European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

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<h3>Trends</h3>
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Discounts have generally widened across the European space.
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<h3>Interesting situations and trades</h3>
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<ul style="list-style-type: disc;">
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<a href="https://www.smartkarma.com/entities/carlsberg-a-s" target="_blank" data-smartkarma-citation="entities:22320:1" rel="noopener">Carlsberg A/S (CARLB DC)</a> B shares (with 1/10th of the voting rights of the A shares) are trading at a whopping 19.3% discount (down from 28.4%  on 19 April) vs. the A shares), some demand for illiquid A shares seems to be the explanation. Maintain LONG B shares/short A shares on, if you can get hold of any A shares.
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<a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" data-smartkarma-citation="entities:21591:1" rel="noopener">Bayerische Motoren Werke AG (BMW GR)</a> exhibited a trend towards a reduction of the discount of preferred shares, until March 2020. The discount remains around the 15% level (vs. 22.1% by mid-April). The discount is approaching pre-Covid levels. Maintain long BMW prefs, short common shares on, with a target of a 12% discount.
</li>
<li>
<a href="https://www.smartkarma.com/entities/fuchs-petrolub-se" target="_blank" data-smartkarma-citation="entities:21624:1" rel="noopener">Fuchs Petrolub SE (FPE GR)</a>'s preference shares premium seems to vary within a range, which is probably liquidity related. It is 22.6% (down from 29.4% by mid-February and 34.4% in my October report). With over 50% of the ordinary shares, the Fuchs family maintains the majority vote. They have never stated they would consolidate and pride to be #1 among the independent suppliers of lubricants.
Although there is no reason why the voting rights should be specially dear in Fuchs's case, voting rights are still valuable and neither the dividend advantage of the preferred shares nor their being members of several midcap indexes (Prime Standard/MDAX; STOXX Europe 600; DAXplus Familiy 30) justify the large premium, in my view. Maintain the trade long common/short prefs on, with a 10% target.
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<a href="https://www.smartkarma.com/entities/henkel-ag-co-kgaa" target="_blank" data-smartkarma-citation="entities:21646:1" rel="noopener">Henkel AG &amp; Co KGaA (HEN3 GR)</a> shows a long-term trend towards a reduction of the premium of the preferred shares. The premium has recently tightened and is now 15.7% (vs. 16.1% by mid-May).. Maintain the trade short prefs/long common shares with a 10% premium target.
</li>
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Voting rights are valuable in a company like <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a>. Prefs discount has widened to 25.5% (vs. 20.5% by mid-May, 16.6% by mid-April and 31.8% on 18 March, highest levels since November 2009). Preference shares have in the past traded at a premium due to its higher liquidity and inclusion in stock indexes. That said, the ordinary shares are also liquid. The shareholder structure of Volkswagen is stable, and there seems to be no reason why the discount of the prefs should widen. Volkswagen was considering a separate listing of its Porsche sports car brand in a deal that could boost its valuation, according to Bloomberg, but the company seems to have put those plans on ice. <a href="https://www.smartkarma.com/entities/traton-se" target="_blank" data-smartkarma-citation="entities:28140:1" rel="noopener">Traton SE (8TRA GR)</a>, a subsidiary majority owned by Volkswagen, is squeezing out the minorities (both ordinary and preferred shares) in <a href="https://www.smartkarma.com/entities/man-se" target="_blank" data-smartkarma-citation="entities:21670:1" rel="noopener">MAN SE (MAN GR).</a> Recommendation is long prefs/short ords, with advantage that it can be executed in size and the necessary health warning attached to any trading with Volkswagen share classes, as one can never be completely sure of the Porsche/Piech families' plans. Close soon enough as the discount tightens 200-250 bps.
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<a href="https://www.smartkarma.com/entities/danieli-c-officine-meccaniche" target="_blank" data-smartkarma-citation="entities:21177:1" rel="noopener">Danieli &amp; C. Officine Meccaniche (DAN IM)</a>:  the mandatory conversion and extraordinary dividend were approved on the shareholders meetings on 28 October. The conversion date is yet to be announced but expected soon (I am aware I have been repeating this since November, but there has no been any further update from Danieli).. Since announcement, the adjusted spread has ranged between -5.48% and 7.69%. It is currently -0.99%. Long Danieli ords/short Danieli savings shares, if and when the discount widens.</li>
<li>
<a href="https://www.smartkarma.com/entities/telecom-italia-sp-a" target="_blank" data-smartkarma-citation="entities:21075:1" rel="noopener">Telecom Italia Sp A (TIT IM)</a> savings shares are trading at a 10.2% premium to ordinary shares (vs. a 7.9% premium by mid-May). The market may think of a conversion of savings into ords à la Buzzi Unicem or Danieli, which makes financial sense as it would save the savings' dividend advantage. That would dilute the voting power of Vivendi (23.943% of the votes). Short savings/long ords.</li>
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<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/entities/grifols-sa" target="_blank" data-smartkarma-citation="entities:21274:1" rel="noopener">Grifols SA (GRF SM)</a>B shares are trading at a 35.1% discount (vs. 36.1% by mid-April and 39.7% by mid-February), there is a trend towards the tightening of this discount since March 2020 lows, albeit it is taking some time. The Covid-related antitakeover provisions issued by the Spanish Government mean that the voting rights are less valuable now. Also, the Spanish government plans to introduce double voting rights for "loyal" shareholders (those who have kept the shares for at least two years). Moreover, the by-laws contain a poison pill that should significantly reduce the discount in case of a takeover attempt. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares (traded on Nasdaq), short A shares (traded in Madrid). The target is a 27% discount. Please note there is FX risk, which can be hedged.
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The current discount in <a href="https://www.smartkarma.com/entities/atlas-copco-ab" target="_blank" data-smartkarma-citation="entities:22282:1" rel="noopener">Atlas Copco AB (ATCOA SS)</a> B shares vs. A shares is 14.5% (similar to May and wider than the 13.8% by mid-April) and seems to be on a widening trend.
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On 10 May, Industrivärden divested its entire holding in <a href="https://www.smartkarma.com/entities/ssab-ab" target="_blank" data-smartkarma-citation="entities:22492:1" rel="noopener">SSAB AB (SSABA SS)</a> . Top shareholder is now LKAB (Luossavaara-Kiirunavaara Aktiebolag), a government owned Swedish mining company. LKAB is now consolidating its influence in SSAB "in order to take responsibility and ensure that the company continues to have a clear industrial ownership influence at a time when the steel industry is facing major change". On 7 June, LKAB communicated its increased holding in SSAB (16.0% of the votes and 10.5% of the capital). The discount has widened to 12.4% (vs. 6.6% by mid-April), due to share purchases from LKAB. It should narrow when LKAB finishes its stake building.
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</ul>
<ul style="list-style-type: disc;">
<li>
The discount in <a href="https://www.smartkarma.com/entities/volvo-ab" target="_blank" data-smartkarma-citation="entities:22521:1" rel="noopener">Volvo AB (VOLVB SS)</a> B shares has widened and is now trading at a 3.0% discount to A shares (vs. 0.8% discount by mid-February). It is the highest level since January 2016.
</li>
<li>
The discount of non-voting <a href="https://www.smartkarma.com/entities/roche-holding-ag-77bd09c9-b0c2-45ea-98f1-6a7ca01dc9c5" target="_blank" data-smartkarma-citation="entities:27906:1" rel="noopener">Roche Holding AG (ROG SW)</a> shares has widened to 6.6% (it recently reached 8%), a level unreached since November 2011. The Hoffman family and related holds 45% of the voting rights (shareholder pooling agreement) whilst Novartis holds 33.3% of the voting rights.
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<li>
The discount in <a href="https://www.smartkarma.com/entities/schroders-plc" target="_blank" data-smartkarma-citation="entities:22134:1" rel="noopener">Schroders PLC (SDR LN)</a> is 25.7%, around the same level as in May (vs. 27.4% by mid-April 30.6% by mid-March and 34.1% by mid-February). I would maintain long non-voting/short voting shares on.
</li>
</ul>
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Please read on for table and charts.
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Trends



Discounts have generally widened across the European space.



Interesting situations and trades





Carlsberg A/S (CARLB DC) B shares (with 1/10th of the voting rights of the A shares) are trading at a whopping 19.3% discount (down from 28.4%  on 19 April) vs. the A shares), some demand for illiquid A shares seems to be the explanation. Maintain LONG B shares/short A shares on, if you can get hold of any A shares.


Bayerische Motoren Werke AG (BMW GR) exhibited a trend towards a reduction of the discount of preferred shares, until March 2020. The discount remains around the 15% level (vs. 22.1% by mid-April). The discount is approaching pre-Covid levels. Maintain long BMW prefs, short common shares on, with a target of a 12% discount.


Fuchs Petrolub SE (FPE GR)'s preference shares premium seems to vary within a range, which is probably liquidity related. It is 22.6% (down from 29.4% by mid-February and 34.4% in my October report). With over 50% of the ordinary shares, the Fuchs family maintains the majority vote. They have never stated they would consolidate and pride to be #1 among the independent suppliers of lubricants.
Although there is no reason why the voting rights should be specially dear in Fuchs's case, voting rights are still valuable and neither the dividend advantage of the preferred shares nor their being members of several midcap indexes (Prime Standard/MDAX; STOXX Europe 600; DAXplus Familiy 30) justify the large premium, in my view. Maintain the trade long common/short prefs on, with a 10% target.


Henkel AG &amp; Co KGaA (HEN3 GR) shows a long-term trend towards a reduction of the premium of the preferred shares. The premium has recently tightened and is now 15.7% (vs. 16.1% by mid-May).. Maintain the trade short prefs/long common shares with a 10% premium target.


Voting rights are valuable in a company like Volkswagen (VOW GR). Prefs discount has widened to 25.5% (vs. 20.5% by mid-May, 16.6% by mid-April and 31.8% on 18 March, highest levels since November 2009). Preference shares have in the past traded at a premium due to its higher liquidity and inclusion in stock indexes. That said, the ordinary shares are also liquid. The shareholder structure of Volkswagen is stable, and there seems to be no reason why the discount of the prefs should widen. Volkswagen was considering a separate listing of its Porsche sports car brand in a deal that could boost its valuation, according to Bloomberg, but the company seems to have put those plans on ice. Traton SE (8TRA GR), a subsidiary majority owned by Volkswagen, is squeezing out the minorities (both ordinary and preferred shares) in MAN SE (MAN GR). Recommendation is long prefs/short ords, with advantage that it can be executed in size and the necessary health warning attached to any trading with Volkswagen share classes, as one can never be completely sure of the Porsche/Piech families' plans. Close soon enough as the discount tightens 200-250 bps.






Danieli &amp; C. Officine Meccaniche (DAN IM):  the mandatory conversion and extraordinary dividend were approved on the shareholders meetings on 28 October. The conversion date is yet to be announced but expected soon (I am aware I have been repeating this since November, but there has no been any further update from Danieli).. Since announcement, the adjusted spread has ranged between -5.48% and 7.69%. It is currently -0.99%. Long Danieli ords/short Danieli savings shares, if and when the discount widens.

Telecom Italia Sp A (TIT IM) savings shares are trading at a 10.2% premium to ordinary shares (vs. a 7.9% premium by mid-May). The market may think of a conversion of savings into ords à la Buzzi Unicem or Danieli, which makes financial sense as it would save the savings' dividend advantage. That would dilute the voting power of Vivendi (23.943% of the votes). Short savings/long ords.





Grifols SA (GRF SM)B shares are trading at a 35.1% discount (vs. 36.1% by mid-April and 39.7% by mid-February), there is a trend towards the tightening of this discount since March 2020 lows, albeit it is taking some time. The Covid-related antitakeover provisions issued by the Spanish Government mean that the voting rights are less valuable now. Also, the Spanish government plans to introduce double voting rights for "loyal" shareholders (those who have kept the shares for at least two years). Moreover, the by-laws contain a poison pill that should significantly reduce the discount in case of a takeover attempt. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares (traded on Nasdaq), short A shares (traded in Madrid). The target is a 27% discount. Please note there is FX risk, which can be hedged.


The current discount in Atlas Copco AB (ATCOA SS) B shares vs. A shares is 14.5% (similar to May and wider than the 13.8% by mid-April) and seems to be on a widening trend.


On 10 May, Industrivärden divested its entire holding in SSAB AB (SSABA SS) . Top shareholder is now LKAB (Luossavaara-Kiirunavaara Aktiebolag), a government owned Swedish mining company. LKAB is now consolidating its influence in SSAB "in order to take responsibility and ensure that the company continues to have a clear industrial ownership influence at a time when the steel industry is facing major change". On 7 June, LKAB communicated its increased holding in SSAB (16.0% of the votes and 10.5% of the capital). The discount has widened to 12.4% (vs. 6.6% by mid-April), due to share purchases from LKAB. It should narrow when LKAB finishes its stake building.




The discount in Volvo AB (VOLVB SS) B shares has widened and is now trading at a 3.0% discount to A shares (vs. 0.8% discount by mid-February). It is the highest level since January 2016.


The discount of non-voting Roche Holding AG (ROG SW) shares has widened to 6.6% (it recently reached 8%), a level unreached since November 2011. The Hoffman family and related holds 45% of the voting rights (shareholder pooling agreement) whilst Novartis holds 33.3% of the voting rights.


The discount in Schroders PLC (SDR LN) is 25.7%, around the same level as in May (vs. 27.4% by mid-April 30.6% by mid-March and 34.1% by mid-February). I would maintain long non-voting/short voting shares on.




Please read on for table and charts.


Liquid Universe of European Ordinary and Preferred Shares: June Report

On 8 May 2021, <a href="https://www.smartkarma.com/entities/traton-se" target="_blank" data-smartkarma-citation="entities:28140:1" rel="noopener">Traton SE (8TRA GR)</a> submitted a specified request to the Executive Board of <a href="https://www.smartkarma.com/entities/man-se" target="_blank" data-smartkarma-citation="entities:21670:1" rel="noopener">MAN SE (MAN GR)</a> to convene the AGM of MAN SE to resolve on the transfer of the shares held by its minority shareholders to Traton SE.
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<li>
Traton SE currently holds 94.36 % of the share capital of MAN SE. <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a> has a c. 90% stake in Traton.
</li>
<li>
The proposed cash compensation is €70.68 (27% premium to the closing price on the last trading session prior to the news release) per both common and preference share and is addressed to c. 8.29 mn shares, for a total consideration of c. €586 mn.
</li>
<li>The announcement follows record Q1 2021 results at Traton and strong performance at MAN SE (33% increase in incoming orders and 29% increase in unit sales, 17% increase in sales revenue and €71 mn in adjusted operating result, vs negative €78 in Q1 2020 at MAN SE). MAN SE plans to cut as much as a quarter of its workforce and potentially close three factories in a restructuring plan.</li>
</ul>
The Executive Board and the Supervisory Board of MAN SE will propose to the Annual General Meeting (date TBA shortly) that a dividend of € 0.11 per ordinary or preference share be distributed for the FY 2020 (source: MAN 2020 accounts and website).
The news clearly took the market by surprise. On 10 May, MAN SE common and preference shares closed at €71.6, a 29% increase vs. the prior closing price (VWAP was €71.72, with c. €27.4 mn traded, well above the three-month average).
Gross spread is (1.15)%, including the €0.11 dividend. The market expects a sweetened squeeze-out compensation, which seems dangerous, or the resolution of a procedure. To be on the safe side, I would wait for the share price to go under €70.79 to set up any position.
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<li>
The amount of the proposed consideration should be reviewed by a court-appointed auditor.
</li>
<li>By putting revenues on the median of comparables EV/2020a sales, the implied valuation of MAN SE could be €77.3/share. There are not any Capital IQ consensus estimates for FY2021 and beyond.</li>
<li>
Dissenting shareholders may start legal action against the squeeze-out resolution, and delay the date in which it becomes effective by 5-6 months. The basis to challenge the compensation could be stronger than expected results from MAN, and the procedure can take years although it will not delay the squeeze-out. 
</li>
</ul>

On 8 May 2021, Traton SE (8TRA GR) submitted a specified request to the Executive Board of MAN SE (MAN GR) to convene the AGM of MAN SE to resolve on the transfer of the shares held by its minority shareholders to Traton SE.


Traton SE currently holds 94.36 % of the share capital of MAN SE. Volkswagen (VOW GR) has a c. 90% stake in Traton.


The proposed cash compensation is €70.68 (27% premium to the closing price on the last trading session prior to the news release) per both common and preference share and is addressed to c. 8.29 mn shares, for a total consideration of c. €586 mn.

The announcement follows record Q1 2021 results at Traton and strong performance at MAN SE (33% increase in incoming orders and 29% increase in unit sales, 17% increase in sales revenue and €71 mn in adjusted operating result, vs negative €78 in Q1 2020 at MAN SE). MAN SE plans to cut as much as a quarter of its workforce and potentially close three factories in a restructuring plan.

The Executive Board and the Supervisory Board of MAN SE will propose to the Annual General Meeting (date TBA shortly) that a dividend of € 0.11 per ordinary or preference share be distributed for the FY 2020 (source: MAN 2020 accounts and website).
The news clearly took the market by surprise. On 10 May, MAN SE common and preference shares closed at €71.6, a 29% increase vs. the prior closing price (VWAP was €71.72, with c. €27.4 mn traded, well above the three-month average).
Gross spread is (1.15)%, including the €0.11 dividend. The market expects a sweetened squeeze-out compensation, which seems dangerous, or the resolution of a procedure. To be on the safe side, I would wait for the share price to go under €70.79 to set up any position.


The amount of the proposed consideration should be reviewed by a court-appointed auditor.

By putting revenues on the median of comparables EV/2020a sales, the implied valuation of MAN SE could be €77.3/share. There are not any Capital IQ consensus estimates for FY2021 and beyond.

Dissenting shareholders may start legal action against the squeeze-out resolution, and delay the date in which it becomes effective by 5-6 months. The basis to challenge the compensation could be stronger than expected results from MAN, and the procedure can take years although it will not delay the squeeze-out. 



Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Equity Capital Markets

TuSimple Holdings Inc / Equity Capital Markets

Tusimple, a US-based leading autonomous technology vendor in the global truck freight industry, is looking to raise USD 1.5bn.
We find the company very interesting for the following reasons: 1) the company is able to monetize the AI technology in a tangible manner in a captive market, 2) the company received investment from both financial investors and the partners in the supply chain, and 3) the company was founded by the Chinese scholars with entrepreneurship experience in the US. 
We think the deal will do well and will participate at strike.

Tusimple, a US-based leading autonomous technology vendor in the global truck freight industry, is looking to raise USD 1.5bn.
We find the company very interesting for the following reasons: 1) the company is able to monetize the AI technology in a tangible manner in a captive market, 2) the company received investment from both financial investors and the partners in the supply chain, and 3) the company was founded by the Chinese scholars with entrepreneurship experience in the US. 
We think the deal will do well and will participate at strike. 

Tusimple IPO: Buy the Autonomous Freight as a Service (AFaaS) Company Founded by Chinese Scholars

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

<h2>TRATON (Part 2- Financial Outlook and Valuation):</h2>In our earlier report, we covered TRATON’s background, its business model, the growth prospects and risks it faces in the market. We concluded that the company has good long-term growth prospects with an attractive business model, although the IPO itself does not look especially attractive. This insight covers the financial performance and position of the company and its valuation based on …<ul>
<li>Revenue is likely to grow strongly over the next three years given the expected move towarsss the peak in demand for trucks across its key markets of operation.</li>
<li>Scania, as the premium brand, should remain a stable but modest revenue growth driver. VWCO is expected to witness double-digit growth in revenue supported by the increasing growth in sales volumes in emerging markets, while Man aims to turn around its operations with a refresh of its aging product lineup.</li>
<li>Profitability will be generated primarily from Scania. Man should improve profitability in FY19 simply through the drop out of one-off restructuring expenses. VWCO is likely to remain a weak contributor to profitability despite an attractive top line growth outlook and matching the margins of Scania and MAN is likely to take considerable time period.</li>
<li>TRATON’s financial position looks quite strong even before the IPO. Additional finance via an equity issue would have put Traton in a strong position to expand its scale through M&amp;A, but since the IPO is purely secondary shares this will not come to be. Instead, Traton will neither strengthen its balance sheet nor gain independence, leaving it and minority investors in a rather uninteresting position.</li>
<li>While we feel the quality of Scania should imply a premium vs. other truck manufacturers and the brand accounts for 75% of OP, ultimately this still does not justify what we calculate as an 11x EV/OP multiple when peers are trading at an average of 8.1x. Traton appears to be priced at mid-cycle multiples while the market is pricing peers for a peak in the cycle.</li>
</ul>

TRATON (Part 2- Financial Outlook and Valuation):In our earlier report, we covered TRATON’s background, its business model, the growth prospects and risks it faces in the market. We concluded that the company has good long-term growth prospects with an attractive business model, although the IPO itself does not look especially attractive. This insight covers the financial performance and position of the company and its valuation based on …
Revenue is likely to grow strongly over the next three years given the expected move towarsss the peak in demand for trucks across its key markets of operation.
Scania, as the premium brand, should remain a stable but modest revenue growth driver. VWCO is expected to witness double-digit growth in revenue supported by the increasing growth in sales volumes in emerging markets, while Man aims to turn around its operations with a refresh of its aging product lineup.
Profitability will be generated primarily from Scania. Man should improve profitability in FY19 simply through the drop out of one-off restructuring expenses. VWCO is likely to remain a weak contributor to profitability despite an attractive top line growth outlook and matching the margins of Scania and MAN is likely to take considerable time period.
TRATON’s financial position looks quite strong even before the IPO. Additional finance via an equity issue would have put Traton in a strong position to expand its scale through M&amp;A, but since the IPO is purely secondary shares this will not come to be. Instead, Traton will neither strengthen its balance sheet nor gain independence, leaving it and minority investors in a rather uninteresting position.
While we feel the quality of Scania should imply a premium vs. other truck manufacturers and the brand accounts for 75% of OP, ultimately this still does not justify what we calculate as an 11x EV/OP multiple when peers are trading at an average of 8.1x. Traton appears to be priced at mid-cycle multiples while the market is pricing peers for a peak in the cycle.


Traton IPO (Part 2): Valuation and Financial Outlook Just Reasonable

Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

The <a href="https://www.smartkarma.com/entities/traton-se" target="_blank" data-smartkarma-citation="entities:28140:1" rel="noopener">Traton SE (8TRA GR)</a> IPO application commenced on the 17th of June 2019 and is expected to end by 12:00 noon, 27th June 2019, on the regulated market of the Frankfurt Stock Exchange (Prime Standard) and the regulated market of Nasdaq Stockhold (Large cap Segment). TRATON was formed in 2015 to aggregate <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a>'s heavy trucks and bus businesses (which were operating under the brands: MAN, Scania and Volkswagen Caminhões e Ônibus (VWCO)) into a single operation. The IPO price range is between EUR 27 to EUR 33 per share, with the IPO deal size expected to be around EUR 1.725bn, assuming a price of EUR30 (the mid-point of the proposed Offer Price range), with over-allotment shares being exercised as well.This insight covers TRATON’s background, its business model, reasons for going public, and the growth prospects and risks it faces in the market. The company’s attractive product portfolio seems quite competitive alongside the growing opportunities in its key markets of operation. Its focus on digitalisation services stemming from its interest in connectivity is a key distinguishing factor of this truck company when compared to other players like Volvo and Daimler. Although it seems logical for the market to focus on this truck company due to its creative business model, strong management team and excellent line-up of products and services, we are somewhat sceptical regarding the company’s ability to demonstrate strong stock performance, given the fact that its IPO seems solely intended to advance its parent company’s interests with modest growth prospects and a potentially peaking cycle.<div class="content-caption">Deal Specifics of TRATON’s Global Offering</div><table class="table table-striped"><tbody>
<tr><td colspan="2">Details:</td></tr>
<tr>
<td>Application Period</td>
<td>June 17th, 2019 - Noon, June 27th, 2019</td>
</tr>
<tr>
<td>Price Determination Date</td>
<td>June 27th, 2019</td>
</tr>
<tr>
<td>Result Announcement Date</td>
<td>June 28th, 2019</td>
</tr>
<tr>
<td>Dealing in Shares commence on</td>
<td>June 28th, 2019</td>
</tr>
<tr>
<td>Expected IPO price per share:  </td>
<td>Between EUR 27 to EUR 33 (SEK 288.92 to SEK353.12 calculated based on the exchange rate one day prior to publication of prospectus)</td>
</tr>
<tr>
<td>Number of Shares for IPO:</td>
<td>57.5m shares (50m base shares and 7.5m over-allotment shares)</td>
</tr>
<tr>
<td>Joint Global Coordinators: </td>
<td> Citigroup, Deutsche Bank, Goldman Sach Internationals and J.P.Morgan</td>
</tr>
<tr>
<td>IPO base deal size: </td>
<td>Approx.EUR 1.725bn (based on Median)</td>
</tr>
<tr>
<td>Major Shareholder  </td>
<td> Volkswagen</td>
</tr>
<tr>
<td>Use of Proceeds</td>
<td>
The Company will not receive any proceeds from the Offering.
The Existing Shareholder will receive the proceeds resulting from the sale of the Base Shares and from a potential sale of the Over-Allotment Shares
</td>
</tr>
</tbody></table><div class="content-remarks">Source: Company Disclosures, Prospectus</div>

The Traton SE (8TRA GR) IPO application commenced on the 17th of June 2019 and is expected to end by 12:00 noon, 27th June 2019, on the regulated market of the Frankfurt Stock Exchange (Prime Standard) and the regulated market of Nasdaq Stockhold (Large cap Segment). TRATON was formed in 2015 to aggregate Volkswagen (VOW GR)'s heavy trucks and bus businesses (which were operating under the brands: MAN, Scania and Volkswagen Caminhões e Ônibus (VWCO)) into a single operation. The IPO price range is between EUR 27 to EUR 33 per share, with the IPO deal size expected to be around EUR 1.725bn, assuming a price of EUR30 (the mid-point of the proposed Offer Price range), with over-allotment shares being exercised as well.This insight covers TRATON’s background, its business model, reasons for going public, and the growth prospects and risks it faces in the market. The company’s attractive product portfolio seems quite competitive alongside the growing opportunities in its key markets of operation. Its focus on digitalisation services stemming from its interest in connectivity is a key distinguishing factor of this truck company when compared to other players like Volvo and Daimler. Although it seems logical for the market to focus on this truck company due to its creative business model, strong management team and excellent line-up of products and services, we are somewhat sceptical regarding the company’s ability to demonstrate strong stock performance, given the fact that its IPO seems solely intended to advance its parent company’s interests with modest growth prospects and a potentially peaking cycle.Deal Specifics of TRATON’s Global Offering
Details:

Application Period
June 17th, 2019 - Noon, June 27th, 2019


Price Determination Date
June 27th, 2019


Result Announcement Date
June 28th, 2019


Dealing in Shares commence on
June 28th, 2019


Expected IPO price per share:  
Between EUR 27 to EUR 33 (SEK 288.92 to SEK353.12 calculated based on the exchange rate one day prior to publication of prospectus)


Number of Shares for IPO:
57.5m shares (50m base shares and 7.5m over-allotment shares)


Joint Global Coordinators: 
 Citigroup, Deutsche Bank, Goldman Sach Internationals and J.P.Morgan


IPO base deal size: 
Approx.EUR 1.725bn (based on Median)


Major Shareholder  
 Volkswagen


Use of Proceeds

The Company will not receive any proceeds from the Offering.
The Existing Shareholder will receive the proceeds resulting from the sale of the Base Shares and from a potential sale of the Over-Allotment Shares


Source: Company Disclosures, Prospectus

Volkswagen’s TRATON to Dual List Just to Provide VW with Financial Flexibility (PART 1)

Germany

Traton SE designs and manufactures automobiles. The Company produces light-duty commercial vehicles, trucks, and buses. Traton serves customers worldwide.

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