX Jun 23 Rebal: Evotec Is the Main Surprise

<ul>
<li>In this insight, we take a look at Quiddity's estimates for the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.</li>
<li>As things stand, there will not be any ADDs or DELs from the DAX index or the SDAX index.</li>
<li>There could be two ADDs/DELs for the MDAX index in the June 2023 rebalance.</li>
</ul>


In this insight, we take a look at Quiddity's estimates for the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.
As things stand, there will not be any ADDs or DELs from the DAX index or the SDAX index.
There could be two ADDs/DELs for the MDAX index in the June 2023 rebalance.


Quiddity Leaderboard-DAX Jun 23: Two Changes for the MDAX Index

<ul>
<li>Bain goes mildly hostile, with a €34/share indicative offer (20.5x EV/Fwd EBIT on IBES consensus), above 11.1x last-10y average. Further, if it fully succeeded, it'd raise to €36/share (21.6x).</li>
<li>Software AG dislikes the improved indicative offer. The situation reminds of the battle for <a href="https://www.smartkarma.com/entities/caverion-corp" target="_blank" data-smartkarma-citation="entities:21753:1" rel="noopener">Caverion Corp (CAV1V FH)</a>, now being played, in which precisely Bain has been the unexpected loser.</li>
<li>At this point, it seems Silver Lake will have to raise its offer again. I raise my TP to €34. Long (possible upside to Bain's €36/share, 6.1% gross).</li>
</ul>


Bain goes mildly hostile, with a €34/share indicative offer (20.5x EV/Fwd EBIT on IBES consensus), above 11.1x last-10y average. Further, if it fully succeeded, it'd raise to €36/share (21.6x).
Software AG dislikes the improved indicative offer. The situation reminds of the battle for Caverion Corp (CAV1V FH), now being played, in which precisely Bain has been the unexpected loser.
At this point, it seems Silver Lake will have to raise its offer again. I raise my TP to €34. Long (possible upside to Bain's €36/share, 6.1% gross).


<ul>
<li>Bain has a 10.01% stake (likely acquired &lt;€32/share) and could play nasty: its stake is enough to block a squeeze-out, and if it launches a €34/share offer, it will be hostile.</li>
<li>Meanwhile, Silver Lake (5% recently acquired+25.1% from the foundation) has sweetened to €32/share (19.4x EV/Fwd EBIT, well above 11.1x last-10y average). The Board could change sides (as recently with Caverion).</li>
<li>The shares trade 3.5% above Silver Lake's, but at a discount of 2.5% to Bain's possible offer. The market believes Bain will bid. I raise my TP to €32.</li>
</ul>


Bain has a 10.01% stake (likely acquired &lt;€32/share) and could play nasty: its stake is enough to block a squeeze-out, and if it launches a €34/share offer, it will be hostile.
Meanwhile, Silver Lake (5% recently acquired+25.1% from the foundation) has sweetened to €32/share (19.4x EV/Fwd EBIT, well above 11.1x last-10y average). The Board could change sides (as recently with Caverion).
The shares trade 3.5% above Silver Lake's, but at a discount of 2.5% to Bain's possible offer. The market believes Bain will bid. I raise my TP to €32.


Germany

Software AG operates as a software development company. The Company enables enterprises to integrate, connect, and manage IoT components, as well as analyze data and predict future events based on artificial intelligence. Software serves customers worldwide.

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Software (SOW GR)

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Quiddity Flow Expectations for DAX Jun 23 Rebal: Evotec Is the Main Surprise

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Rocket Software (Bain) Ups the Game

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Sweetened Offer and Bain Interloping

Software AG agreed on 4 May to amend the investment agreement concluded on 21 April with Silver Lake. The offer price is increased to €32.00, an...

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