This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. [Japan M&A/Activism] Toyota RE Deal for Toyota Industries (6201 JP) Last Looks
- The fact Toyota Industries (6201 JP) is only 4+% through terms is an indication investors are unconvinced blocking this deal gets a good governance result. That’s bad.
- Remember TICO+Toyota Group were already unwinding cross-holdings. The original docs said they’d agreed. I doubt they un-agree. The transaction WITH buybacks WITHOUT takeover (or restructuring) has a BVPS of ¥28,855.
- If the benefits of uplift are shared with Toyota and all Crossholders, they receive an extra ¥385bn and ¥159bn and post-deal minority BVPS is “just” ¥25,549. Best outcome? Deal break.
2. Toyota Industries (6201 JP): Scenarios Ahead of the First Close
- The first closing date of Toyota Fudosan’s JPY18,800 offer for Toyota Industries (6201 JP) is 12 February. Shares continue to trade above terms.
- Ahead of the first close, internal and external factors have continued to underscore that the offer is light.
- There are several potential scenarios at the first close. The most likely scenario is the extension of close and additional irrevocables. The least likely scenario is successful completion.
3. [Japan M&A/Activism] Toyota RE Deal for TICO (6201) Extended. VERY Few Minorities Have Tendered.
- Toyota Asset Preparatory Co today extended its tender for Toyota Industries (6201 JP) til 2 March. They indicated 33.1% had tendered as of 1pm. That suggests 95+% of minorities hadn’t.
- It repeated its statement that it is paying full intrinsic value for the company. I think that is patently, demonstrably false. If they think so, they are the wrong buyer.
- Shares popped after the news. They reiterated they had no intention to pay more. That’s par for the course. I expect they may bid up, but still not get it.
4. Ferretti (9638 HK): On KKCG’s Partial Offer
- On 19th January, privately-held KKCG Maritime announced a partial offer for luxury yacht maker Ferretti SpA (9638 HK), seeking to lift its stake to 29.9% from 14.5%.
- Ferretti is a dual-primary listing, the first company to be listed on both the Hong Kong and Milan exchanges.
- Ferretti’s major shareholder is Shandong SASAC (37.54%). The Italian regulator is running a ruler over the transaction. Comfortably trading through the HK$31.71/share cash terms.
5. StubWorld: On Toyota Inds (6201 JP)’s Last Day Of Offer
- A double dose of StubWorld this week as the Tender Offer for Toyota Industries (6201 JP) closes today. Will Fudosan extend? Possibly. Will they bump? Unlikely.
- Preceding my comments on Toyota are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
6. [Japan M&A] CVC/Family “Re-Nudge” Mandom (4917 JP) MBO Price from ¥2,600 to ¥3,105, Eclipsing KKR
- Almost two weeks ago, Kalon Holdings – the CVC+Nishimura Family entity bidding for Mandom Corp (4917 JP) in an MBO upped their ¥2,520 Bid to ¥2,600 against KKR’s ¥3,100 Bid.
- They said they might meet KKR’s price. Today, at 9am JST, they met KKR’s price and raised it by ¥5/share to ¥3,105.
- The resulting Amended Target Opinion is a masterpiece of Board self-justification for going with the original MBO rather than with KKR. But it’s an OK price.
7. Merger Arb Mondays (09 Feb) – Mandom, MCJ, Toyota Ind, Raksul, IJM, Guocoland, Skyworth, ENN
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Skyworth Group Limited (751 HK), Dongfeng Motor (489 HK), Australian Strategic Materials (ASM AU), Webjet Group (WJL AU), ENN Energy (2688 HK), Ijm Corp Bhd (IJM MK).
- Lowest spreads: Bright Smart Securities (1428 HK), BioDlink International (1875 HK), Hisamitsu Pharmaceutical Co (4530 JP), Toyota Industries (6201 JP), Sankei Real Estate (2972 JP).
8. Front-Running Korea’s 2x Single-Stock ETFs: Basis Blowouts & Calendar Spread Arb Pre-June Launch
- The one-ETF-per-desk rule matters because concentrated hedging flow can blow out single-stock futures basis, creating ugly contango and juicy cash-and-carry opportunities as one desk dominates futures buying.
- Focus on pre-loading long-basis positions 1–2 months ahead, monitor contango closely, set short-basis trades, and capture the basis blowout once ETF flows hit.
- ETF listing likely pushes June flows into September, creating a timing arb: short front months (June/July), long Sep, capturing curve steepening and widened calendar spreads.
9. Pepper Money (PPM AU): KKR/Challenger’s NBIO
- This morning (9th Feb), leading non-bank lender Pepper Money (PPM AU) confirmed KKR and Challenger Ltd (CGF AU) have submitted an NBIO by way of a Scheme.
- KKR/CGF are offering A$2.60/share, a 47.7% premium to undisturbed. And ~1.49x P/B (based on 1H25 numbers). KKR currently holds 60.34%.
- CGF announced it would hold no more than 25% in Pepper Money, if delisted. CGF is down 3.6%.
10. Hisamitsu Pharma (4530 JP): Risk/Reward as Shares Trade Through Terms
- Since announcing the offer, Hisamitsu Pharmaceutical Co (4530 JP)’s shares have traded consistently above the MBO offer price of JPY6,082. The offer closes on 19 February.
- While there was no auction, the offer is reasonable. The spate of recent MBOs that attracted activists successfully securing better terms may also be behind the share price action.
- The probability of a bump is low due to no visible activism, peers not re-rating, irrevocables, several crossholders, and the minimum can be lowered. Take profits.
