Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<h2>Another Hostile Deal!!!</h2>Japan's premier discount travel agency <a href="https://www.smartkarma.com/entities/h-i-s-co-ltd" target="_blank" data-smartkarma-citation="entities:19311:1" rel="noopener">H I S Co Ltd (9603 JP)</a> on Wednesday <a href="https://www.his.co.jp/wp-content/uploads/20190710.eng_.pdf" target="_blank" rel="noopener">announced</a> it would launch a Partial Tender Offer to purchase a 40+% stake in real estate and hotel business <a href="https://www.smartkarma.com/entities/unizo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5209:1" rel="noopener">Unizo Holdings (3258 JP)</a> to raise its stake from ~4.8% to 45.05%. The Tender Offer was launched this morning (EDINET <a href="https://disclosure.edinet-fsa.go.jp/E01EW/BLMainController.jsp?uji.verb=W00Z1020initialize&amp;uji.bean=ek.bean.EKW00Z1020Bean&amp;TID=W00Z1020&amp;PID=W1E63041&amp;SESSIONKEY=1562802316944&amp;lgKbn=2&amp;dflg=0&amp;iflg=null&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=S100GGKV" target="_blank" rel="noopener">disclosure</a> only in Japanese). The Tender Offer price is at a 56% premium to the last trade and is at an 18-month high. The announcement was made at around 1:30pm local time, and the shares jumped 20% to limit up ¥2390 in a five minute period, trading 700,000 shares, which was about three and a half days volume on average - before getting pegged at limit up (the shares went limit up yesterday too, closing at ¥2890 on close allocation volume of 220,000+ shares. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/092/789/original/Screenshot%202019-07-11%20at%209.29.17%20AM.png?1562808578" class="editor-image img-responsive" data-smartkarma-image-id="92789"></figure><div class="content-caption">source: tradingview.com</div>Quite late that evening, Unizo Holdings issued a <a href="https://www.unizo-hd.co.jp/en/news/file/EN_2019710.pdf" target="_blank" rel="noopener">release</a> saying...<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/092/866/original/Screenshot%202019-07-11%20at%207.53.45%20PM.png?1562846042" class="editor-image img-responsive" data-smartkarma-image-id="92866"></figure>The new Takeover Rules enacted in December 2006 (with one amendment to the SEL made in 2005 in direct reaction to the loophole used by Livedoor to acquire large stakes of Nippon Broadcasting System off-market to reach a level above one-third) are enshrined in the <a href="https://www.fsa.go.jp/common/law/fie01.pdf" target="_blank" rel="noopener">Financial Instruments and Exchange Act/Law</a> (normally called "FIE", "FIEA", or "FIEL"), with the most relevant portions commencing with Article 27-2. These "TOB Rules" outlawed stealth acquisition off-market to "suddenly acquire" a large stake without passing through the market mechanism or conducting a Tender Offer. The principle of this was a sense of "fairness" such that minority investors had an equal opportunity to sell to someone who sought to have control or influence, and that it could not simply be arranged through collusive behavior. That's why HIS is conducting a Tender Offer.The first rule which matters here for <a href="https://www.smartkarma.com/entities/unizo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5209:1" rel="noopener">Unizo Holdings (3258 JP)</a> is that the Board of the "Subject Company", according to Article 27-10...<blockquote>shall, pursuant to the provisions of a Cabinet Office Ordinance, submit a document which states its opinion on the Tender Offer and other matters specified by a Cabinet Office Ordinance (hereinafter referred to as the "Subject Company's Position Statement") to the Prime Minister within a period specified by a Cabinet Order from the date when the Public Notice for Commencing Tender Offer is made.</blockquote>That period specified is 10 business days, so Unizo has until 25 July.<h2>A Rare Hostile Tender Offer</h2>A hostile tender offer by one company upon another conducted without warning, or with warning but without approval, is reasonably rare. In Japan it is even rarer. This is, however, the second in six months, the first being <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a>'s tender offer for shares of <a href="https://www.smartkarma.com/entities/descente-ltd" target="_blank" data-smartkarma-citation="entities:8225:1" rel="noopener">Descente Ltd (8114 JP)</a>. That situation was much discussed on these pages by <a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> and myself, and eight insights spanning months on the situation are to be found <a href="https://www.smartkarma.com/entities/descente-ltd/insights" target="_blank" rel="noopener">here</a>. The Descente Tender Offer was to get Itochu from 30% to 40% after Itochu, which had been in business with Descente for 50 years, and had held 25% for decades, was not consulted on a business tie up with Wacoal, negotiated in a hurry last year, designed to sideline Itochu's influence.That was a news story and a half for 10% of a company. This time HIS analyzed the company, liked what it saw, bought 4.8%, and says it asked to meet. Unizo wouldn't. Repeatedly.So HIS decided to buy 40% of a company it hadn't talked to. At a 50+% premium. This promises to be interesting. And given this one has hostility AND a longer end date, there is more trading and event optionality than normal. That optionality is discussed below, and as is normal, we have Arb Grids.The shares have traded for 5 minutes in the market and one closing allocation, and have traded 2.7% of shares out in that space with the stock now up 45% since 1:30pm Weds. This morning the shares will open and we will see what happens.<hr><div class="content-highlight">
This situation is going to have hair and we love those. 
This is a $400mm Tender Offer. 
It is WELL worth your time to study it if you are an arbitrageur. 
If you are a long-only investor holding the stock, it is a complicated situation which may warrant a deeper look into things you do not normally delve. Do not hesitate to get in touch.
</div><hr>For other insights on Japanese M&amp;A please check the list of Japan-related Event-Driven insights <a href="https://www.smartkarma.com/insights?collection=all-insights&amp;filters=countries%3AJapan%7Cverticals%3A29" target="_blank" rel="noopener">here</a>. As a reference to Japan M&amp;A rules and practices, please see the <a href="https://www.smartkarma.com/insights/quiddity-japan-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:28911" rel="noopener">Quiddity Japan M&amp;A Guide 2019</a>.

Another Hostile Deal!!!Japan's premier discount travel agency H I S Co Ltd (9603 JP) on Wednesday announced it would launch a Partial Tender Offer to purchase a 40+% stake in real estate and hotel business Unizo Holdings (3258 JP) to raise its stake from ~4.8% to 45.05%. The Tender Offer was launched this morning (EDINET disclosure only in Japanese). The Tender Offer price is at a 56% premium to the last trade and is at an 18-month high.   The announcement was made at around 1:30pm local time, and the shares jumped 20% to limit up ¥2390 in a five minute period, trading 700,000 shares, which was about three and a half days volume on average - before getting pegged at limit up (the shares went limit up yesterday too, closing at ¥2890 on close allocation volume of 220,000+ shares. source: tradingview.comQuite late that evening, Unizo Holdings issued a release saying...The new Takeover Rules enacted in December 2006 (with one amendment to the SEL made in 2005 in direct reaction to the loophole used by Livedoor to acquire large stakes of Nippon Broadcasting System off-market to reach a level above one-third) are enshrined in the Financial Instruments and Exchange Act/Law (normally called "FIE", "FIEA", or "FIEL"), with the most relevant portions commencing with Article 27-2. These "TOB Rules" outlawed stealth acquisition off-market to "suddenly acquire" a large stake without passing through the market mechanism or conducting a Tender Offer. The principle of this was a sense of "fairness" such that minority investors had an equal opportunity to sell to someone who sought to have control or influence, and that it could not simply be arranged through collusive behavior. That's why HIS is conducting a Tender Offer.The first rule which matters here for Unizo Holdings (3258 JP) is that the Board of the "Subject Company", according to Article 27-10...shall, pursuant to the provisions of a Cabinet Office Ordinance, submit a document which states its opinion on the Tender Offer and other matters specified by a Cabinet Office Ordinance (hereinafter referred to as the "Subject Company's Position Statement") to the Prime Minister within a period specified by a Cabinet Order from the date when the Public Notice for Commencing Tender Offer is made.That period specified is 10 business days, so Unizo has until 25 July.A Rare Hostile Tender OfferA hostile tender offer by one company upon another conducted without warning, or with warning but without approval, is reasonably rare. In Japan it is even rarer. This is, however, the second in six months, the first being Itochu Corp (8001 JP)'s tender offer for shares of Descente Ltd (8114 JP). That situation was much discussed on these pages by Michael Causton and myself, and eight insights spanning months on the situation are to be found here. The Descente Tender Offer was to get Itochu from 30% to 40% after Itochu, which had been in business with Descente for 50 years, and had held 25% for decades, was not consulted on a business tie up with Wacoal, negotiated in a hurry last year, designed to sideline Itochu's influence.That was a news story and a half for 10% of a company. This time HIS analyzed the company, liked what it saw, bought 4.8%, and says it asked to meet. Unizo wouldn't. Repeatedly.So HIS decided to buy 40% of a company it hadn't talked to. At a 50+% premium. This promises to be interesting. And given this one has hostility AND a longer end date, there is more trading and event optionality than normal. That optionality is discussed below, and as is normal, we have Arb Grids.The shares have traded for 5 minutes in the market and one closing allocation, and have traded 2.7% of shares out in that space with the stock now up 45% since 1:30pm Weds. This morning the shares will open and we will see what happens.
This situation is going to have hair and we love those. 
This is a $400mm Tender Offer. 
It is WELL worth your time to study it if you are an arbitrageur. 
If you are a long-only investor holding the stock, it is a complicated situation which may warrant a deeper look into things you do not normally delve. Do not hesitate to get in touch.
For other insights on Japanese M&amp;A please check the list of Japan-related Event-Driven insights here. As a reference to Japan M&amp;A rules and practices, please see the Quiddity Japan M&amp;A Guide 2019.

HIS Hostile Tender for Unizo - Fun Ahead!

Japan

UNIZO Holdings Company,Limited is a holding company, which manages operations for its subsidiaries. Group companies operate leasing office buildings and managing golf course and hotel.

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HIS Hostile Tender for Unizo - Fun Ahead!

Another Hostile Deal!!!Japan's premier discount travel agency H I S Co Ltd (9603 JP) on Wednesday announced it would launch a Partial Tender Offer...

Travis Lundy