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] Hikari Tsushin + Friends to Buy Leopalace21 (8848) – Light Bid, Somewhat Open Register
- Today after the close, Hikari Tsushin (9435 JP) announced a deal to buy out Leopalace21 Corp (8848 JP) partnering with MBK and NEC Capital, taking out Fortress’ last 15%.
- Hikari Tsushin bought its large stake very low in 2022, post-scandal. Fortress did too. Murakami tried earlier, failed. Others made money on it.
- This deal offers near zero basic transparency, and comes at a sharp discount to the midpoint of the fair value DCF ranges. Very not a good look. But it’s vulnerable.
2. [Japan Partial Tender] BASE (4477 JP) Deal Update – Trading VERY Cheap
- When SBI launched its partial tender for 20% of BASE Inc (4477 JP) at the end of last month, they wanted to buy ~42.5% of the Max Real World Float.
- That was at ¥340, a small premium to where the stock was trading, and a 17% discount to where another partial tender last year got only 7-8% of MRWF.
- I think the dynamic here favours being long. Pro-ration expectations are misplaced I think.
3. Kadoya (2612 JP): Integral’s Unconventional Offer With Competing Bidders Lurking
- Kadoya Sesame Mills (2612 JP) announced a tender offer from Integral (5842 JP) at JPY2,514, a 3.9% premium to the last close and a 40.2% premium to the undisturbed price.
- The offer could increase to JPY2,760 if both Mitsubishi Corp (8058 JP) and Mitsui & Co Ltd (8031 JP) agree to share buybacks. Two competing bidders remain in the background.
- Mitsubishi and Mitsui’s deliberately deferred, non-committal stance facilitates a potentially higher competing bid, particularly as the offer is below the midpoint of the IFA DCF valuation range.
4. Setup Pointing to Hynix (And Samsung) Slowing Their Dollar Selling Pretty Soon
- Local concerns are resurfacing over Hynix and Samsung’s low utilization, with further GMR cuts potentially exposing deliberate production curbs, though KRW strength remains supportive for buybacks.
- Hynix and Samsung’s dollar selling may be slowing as FX driven GMR deterioration risks exposing low utilization, while regulators increasingly flag KRW volatility.
- Hynix ADR funding faces rising regulatory hurdles amid FX volatility, potentially delaying buyback funding and forcing slower dollar selling, creating a near term stock price pivot.
5. Cleanaway Waste (CWY AU): EQT (All But) Firms Terms. Get Involved
- On the 13th August, EQT proposed taking Australia’s largest garbage and waste disposal play Cleanaway Waste (CWY AU) private, via a Scheme, at A$3.13/share, a 32.1% premium to undisturbed.
- EQT was afforded nine weeks of exclusive DD; and announced yesterday nothing had arisen in its review that was likely to cause it not to proceed on the same terms.
- All good? Mostly. There’s some pushback in the market CWY’s management’s backing an (exclusive) Offer as the Iran war suppressed CWY’s share price. I’m not a buyer into that narrative.
6. Kakaku.com (2371 JP): Bain/LY’s Latest Offer Is Playing a Dangerous Game
- Bain/LY revised their Kakaku.com Inc (2371 JP) offer to JPY3,597 (JPY3,720 for KDDI share buyback), 2.2% premium to the previous JPY3,520 offer but a 2.3% discount to EQT/DG’s JPY3,680 offer.
- Bain/LY (4689 JP)’s latest offer underwhelms and could backfire if KDDI Corp (9433 JP) and possibly Oasis decide to end this long-running saga by accepting the marginally lower EQT/DG offer.
- While there remain arguments for continued escalation, the “winning” offer is unlikely to exceed the last close (JPY3,820). It’s time to head for the exit.
7. Korea Investment Partners – A Home Run Investment in Anthropic
- Korea Investment Partners (KIP) has made a home run investment in Anthropic. Korea Investment Holdings Co, Ltd. (071050 KS) owns a 100% stake in Korea Investment Partners
- Assuming a 50% share dilution from its original investment in August 2024 ($10 million), KIP’s stake in Anthropic would reach $555 million (if Anthropic is valued at $2 trillion).
- Korea Investment Holdings Co, Ltd. (071050 KS) has a market cap of 10.4 trillion won, so this would be 7.4% of its market cap.
8. Trading Setup from Samsung and Hynix Timing Buyback Completion Around Litigation Key Dates
- Fresh local chatter links Samsung and Hynix accelerating buyback completion to the DRAM price fixing litigation, with September 29 CMC and October 21 MTD as key binary events.
- MTD denial could shift the narrative from supply discipline to coordinated supply discipline, with Micron’s divergent stance and tight Samsung and Hynix inventories adding to legal overhang.
- The key trading window may be Sep 29 to Oct 21, as the CMC could signal discovery scope and trigger front running of the MTD outcome.
9. [Japan M&A] An Ongoing Competitive MBO-Ish Deal for Kadoya Sesame Mills (2612 JP) – Watch for More
- VERY late last night Tokyo time, Kadoya Sesame Mills (2612 JP) announced a Supported/Recommended Deal whereby local PE form Integral would buy out the company at ¥2,514-2,760 pending shareholder agreements.
- The base case is ¥2,514. ¥2,760 comes when major shareholders agree to sell at a discount, passive their tax benefits to the whole shareholder base.
- But there’s competition. A started things off last year. Integral/family joined in. Major shareholders MitCorp and Mitsui got B and C to join. A and C are still in it.
10. National Stock Exchange of India (NSE) IPO: Index Entry Timeline & Flow
- National Stock Exchange (NSEIN IN) is looking to list on the BSE by selling 126.4m shares via an OFS to raise INR 226bn (US$2.35bn) at a valuation of US$46bn.
- Anchor investors have been allotted 37.8m shares at INR 1785/share and shares will start trading from 24 September.
- The stock will not get Fast Entry to local and global indices and inclusion will start in March 2027 with the biggest buying coming in May and June.
