In today’s briefing:
- NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
- 7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
- Topcon (7732 JP): Privatisation Auction Underscores Underlying Value
- Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels
- Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer
- Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention
- NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- LG Electronics India: IPO Details & Index Entry Timing
- CPMC Holdings (906.HK) Update – It’s Time to Prepare for Different Scenarios
- REPT BATTERO Energy IPO Lockup – US$1.2bn Lockup Release
NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
- Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
- The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
- Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
- Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
- Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
- The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.
Topcon (7732 JP): Privatisation Auction Underscores Underlying Value
- Topcon Corp (7732 JP) shares rose 51% over two days, confirming a Bloomberg report that is conducting a privatisation auction. The process is in the second round of bids.
- Exploring the privatisation process is unsurprising, as Topcon has materially underperformed the Nikkei 225 since its last medium-term management term plan was announced on 12 May 2023.
- Despite the share price pop, Topcon trades at a discount to median peer multiples. At an offer of JPY3,000, Topcon would trade in line with median peer multiples.
Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
- We see two index changes based on the latest available data. However, the reference period is not complete which means our expectations can change over the next few weeks.
Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer
- The battle for Fuji Soft Inc. (9749 JP) took an unexpected turn. Bain revised its offer to JPY9,600, a 1.6% premium to KKR’s JPY9,451 second tender offer.
- Bain has introduced a minimum number of shares to be purchased criterion. Bain’s offer is structured to address most but not all of the special committee’s reasons for opposition.
- The Board’s first reaction will be to ask KKR, its preferred bidder, to bump. Given the amount of time and effort KKR has put into this bid, it will bump.
Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention
- Palantir Technologies (PLTR US) is anticipated to be the largest addition following its eligibility, which was secured through a listing transfer from NYSE to Nasdaq just before the cut-off date.
- Super Micro Computer (SMCI US) is projected to exit the index despite its recent entry in July 2024, as it has ranked above the exit threshold of 125.
- ARM Holdings (ARM US) is not an expected deletion due to special ADR market cap treatment. Equinix Inc (EQIX US) is not an expected addition because it is a REIT.
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
- Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
- The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.
LG Electronics India: IPO Details & Index Entry Timing
- LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
- The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
- The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.
CPMC Holdings (906.HK) Update – It’s Time to Prepare for Different Scenarios
- If ORG cannot obtain the SAFE approval by the end of December, this indicates something is wrong in the process. Then the success rate of this transaction is greatly reduced.
- Acquiring CPMC is in line with Baosteel’s strategic goals and CPMC is important to Baosteel.So, the possibility of state-owned capital to agree to withdraw completely from CPMC is not high.
- It’s unclear whether Zhang Wei will continue to side with ORG, or whether he still want to exit. This actually depends on the renegotiations between Baosteel/China Foods/COFCO and Zhang Wei.
REPT BATTERO Energy IPO Lockup – US$1.2bn Lockup Release
- REPT BATTERO Energy raised around US$270m in its Hong Kong IPO in Dec 2023. Its pre-IPO investors holding around US$1.2bn worth of shares will be released from their lockup soon.
- REPT is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
- In this note, we will talk about the lockup dynamics and possible placement.
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