This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Taishin (2887 TT)/Shin Kong (2888 TT) Merger: Index Flows in July
- Taishin Financial Holding (2887 TT) and Shin Kong Financial Holding (2888 TT) announced a Merger of Equals in August 2024 and completion is expected on 24 July.
- Taishin Financial Holding (2887 TT) has underperformed its peers over the last 18 months while Shin Kong Financial Holding (2888 TT) has underperformed its peers following the merger announcement.
- There will be passive flows in the merged entity following the completion of the merger and could help reverse some of Taishin Financial Holding (2887 TT)‘s underperformance.
2. Lens Technology (6613 HK): Offering Details & Index Inclusion
- Lens Technology (6613 HK)‘s global offering opened yesterday, and the raise could reach up to US$800m if the offer-size adjustment option and the overallotment option are exercised.
- The allocation to cornerstone investors is smaller than in other recent AH listings. The discount of over 25% to the A-shares is attractive given the recent trend for large listings.
- Lens Technology (6613 HK) could be added to a global index in December. Inclusion in Southbound Stock Connect in August and HSCI inclusion could take place in March 2026.
3. [Japan M&A] Bain Plays Announcement Games with Nissin (9066) MBO TOB – Noise A Possibility
- On 12 May 2025, Bain Capital announced a deal to buy Nissin Corp (9066 JP). The tender was VERY light in price (Bain’s borrowing more than adjusted EV at TOB Price)
- And it was very long at 41 days. As of Day 1, they announced a long list of “irrevocables” – 16 holders with 5.75% – who had agreed to tender.
- Since then Bain have made 7 separate amendment filings detailing additional irrevocables and one possible additional tender agreement to get to 11.30%. Now it’s extended.
4. A/H Premium Tracker (To 27 June 2025): “Beautiful Skew” Continues as SB Buys, AH Premia Fall Back
- AH premia gives back previous week gains but the “beautiful skew” of wide premia converging more than narrow premia continues. It has paid to be long wide H discounts.
- It has paid to be long the H on those H/A pairs with the biggest H discounts. I would continue to ride that trend.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers. Technical issue delayed this week’s Monitor.
5. [Japan M&A] YAGEO Extends Shibaura TOB Limbo at FSA/METI/BOJ Request on FEFTA
- YAGEO’s deal for Shibaura Electronics (6957 JP) had been extended a couple of times – once for Shibaura’s yuho, and once for Taiwan Investment Commission Approval.
- YAGEO had re-filed its notification for FEFTA on 2 June, and the “normal” 30 day waiting period expired 1 July. YAGEO extended by 4 business days to 15 July.
- The TRS amendment was less informative than the TDNET release today. That’s worth reading. More waiting ahead. But the timing may be politically strategic.
6. Nippon Concept (9386 JP): J-STAR-Sponsored MBO a Done Deal
- Nippon Concept (9386 JP) has recommended a J-STAR-sponsored MBO at JPY3,060, a 37.2% premium to the last close price.
- The offer is attractive as it represents an all-time high and is above the midpoint of the IFA DCF valuation range.
- An attractive offer and irrevocables pave the way for deal completion. The tender runs from July 1 to August 13, with payment due on August 20.
7. Merger Arb Mondays (30 June) – Toyota Industries, Santos, Pointsbet, Dickson, HKBN, OneConnect
- 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: Mayne Pharma (MYX AU), Insignia Financial (IFL AU), ENN Energy (2688 HK), Santos Ltd (STO AU), Seven & I Holdings (3382 JP), Ainsworth Game Technology (AGI AU).
- Lowest spreads: Bright Smart Securities And (1428 HK), New World Resources (NWC AU), Avjennings Ltd (AVJ AU), Hainan Meilan International Airport (357 HK), Toyota Industries (6201 JP).
8. HD HCE–Infracore Merger: Deal Mechanics & Trade Playbook
- This event offers two arb plays—merger swap and appraisal rights—but there’s barely any juice left as pricing locked the market into an unusually tight range.
- Yeah, it’s tight. Unless cancel risk flares up, the spread likely stays muted—major holder’s balanced stakes make vote pushback or ratio disputes pretty unlikely.
- One angle to watch: passive flows. HCE likely joins KOSPI 200 post-merger, triggering index buys around Infracore’s halt on Dec 30—potentially a solid year-end positioning play.
9. KCC Corp: EB Issue of $625 Million Of HD KSOE + KCC Corp and KCC Glass Share Swaps
- KCC announced that it is issuing an EB worth $625 million in foreign currency using its stake in HD Korea Shipbuilding & Offshore Engineering as the underlying asset.
- The asset that is used as the underlying asset for the EB is 2.056 million shares of HD Korea Shipbuilding & Offshore Engineering held by the KCC Corp
- We believe this large EB issue by KCC Corp is likely to have a positive impact on KCC Corp but slightly negative impact on HD KSOE.
10. Merger Between HD Hyundai Infracore and HD Hyundai Construction Equipment
- After the market close on 1 July, HD Hyundai Infracore announced that it will be merging with HD Hyundai Construction Equipment.
- The merger ratio is 0.1621707 common shares of HD Hyundai Construction Equipment for each common share of HD Hyundai Infracore.
- We have Negative ratings on both HD Hyundai Infracore and HD Hyundai Construction Equipment.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Hygon/Sugon Merger: BIG Index Flows on Completion
- On 26 May, Hygon Information Technology (688041 CH) and Dawning Information Industry (603019 CH) announced a merger in a sign of consolidation in China’s chipmaking industry.
- For each share of Dawning held, shareholders will receive 0.5525 shares of Hygon. With uncertainty on the timeline for merger completion, Dawning is trading at a 10% discount.
- On completion of the merger, passive trackers will need to buy over US$1.1bn of Hygon Information Technology C (688041 CH) with nearly of that from local index trackers.
2. Greatland Resources (GGP AU): Big Index Inclusions for Recent IPO
- Greatland Resources (GGP AU) started trading on the ASX Ltd (ASX AU) on 24 June after selling shares worth A$504m in a primary and secondary offering across Australia/UK.
- Greatland has a full market cap of A$4.9bn and a high free float since Greatland Gold Plc (GGP LN) was listed on the AIM market of the London Stock Exchange.
- Given the large market cap and high float, the stock could be added to multiple indices over the next few months.
3. Xero (XRO AU): Index Flows Following the Capital Raise
- Xero Ltd (XRO AU) has entered into a binding agreement to acquire Melio Limited for an upfront cash consideration of US$2.5bn in cash and Xero Ltd (XRO AU) stock.
- The cash consideration is being funded mainly through a fully underwritten A$1.85bn (US$1.2bn) institutional placement. There is also a non-underwritten Share Purchase Plan to raise around A$200m.
- Given the large size of the institutional placement, there will be an increase in index shares and the passive buying that follows should mop up over 20% of the placement.
4. Gemlife (GLF AU): Index Inclusions Start Later This Year
- Gemlife (GLF AU) is looking to raise A$750m in a primary offering, valuing the company at A$1.58bn. The stock is expected to start trading on 3 July.
- The Puljich family and Thakral Corp (THK SP) are escrowed on their shares till mid 2026 at the earliest.
- Gemlife (GLF AU) could be added to global indexes in November and December this year, but S&P/ASX 300 Index inclusion could take place only in March 2026.
5. FWD Group (1828 HK): Offering Details & Index Entry Timeline
- FWD Group Holdings (FWD HK) is looking to raise up to HK$3.99bn (US$508m) in its IPO, valuing the company at HK$48.82bn (US$6.22bn).
- Cornerstone investors will take up more than half the base offering and that will delay index inclusion to well into 2026.
- FWD Group Holdings (FWD HK) could be added to the HSCI Index and Southbound Stock Connect in December. That could bring some buying into the stock from mainland investors.
6. Contact Energy/Manawa Energy: Index Flows as Deal Nears Completion
- Contact Energy (CEN NZ) is acquiring Manawa Energy Ltd (MNW NZ) for NZ$1.12/share in cash and 0.583 Contact Energy shares for each share of Manawa Energy.
- Manawa Energy (MNW NZ) is expected to stop trading after the close on 7 July. There will be passive inflows for Contact Energy (CEN NZ) due to increased index shares.
- As a replacement for Manawa Energy Ltd (MNW NZ), there will be an ad hoc inclusion to the S&P/NZX 50 Index at the close of 7 July.
7. Fresh Low-PBR Policy Color Hitting the Local Tape Today
- The ruling party’s KOSPI 5,000 task force is now eyeing low PBR names with talk of direct penalties — a sharper shift from the prior admin’s soft-touch value-up approach.
- Low PBR penalties may bypass the Assembly, fast-tracked via KRX or enforcement rule tweaks — rollout could follow swiftly post commercial code passage, possibly within 2–3 months.
- Market’s zeroing in on low PBR, high ROE large caps — with 0.8x flagged as the penalty line, 56 KRW 1T+ names screen as potential re-rating plays.
8. Krungthai Card (KTC TB): Buying Opportunity After Margin Call
- Mongkol Prakitchaiwattana is the second largest shareholder in Krungthai Card (KTC TB), behind Krung Thai Bank Pub (KTB TB).
- He also holds stakes in XSpring Capital (XPG TB), BEC World Public (BEC TB), and The Practical Solution (TPS TB).
- All four companies went limit down on the 23rd June. And again the next day. Both KTC and TPS say nothing has fundamentally changed. The cause? Margin calls.
9. Korea Holdco Rerating Pullback Risk: No Retroactive Treasury Cancellation
- Mandatory treasury cancellation isn’t in the current bill, but FSC and MOJ have started internal reviews; enforcement decree could drop as early as Q4.
- An internal policy paper suggests mandatory cancellation will apply only to newly acquired treasury shares, with tight limits on existing ones to curb owner control abuse.
- Lack of retroactive cancellation weakens the bull case, and while holdco sentiment stays upbeat, momentum may fade, opening the door to a tactical pullback.
10. PointsBet (PBH AU): Betr’s “Superior Offer”? In An Alternate Reality
- BETR Entertainment (BBT AU) has now tabled an all scrip off-market offer for PointsBet (PBH AU) – no minimum acceptance condition – which they consider superior to MIXI (2121 JP)‘s.
- Really? 3.81 new betr shares is currently equivalent to A$1.143/share versus MIXI’s A$1.20/share all-cash Offer. Terms backed out just A$1.086/share at the start of trading last Friday.
- PointsBet quite rightly states the obvious – betr’s Offer is materially below MIXI’s.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Santos Ltd (STO AU): FIRB Approval For XRG’s Tilt Will Be No Pushover
- Aussie O&G producer Santos Ltd (STO AU) has announced a non-binding Scheme from XRG, which comprises Abu Dhabi’s National Oil Company, Abu Dhabi Development Holding Company, and Carlyle
- The consortium is offering US$5.76 (A$8.89)/share, a 28% premium to last close. Initial Offers were pitched at US$5.04/share, followed by US$5.42/share.
- Confirmatory due diligence has been afforded. A firm bid would require a multitude of reg approvals in Australia, PNG, and the US.
2. [Japan Event] Potentially Interesting Dynamics of Post-Tender NTT Data (9613) Trading. $8bn+ One Way
- The NTT Data Corp (9613 JP) Tender Offer closed today. Results will come out tomorrow. I expect it will have been successful.
- That will mean some US$8bn+ of passive tracking flows to sell and $8bn+ to buy related to this event alone in the next 3 months.
- And there are some very interesting dynamics to consider in the meantime.
3. Shin Kong (2888 TT)/Taishin (2887 TT) – Short Timer, FX Risk, Index Flows – Time To Buy Vs Peers
- Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) are scheduled to merge in less than 6 weeks.
- The recent TWD strength has meant sharp losses for Shin Kong Life, but the merger agreement the FSC agreed has Taishin explicitly supporting Shin Kong Life.
- There are near-term flows and technical limitations which make this situation interesting again. Grab your shorts! It could be a bumpy ride!
4. Santos (STO AU): XRG Consortium’s Big Offer; Index Impact
- A consortium comprising ADNOC and Carlyle have offered US$5.76/share (A$8.8807/share) to take Santos Ltd (STO AU) private. That values Santos equity at A$28.8bn and an Enterprise Value of A$36bn.
- With the offer price at a premium of 28%-44% to last and VWAPs, and the Board supporting the offer, this looks like a done deal.
- Santos Ltd (STO AU) is a member of all the major S&P/ASX indices and there will be ad hoc inclusions to the indices at the time of the delisting.
5. Vishal Mega Mart (VMM IN) Placement: PE Selling Will Lead to Large Passive Buying
- Reports indicate that Kedaara Capital Fund is looking to sell 22% of Vishal Mega Mart at a floor price of INR 110/share, a 11.9% discount to the last close.
- The placement will lead to a huge increase in the free float for the stock and Vishal Mega Mart could be added to a global index in August.
- Vishal Mega Mart is also an inclusion to another global index at the close on Friday and we could see more buying in the stock following the increase in float.
6. [Japan Event] Seven Bank (8410) To Buy Back Up to 17.0% of Shares Out Tomorrow
- Today after the close, Seven Bank Ltd (8410 JP) announced a MASSIVE ToSTNeT-3 transaction to buy back up to 200,000,000 shares (17.0% of shares out) for ¥52.4bn. Tomorrow AM.
- There is a complex iterative calculation on the part of Seven Eleven Japan to figure out how many shares they should put into the buyback.
- I see a minimum buyback of 10.8%. 17% would be great. But there is a potential issue on the back end of which investors should be aware.
7. HDB Financial IPO: Offer Details & Index Entry Timing
- HDB Financial Services Ltd (0117739D IN) is looking to list on the exchanges by selling up to INR125bn (US$1.46bn) of stock at a valuation of around INR 620bn (US$7.2bn).
- The stock will not get Fast Entry to either of the global indices. The earliest inclusion in a global index should take place in December.
- HDB Financial Services Ltd‘s peers have traded well over the last 6 months and that could spill over into demand for the stock. Grey market premium is pretty high.
8. [Japan Activism] Mitsui Matsushima (1518) Ups Buyback Tender to 35.8%, Murakami-San Group To Sell
- Today after the close, Mitsui Matsushima (1518 JP) announced it would increase its buyback from 3.5mm shares to 4.0mm shares (31.3% to 35.8%). It also announced a Tender Offer Buyback.
- The tender offer starts tomorrow and goes til mid-July, paid 8 August. Murakami Group will tender a minimum of 3.3mm shares (more likely 4.2mm).
- This is not a huge immediate win, but it’s OK. And it changes the structure of the company’s balance sheet, ROE, effective ROE, and possibly its dividend.
9. ENN Energy (2688 HK): ENN Natural Gas’ Application Proof Is Out. Interesting For What Is Not Present
- On the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH) (ENN-NG), its largest shareholder.
- The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA’s theoretical assessment on such leaves a lot to be desired.
- A redacted version of ENN-NG’s application proof is now out. Curiously, the share ratio – new ENN-NG H Shares for each ENN shares – is noticeably absent
10. [Japan M&A] NTT Docomo Buys Out Carta Holdings (3688) Minorities – Done Deal
- On 16 June 2025, NTT (Nippon Telegraph & Telephone) (9432 JP) sub NTT Docomo and Dentsu Inc (4324 JP) announced Docomo would buy out minorities in Dentsu sub Carta Holdings.
- It’s an OK price, not a great price. But while they are not calculated by advisors, at least the Target Board talks about the value of synergies to minorities.
- The price is light, but the combined irrevocables and large individual shareholders not brought over the wall get this over the line.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Index Treatment of Sony (6758 JP)’s Spinoff of the Financial Services Business
- For each share of Sony Corp (6758 JP), shareholders will receive 1 share of Sony Financial Group. Ex-date for the dividend in-kind is 29 September.
- The Nikkei has started a market consultation on treatment of the spinoff in the Nikkei225 and that means the dividend in-kind will not be included in the Dividend Point Index.
- There will be some selling in SFGI from passive trackers and the company will buy back some stock following listing. Details of the buyback have not been announced yet.
2. Foshan Haitian Flavouring & Food (3288 HK): Offering Details & Index Inclusion
- Foshan Haitian Flavouring & Food (603288 CH)‘s global offering opens today and the raise could reach up to US$1.5bn if the offer-size adjustment option and the overallotment option are exercised.
- There is a large allocation to cornerstone investors. The discount of around 22% to the A-shares is attractive given the recent trend for Midea (300 HK) and CATL (3750 HK).
- The H-shares could be added to a global index and the FXI ETF in December. Inclusion in the HSCI should be in September and Southbound Stock Connect in July.
3. [Japan M&A] Carlyle Deal for TRYT (9164) – Great Exit for Speculators as HR Co Targets Are Desirable
- In early February, articles suggesting the PE owner of TRYT (9164 JP) wanted to cash out. Performance post-IPO had been bad. Catching up to the IPO price would be tough.
- But a second round of bidding came about, so the stock went limit up. Then it settled in the ¥480 range for three weeks. Then started to climb.
- Now the company and its PE firm owner have announced a sale to a new PE Firm at ¥880/share. This is below IPO Price but it will get done.
4. Toyota Industries (6201 JP): Thoughts on Intrinsic Value
- Several investors have sharply criticised Toyota Industries (6201 JP)’s preconditional tender offer from Toyota Fudosan. Oasis is pushing for a higher offer.
- The offer has several issues that are detrimental to minorities’ interests. The key grievance is that it is below TICO’s intrinsic value.
- Due to TICO’s varied business units, SoTP valuation is the most appropriate methodology. My analysis suggests a base case intrinsic value of around JPY19,000.
5. [Japan M&A] Private Co Takeout of Fuji Corp (7605 JP) – A Done Deal
- The long-term major owner now chairman is getting out. The company was shopped. And bought. And this is the deal. ¥2,830 which is about 5.7x this year’s EBITDA.
- It could have been done a bit better, but irrevocables are 48.5% out of the 50.01% minimum and other directors get this past the minimum hurdle.
- Transparency is lacking but it is an all-time high and you can’t do much about it.
6. Virgin Australia (VGN AU): Touch & Go for Index Inclusion
- Virgin Australia Holdings (VGN AU) is looking to raise A$685m in a secondary offering, valuing the company at A$2.27bn. The stock is expected to start trading on 24 June.
- Bain Capital and management are escrowed on their shares till early 2026. There is no escrow for Qatar Airways, but they have indicated that their shareholding is strategic.
- Virgin Australia Holdings (VGN AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.
7. Zhejiang Sanhua Intelligent Controls (2050 HK): Big Raise Supported by Cornerstones
- Zhejiang Sanhua Intellignt Controls Co. (002050 CH)‘s global offering opens today and the raise could reach up to US$1.4bn if the offer-size adjustment option and the overallotment option are exercised.
- There is a large allocation to cornerstone investors. The discount of around 22.7% to the A-shares is attractive given the recent trend for Midea (300 HK) and CATL (3750 HK).
- The H-shares should be added to Southbound Stock Connect in July, to the HSCI in September, and to a global index in December.
8. Merger Arb Mondays (09 June) – Mayne, Tam Jai, OneConnect, Toyota Industries, Makino, Fuji Corp
- We 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: Mayne Pharma (MYX AU), Insignia Financial (IFL AU), Fuji Corp (7605 JP), ENN Energy (2688 HK), Smartpay Holdings (SPY NZ), Seven & I Holdings (3382 JP).
- Lowest spreads: Bright Smart Securities And (1428 HK), Toyota Industries (6201 JP), Dada Nexus (DADA US), Avjennings Ltd (AVJ AU), Nissin Corp (9066 JP), Torii Pharmaceutical (4551 JP).
9. [Japan M&A] Hino & Mitsubishi-Fuso Truck to Join; Bagholding Ugly for Minorities, and a Re-IPO
- On the 10th of June, Toyota Motor (7203 JP) subsidiary Hino Motors Ltd (7205 JP) and Mitsubishi-Fuso Truck & Bus Company announced their long-awaited integration plans. We have a deal.
- An agreement was signed in 2023, but Hino got in big trouble for falsifying testing data on gasoline engine emissions/efficiency. Hino took a hit in 2023, then 2025. Talks advanced.
- The deal announced suggests Toyota has thrown itself and Hino minorities under the proverbial Fuso bus. It’s VERY odd. But… it deserves a look because 2026 will see a re-IPO.
10. A/H Premium Tracker (To 6 June 2025): Narrow Premia Hs Worst Performers, BYD Relents
- AH spreads are slightly narrower. BANKS, INSURERS, BROKERS, INDUSTRIALS, PHARMA and UTILITIES see significant H-share outperformance vs their A pairs. TECH, CONSUMER, ENERGY mixed to worse.
- Ongoing skew on H-vs-A performance this week. Those trading AH Premium <20% saw H outperform sharply but those with H Premia contracted. Quiddity Portfolio alpha trending strongly.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. [Japan M&A] Toyota Inds (6201) Proposed Takeover – It Looks Bad, and It’s Worse Than It Looks
- 2wks ago I said “a deal could be announced near-term.” 2wks later we have a deal. But it is a bad deal for TICO minorities. Low price. Minimal transparency. Awful.
- But if you dig through deal structure and economics, it is worse than it looks. It takes digging to understand how bad, and they could tell you, but they won’t.
- The deal will take time. Things will be in limbo til then. And Toyota Group governance and capital allocation is conditional on this deal getting done, which is also bad.
2. Soul Patts & Brickworks: Index Impact of A$14bn Merger
- Washington H. Soul Pattinson (SOL AU) and Brickworks Ltd (BKW AU) have executed a binding Combination Deed to implement an A$14bn merger that simplifies the company structure by eliminating crossholdings.
- The merger ratio is a good one for Brickworks Ltd (BKW AU) shareholders and the benefits to both sets of shareholders should see the merger approved.
- There will be large passive buying in Washington H. Soul Pattinson (SOL AU) from global and local index trackers and that could lead to short covering.
3. Toyota Industries (6201 JP): After a High, Comes the Low of a Takeunder
- Toyota Industries (6201 JP) disclosed a preconditional tender offer from Toyota Fudosan at JPY16,300, a 23.3% premium to the undisturbed price but a 11.4% discount to last close.
- While representing a pre-rumour all-time high, the offer is below the midpoint of the special committee IFA DCF valuation range. The Board has a neutral recommendation.
- The offer undermines minorities as it lacks split pricing for the Toyota Motor (7203 JP) and its affiliates’ shareholding and likely undervalues the significant real estate holdings.
4. [Japan Activism] Pasona Group (2168 JP) – Three New Things Of Mixed Importance
- Pasona Group (2168 JP) is a “value stock.” It has loads of cash (but less than you think) and significant ongoing governance issues, but they are doing a TINY buyback.
- Several weeks ago we got an announcement which was odd. Not completely odd, just odd. Now in the past week we have market activity/announcements which make one wonder.
- This piece attempts to interpret some of the recent data/info points. One is odd. Another is odd but meaningful (but different than people think). A third is just technical.
5. ESR (1821 HK): A Shareholder Register Look-Through
- Today, I was the first analyst to gain access to ESR (1821 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under s329 of the Securities and Futures Ordinance.
- This is the same register discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM and L’Occitane (973 HK): Who Owns What, And When
- It is also used by proxy solicitors. My takeaway, still, is that this Offer is a done deal. But yes; there are a few shareholder activists lurking in the register.
6. [Japan Buyback] Leopalace (8848 JP) – A Giant Buyback To Get Fortress Partially Out
- Leopalace21 Corp (8848 JP) had a giant oopsie in 2018-2021 where they lost ¥180bn over three years because of defective construction requiring repairs.
- Murakami and others got involved. Leopalace got financing from FIG (shares/SARs/loan), Murakami bailed. Eventually Hikari Tsushin got in. Leopalace got FIG out of their loan, doing a refi through Mizuho.
- Cash was up, cashflow is strong. Business is changed/revived. Now Leopalace is buying back SARs it sold to FIG. FIG will still own 26%. The future is potentially interesting. Still.
7. Soul Patts/Brickworks To Unwind Circularity
- The cross-shareholding between Washington H. Soul Pattinson (SOL AU) (Soul Patts) and Brickworks Ltd (BKW AU) was established in 1969 to defend the companies from corporate raiders.
- Perpetual pursued a case in the Federal Court of Australia, alleging that the cross-shareholding was oppressive to minority shareholders; however the claim was dismissed in 2017.
- Today, via inter-conditional Schemes, the circularity is set to be unwound through a merger. Soul Patts currently owns 43.3% in Brickworks, and Brickworks 26% in Soul Patts.
8. Makino Milling Machine (6135 JP): MBK’s Preconditional Offer Is Not the Likely Endgame
- Makino Milling Machine Co (6135 JP) announced a preconditional tender offer from MBK Partners at JPY11,751, a 4.8% premium to last close and a 6.8% premium to Nidec’s withdrawn JPY11,000 offer.
- The offer is broadly in line with the midpoint of the IFA DCF valuation range. The tender offer is expected to commence in early December.
- Despite the offer resulting from an auction, there remains a medium probability that Nidec Corp (6594 JP) or a spurned white knight bidder (Candidate A) emerges with a higher offer.
9. Mayne Pharma (MYX AU): Twists and Turns as Cosette Chases a Get-Out-Of-Jail-Free Card
- Mayne Pharma (MYX AU) disclosed that Cosette served a scheme termination notice. Mayne maintains that a material adverse clause was not breached and considers the termination notice invalid.
- The Cosette MAC breach claims likely hinge on establishing that forecasts provided during due diligence are materially lower than the unaudited management accounts. Precedents do not favour Mayne.
- While the last close price (A$4.48) is below the undisturbed price (HK$5.41), there remains downside. My estimated deal break valuation range is A$3.26-A$4.00.
10. NWD (17 HK): Markets Pricing In A Bust
- 0.052x P/B! That’s New World Development (17 HK)‘s current trailing P/B ratio; roughly a quarter of the next comparable real estate peer.
- What’s new? The latest decline followed an announcement on the 30th May that it would defer payments on its perpetual bonds.
- NWD’s 6.15% and 4.8% perpetuals fell to 23 cents and 15.5 cents on the dollar on 2nd June, suggesting the market is pricing in the possibility of a bust.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Horizon Robotics (9660 HK): Southbound Stock Connect Inclusion Today & Upcoming Index Flows
- Horizon Robotics (9660 HK) will be added to Southbound Stock Connect from the start of trading today. Then there will be passive buying at the close on 20 June.
- The lock up expiry in April will result in large buying from trackers of the Hang Seng TECH Index (HSTECH INDEX) and HSIII Index in September.
- The stock will also be added to another large global index, though the timing on inclusion is not certain at the moment.
2. Zomato/Eternal: The BIG Passive Selling Starts
- Following shareholder approval of the proposal to reduce the Foreign Ownership Limit from 100% to 49.5%, NSDL has updated the FOL. This starts the process of passive selling in Zomato.
- Passives will sell US$350m at the close on Tuesday. There is a low probability of more selling later in the week. There will be bigger selling in August.
- The size of the selling in August and beyond will depend on what foreign investors do in the stock till the end of June. Watch the red flag/ breach list.
3. [Japan Activism/M&A] Taiyo Holdings (4626) Now an MBO Target? KKR and One More Bidding
- Taiyo Holdings (4626 JP) has an interesting background, embroiled in a separate activist event via its equity affiliate sponsor Dic Corp (4631 JP), and recently an activist target itself.
- Today a Bloomberg article said KKR and one other PE fund had made acquisition proposals via TOB. Taiyo confirmed, establishing a Special Committee. A deal is months away, at earliest.
- Shares shot up to limit up, opened briefly, then resumed at limit up. The question here and now is valuation.
4. [Japan M&A] Makino Milling (6135) – MBK as White Knight Appears To Have Made a Binding Bid
- In December, Nidec Corp (6594 JP) made an unsolicited bid for Makino Milling Machine Co (6135 JP). Makino wanted more time. Nidec wanted to squeeze. Makino proposed a poison pill.
- Makino appeared to act slowly but white knight bidders were mooted in the media. Nidec launched, but apparently approvals may have been hard. They withdrew. Makino cancelled the poison pill.
- Shares fell sharply. Yesterday, they rose because it appears Effissimo owns 3%. Today, we got news post-close that MBK may be close to making an ¥11,000+ bid.
5. [Japan M&A] NTT To Buy Out SBI Sumishin Net Bank (7163) At a HUGE Price for Minorities
- Late Nov-2024, SBI Sumishin Net Bank (7163 JP) was trading ¥2,900, weekly mag Bunshun scooped a possible NTT Docomo deal. The stock popped, I was skeptical. It popped more.
- At Q3 earnings, NTT seemed to downplay the possibility saying they wouldn’t overpay. SBI Sumshin fell. Then fell some more.
- Today we get a deal whereby NTT buys out SBI Holdings (8473 JP)‘s 34% stake, and minorities, and partners with Sumitomo Mitsui Trust. Then a side deal with SBI.
6. Tsuruha (3391 JP)/Welcia (3141 JP): Vote Musings
- Leading proxies recommend that Tsuruha Holdings (3391 JP) shareholders vote against the Tsuruha/Welcia Holdings (3141 JP) merger on 26 May.
- The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha vote will be close but likely to be approved. Long Tsuruha is the trade, irrespective of the vote.
- For a vote pass, you are long synergies and a likely partial offer bump. For a fail, you are long an undemanding multiple and the optionality of a new bid.
7. A/H Premium Tracker (To 23 May 2025): AH Premia Contract, H Premia Names Perform Best; Batteries!
- AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. BYD (1211 HK) now 5% through. CATL 10% through will help.
- It feels like there were some concentrated shorts on H vs A. BYD performance on CATL and Hang Seng upweight/inclusion exacerbate the issue. CATL H less liquid than people think.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
8. [Japan Activism/M&A] – Shareholders Approve Tsuruha/Welcia Merger – Now It’s Partial Offer+Synergies
- This morning the Nikkei reported shareholders of Welcia Holdings (3141 JP) and Tsuruha Holdings (3391 JP) approved their Merger. Activists opposed but it was going to be close at best.
- As expected, Welcia shares popped, and the spread converged to 2% with Tsuruha falling back to just below ¥11,400. Some of this is unwind of speculative interest in Tsuruha.
- The new yuhos are out, which shows roughly where we stand (as of end-Feb, and some updates). Now the trade is NEWCO vs Aeon’s interest and NEWCO vs World.
9. NIFTY Index Outlook (With an Eye on Zomato’s Passive Selling Starting…)
- As reported by Brian Freitas , one of the NIFTY Index (NIFTY INDEX) ‘s component (Zomato: Eternal (ETERNAL IN) ) will be subject to big passive selling beginning on Tuesday.
- Let’s have a look at the NIFTY Index (NIFTY INDEX) to evaluate the tactical outlook according to our model.
- Since our last BUY recommendation in a previous insight in early May, the index has made some progress uptrending, let’s see if the rally can continue…
10. [Quiddity Index] GMO (9449) Sub GMO Financial Gate (4051) Moves to TOPIX
- Today after the close, GMO Internet Group (9449 JP) subsidiary GMO Payment Gateway (3769 JP) announced its subsidiary GMO Financial Gate (4051 JP) would move to TSE Prime 5 June.
- That means it moves to TOPIX at the close of trading 30 July 2025.
- This growth stock appears to have “de-growthed” somewhat in stock price terms – trading near its IPO price from covid era, so it is worth a look.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. CATL (3750 HK): Reassessing Index Fast Entry; Need Overallotment Exercised by Tomorrow
- CATL (3750 HK) is trading at a 6.9% premium to Contemporary Amperex Technology (CATL) (300750 CH) – if that is due to expectations of Fast Entry, that premium could drop.
- CATL (3750 HK) has not announced the overallotment option as exercised and that puts Fast Entry at risk. An announcement prior to the close tomorrow could lead to Fast Entry.
- The earliest inclusion could be at the close on 30 May while the other global index inclusion looks likely in December.
2. [Japan M&A/Activism] Toyota Industries (6201) Deal Could Be Announced Near-Term
- Friday 25 April, Toyota Industries (6201 JP) released earnings for last year, guidance for this year and a Bloomberg scoop suggested Toyota Motors chairman Akio TOYODA would launch an MBO.
- In some ways surprising, but activists/”noisy shareholders” and TSE guidance on dual listings caused pressure, and Toyota Motors was trying to walk the good governance walk.
- I discussed the situation here on Day 1, and here a few days later. Long-only shareholders sold. Today, Kyodo had a follow-up article. Then Nikkei. Looks more solid now.
3. CATL (3750 HK): The Tail Wags the Dog
- The buying in Contemporary Amperex Technology (3750 HK) over the last couple of days has dragged Contemporary Amperex Technology (CATL) (300750 CH) higher as the arbs trade the AH spread.
- The Fast Entry into a global index could keep CATL (3750 HK) supported over the next few trading days, but reality will take hold pretty soon.
- Short CATL (3750 HK) / long CATL (300750 CH) offers great risk/reward, while an outright CATL (3750 HK) short offers higher return albeit at a much higher level of risk.
4. CATL (3750 HK)’s Concentration Warning
- Contemporary Amperex Technology (3750 HK) (CATL H), a global leader in providing battery solutions, was listed on the 20th May at $263/share. Here is the prospectus.
- Via the H-share listing, CATL raised ~US$5.2bn. Shares have since gained ~26% and trade at HK$330/share, as I type.
- It is worth noting the HKEx issued a high concentration warning in CATL’s H shares the day before shares were listed.
5. [Japan Activism/M&A] – Thinking About Positioning Around the Tsuruha/Welcia Vote
- The Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) AGMs to elect directors and approve the share exchange agreement to merge the two.
- 10% Tsuruha shareholder Orbis objects to the merger ratio AND the later tender whereby Aeon goes to 51%, saying everything is underpriced. ISS/GlassLewis recommend voting against the merger.
- I haven’t seen the proxy reports but I’ve done the math. Investors/arbs should look at the possibilities/probabilities and understand what dependencies exist. Shareholders are not helpless, no matter the outcome.
6. [Japan M&A] Mitsubishi Logisnext (7105) – The Deal Still Looks Mighty Good
- On 9 May Mitsubishi Logisnext Co., Ltd. (7105 JP) delayed earnings by 30 minutes. Shares popped. Then earnings were released, no deal, and shares crashed. Now they are rebounding.
- But they remain volatile and subject to dips like the one this AM -5% at one point. Fears may be due to the idea that first smoke here was Dec-2024.
- 5 months later, no deal yet. Bids were due pre-earnings but with tariffs and writedowns, one wonders if bidders were waiting for results.
7. Melco (200 HK) Trading “Cheap” Into Rights Issue
- In my stub monitor flagged in StubWorld: Toyota Industries/Motors, GMO Internet, I see Melco International Development (200 HK) is trading “cheap” to Melco Resorts & Entertainment (MLCO US).
- Last month, Melco proposed one new rights share for two existing shares at a subscription price of HK$1.0286/share, a 72.93% discount to undisturbed, and a 64.28% discount to the TERP.
- Lawrence Ho will backstop ~54% of the rights, if need be. Depending on the level of support for the rights, expect Lawrence to further chip away against minorities.
8. Toyota Industries (6201 JP): A Potential Privatisation Sooner than Expected
- Kyodo news agency reported that Toyota Industries (6201 JP) plans to accept a tender offer by Toyota Motor (7203 JP) and Toyota Chairman Akio Toyoda, potentially in May or June.
- The Nikkei reported that Toyota plans to borrow JPY3 trillion to fund the acquisition. These articles provide more clarity on price, composition of the offeror, financing structure, and timeline.
- These articles increase the probability of a tender offer around JPY18,515 (JPY6 trillion market cap). At the last close, the gross spread was 12.1%.
9. [Japan Buybacks] ShinEtsu Chem (4063) – How the FCSR Works
- Late April, Shin Etsu Chemical (4063 JP) announced a huge ¥500bn 200mm shares (10.2%) buyback. That was never ever going to happen. That needed a ¥2500 share price, not ¥4300+.
- But it was big, and started in late May. Today, they announced how. It is a “Japan ASR”, the Nomura version, this time with an interesting twist.
- In response to a couple of reader questions today, I provide a brief overview of how these things work.
10. Soundwill Holdings (878 HK): An Opportunity or Another HK Arbageddon?
- The spread to the Foo family’s HK$8.50 offer for Soundwill Holdings (878 HK) has materially increased to 15.8% over the last two trading days. The vote is on 23 May.
- Several readers have asked if the Soundwill offer will mirror the Goldlion Holdings (533 HK) deal break. The two schemes share similarities but are also different in several ways.
- The share price action either reflects an imminent deal break or a result of a negative feedback loop. Tread carefully as this is a high-risk/high-reward situation.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go
- Contemporary Amperex Technology (CATL) (300750 CH) could raise up to US$5.1bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a huge allocation to cornerstone investors that is locked up for 6 months. That significantly reduces float and the probability of Fast Entry inclusion to global indexes.
- CATL (3750 HK) will be added to Southbound Stock Connect from the open of trading on 16 June following the end of the Price Stabilisation period.
2. Renesas Electronics (6723 JP): Denso Exits as Stock Price Falters
- Denso Corp (6902 JP) is looking to raise up to JPY137bn (US$940m) by selling 73.9m shares of Renesas Electronics (6723 JP) to international investors.
- The indicative price range is JPY 1,812-1,848/share, a discount of 1-2.95% to Monday’s close. The placement is 4.1% of shares outstanding and is 4.7 days of ADV.
- We do not expect any passive buying at the time of settlement of the placement shares. The earliest passive buying will take place in August and September.
3. Mayne Pharma (MYX AU): MAC Musings
- Back on the 21st Feb 2025, Mayne Pharma (MYX AU), a leader in dermatology and women’s health, entered into a Scheme with US-based pharmaceutical outfit, Cosette Pharmaceuticals, at A$7.40/share.
- The transaction is progressing – the HSR Act condition was satisfied last week. A Scheme Booklet should be issued shortly, with an expected vote mid-June and late-June/early-July implementation.
- Shares declined 3.1% yesterday over concerns a MAC could be triggered on the back of the Trump’s executive order on pharma. The impact is likely mixed, but leans neutral.
4. Korean Market Election Setup: Locals’ Low PBR Trading Trends
- Quick screen shows ₩1T+ names under 0.4x PBR — mostly retail, financials, and holdcos. Locals are keeping an eye on these with the election theme in play.
- This isn’t just hopeful chatter — both parties are seriously leaning into value-up policies. With dividend tax reform and solid sector catalysts, locals see real potential in the post-election trade.
- Long regional banks, hedge with KB and Shinhan. In retail, long domestic names, short China-dependent ones. For holdcos, long Hanwha and Doosan, short CJ and Kolon.
5. [Japan M&A] Son of Chairman/55%Owner Taking Imagica (6879) Private at 10x FCF, 4+x EBITDA. CHEAP.
- This deal should not come as a surprise. Bloomberg has an article out saying tycoons are taking companies private to avoid shareholder activism. It’s not just that.
- The stated reasons (competitive environment requiring faster decision-making and significant restructuring) are all kinda hot garbage. This is being done at adjusted EV/EBITDA of 4x and 10x FCF.
- And there are no synergies counted, and half of the Adjusted EV is net receivables+inventory equal to about 2mos of revenues. This is being done too cheaply. But…. TIJ baby…
6. Goldlion Holdings (533 HK): An Unexpected HK Arbageddon
- Goldlion Holdings (533 HK) shareholders have voted against Mr Tsang’s HK$1.5232 per share offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.
- The Goldlion deal break was unexpected, and the HKEx merger arb rulebook will be rewritten. This deal break offers several lessons.
- Goldlion had the highest premium of the pre-deal break price to the undisturbed price compared to previous deal breaks. My estimated deal-break price is HK$0.953, 36.0% below last close.
7. [Japan Activism] Murakami Owns ~42% and Company Announces 31.3% Buyback
- With earnings today (which beat guidance), Mitsui Matsushima (1518 JP) announced upbeat guidance for next year, a very large dividend hike from ¥130/share to ¥230/share, and a Very Large Buyback.
- The buyback is ¥20bn (vs ¥47bn market cap) or 3.5mm shares (31.3%). It starts 2 June. Astute Murakami trackers may recognise the potential pattern here.
- If the company buys back all 3.5mm shares at just below book, EPS of ¥756 = 12.9% ROE and PER of 7.8x. Even up 30% from here that isn’t super-rich.
8. [Japan M&A] Bain Deal for Nissin (9066) Is Still Light Vs Comparable Deals
- The deal price is higher than the Bloomberg article insinuated. The closing date is earlier than the Bloomberg article suggested. But that doesn’t mean it’s enough.
- The Large ToSTNeT-3 buyback last year changed the shareholder structure significantly, but many holders who sold are unknown. I would expect they were cross-holders.
- For that, this deal is NOT a done deal. There may be games played on this deal.
9. [Japan M&A] TechnoPro Holdings (6028) May Be Up For Grabs
- Technopro Holdings (6028 JP) is a temp/contract staffing platform which specialises in engineering staff (IT engineers far more than machinery, construction, chemicals). The company has been growing.
- Overnight, an article appeared in MergerMarket – a high-dollar M&A-related news service – saying the company was going through a sale process. The company confirmed it was one possibility.
- The stock went limit up. This quick writeup looks at the framework of the idea, and possibilities.
10. Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year
- Jiangsu Hengrui Medicine (600276 CH) could raise up to US$1.6bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the possibility of Fast Entry inclusion to global indexes.
- Jiangsu Hengrui (1276 HK) should be added to Southbound Stock Connect from the open of trading on 20 June following the end of the Price Stabilisation period.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. NTT (9432) To Overpay To Take Over NTT Data (9613) Subsidiary?
- This morning, the Nikkei says NTT (Nippon Telegraph & Telephone) (9432 JP) has decided, 5 years after taking Docomo private, to buy out minorities in NTT Data Corp (9613 JP).
- NTT owns 58%. The article suggests a “30-40% premium” (¥3,900-4,200) “is likely”, with the parent spending ¥2-3trln (¥3,380-5,060) on the deal. The numbers are a bit all over the place.
- It will go limit up today to ¥3,492. A deal should be announced today after the close when NTT Data reports earnings. There’s a cool index event too.
2. CATL (300750 CH): Index Inclusion as Potential Listing Nears
- Reports continue to indicate a US$5bn raise for CATL H-shares with a discount of up to 10% to CATL (300750 CH) and with cornerstone investors taking up half the deal.
- The company is currently gauging investor demand. The IPO could open next week and the H-shares could list later this month.
- Index Fast Entry largely depends on the cornerstone investor allocation. Float higher than 50%/60% is required for Fast Entry to global indices.
3. ShinKong (2888 TT)/Taishin (2887 TT) – Time To Deal Is Shorter, But Risk To Peers Is Higher
- The last couple of days have seen the TWD increase value against the USD extremely sharply. This has caused the Shin Kong/Taishin risk arb spread to widen.
- There is no expectation that the merger will be delayed, but the change in USDTWD rate introduces a new dynamic into the ShinKong-as-Taishin-vs Peers trade.
- Careful consideration of this trade going forward is worthwhile. What may have been the better trade may no longer be the better trade.
4. Laopu Gold (6181 HK): US$300m Primary Placement & Index Inclusion Green Light
- Full circulation implementation at the beginning of April derailed Laopu Gold (6181 HK)‘s chances of global index inclusion in May.
- The company has now launched a US$300m primary placement that will significantly improve chances of inclusion in the same global index in August.
- Laopu Gold (6181 HK) will also be added to another global index in September, so there are a few index inclusions likely for the stock this year.
5. [Japan M&A] NTT (9432) Overpays To Buy Out NTT Data (9613) Minorities
- Pre-Open, we got a Nikkei article which suggested four different prices possible. We got something in the middle. I think NTT is probably overpaying here.
- There is a fair bit of transparency in the documents and valuation. That is encouraging. There are no synergies counted in the fair calculations. That is discouraging.
- This will not trade like a “normal” Japan risk arb situation. There will be nuances.
6. Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread
- Local traders are targeting the spread between day and NXT’s after-hours, a classic arb play similar to what Japanese instos used when ATS first launched, now emerging in Korea.
- The gap persists because institutional flow on NXT is still minimal, with recent data showing instos accounting for just 1-2% of total turnover.
- NXT’s night session is seeing heavy retail flow, providing instos with the liquidity to trade. This creates a rare opportunity to capitalize on early inefficiencies before others catch on.
7. [Japan M&A] MitCorp (8058) Buys Out Subsidiary Mitsubishi Shokuhin (7451) – Bad Process, Bad Price
- Mitsubishi Shokuhin (7451 JP) was supposed to announce earnings at 2pm JST. They didn’t. Someone (or people) decided that meant there might be a takeover. There was.
- The stock popped nearly 15% to ¥6,200, paused, was flat for an hour, then popped again, closing at ¥6,150/share. Post-close, we get a deal at ¥6,340/share.
- A disappointing process. At ¥6,240, the Special Committee said it was “far from a standard that takes into account the interests of TargetCo’s minority shareholders.” At ¥6,340, they dealt. Aaaargh.
8. [Japan M&A] YAGEO Overbids Minebea’s Overbid of YAGEO’s Overbid of Minebea’s Overbid – The Endgame
- Yageo Corporation (2327 TT) has now strongly overbid Minebea’s weak overbid of Yageo’s strong overbid of Minebea’s weak overbid of Yageo’s initial hostile offer for Shibaura Electronics (6957 JP).
- We are now 40% higher than the initial bid and the best bid is approaching the top end of Valuation Agent’s top-of-DCF-range prices. There may be a bit more. Maybe.
- The question now is only whether Minebea responds. If it does, there is a little juice left, but if not, that’s it. It should get done.
9. [JAPAN M&A] Shionogi (4507) Bids for Torii Pharma (4551) – Split Price Deal on Weak Transparency
- Today after the close, Shionogi & Co (4507 JP) and Torii Pharmaceutical (4551 JP) announced an agreed deal whereby Shionogi would launch a Tender Offer to take over Torii.
- Torii Pharmaceutical shares rallied sharply after earnings so the actual TOB Price of ¥6,350/share is not a particularly high premium vs undisturbed. Valuation transparency is limited. Synergies are not included.
- But the price is an ATH, the company is heavily de-levered (so a 23% premium to undisturbed is decent) and the minimum threshold is not high.
10. A/H Premium Tracker (To 2 May 2025): AH Premia Fall Small; Spread Torsion Provides Continued Alpha
- A quiet week as most indices – HK and mainland – saw performance hover around zero for the three days both were open at the start of the week.
- For a couple of months I’ve thought warning signs were flashing and spreads could widen. Widening has paused. I am not comfortable it will remain paused or Hs will outperform.
- The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from spread torsion (wider spreads coming in, small premia widening). Alpha good again this week.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)
- On Friday after the close, media reports surfaced that Toyota Motor (7203 JP) Group chairman and founding family member had put forth a take-private proposal to Toyota Industries (6201 JP).
- The number quoted was ¥6trln market cap (most) or EV (FT), financed by personal funds, 3 megabanks, and reportedly some group companies.
- ¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.
2. Toyota Industries (6201) – Thinking About How To Value a ¥6trln Bid
- Toyota Industries is a relatively complicated business. It owns lots of shares of Toyota and other companies. It has a financing business, and runs ¥500+bn of EBITDA.
- As of 31 March 2025, the “Enterprise Value” of the Operating and Financing Business together was about ¥2.2trln. The “Asset Ownership Business” was at ¥2.8trln (1yr ago it was ¥4trln).
- If you think buying the Operating Business at 6x EBITDA is appropriate, that means the Asset Ownership Business block buy gets done at 31-March-2025 prices. Worth thinking about.
3. Toyota Industries (6201 JP): A Rumoured Privatisation with Several Unknowns
- Toyota Industries (6201 JP) shares were set to hit the daily upper limit of JPY16,225 due to press reports of a privatisation bid valuing it at JPY6 trillion.
- Toyota Industries confirmed receiving a going-private proposal from a special purpose company, while Toyota Motor (7203 JP) said it is considering all possibilities, including a partial investment.
- There are still several unknowns, including the price, the identity of the offeror, potential irrevocable commitments, the financing structure, and the timeline.
4. Hanwha Ocean (042660 KS) Placement: Index Implications; Stock Appears Wildly Overvalued
- Korea Development Bank is looking to sell 13m shares of Hanwha Ocean (042660 KS). That is US$740m at the top end of the marketed range and 4x ADV.
- Following the sale, Korea Development Bank will still own over 15% of the company and that will be an overhang for the stock. Plus the stock appears wildly overvalued.
- There will be limited buying from passive trackers at the time of the placement with bigger passive flows coming through in June and August.
5. Ather Energy IPO: Expensive and No Immediate Index Inclusion
- Ather Energy is looking to raise INR 30bn (US$349m) in its IPO, valuing the company at INR 120bn (US$1.4bn). The company appears to be expensive compared to peers.
- Ather Energy could be added to one global smallcap index in August/November and to another in December/March. Small Cap classification for AMFI and no major local index inclusion.
- The continued selloff in Ola Electric will give investors pause, especially given Ather Energy‘s stagnant market share and continued losses. There is supply in Ola Electric with PE/VC investors selling.
6. Shibaura Elec (6957) – Minebea Overbids Yageo’s Overbid of Minebea’s Overbid of Yageo – ¥5,500
- A Nikkei article today suggested Minebea Mitsumi (6479 JP) would overbid Yageo’s dramatic 20% overbid of Minebea’s early ¥4,500 overbid of Yageo’s initial ¥4,300 bid for Shibaura Electronics (6957 JP).
- Now the news is out. MinebeaMitsumi has bid ¥5,500. Shibaura Electronics has endorsed. This is bang-in-line with the expected path. The question is now YAGEO’s overbid, expected 7 May.
- If I were YAGEO, I would wait for Shibaura’s earnings a couple of days later, then overbid by ¥100-150 and go for 35 days. There’s optionality there.
7. Poon’s Underpriced Takeover. Minorities Deserve Better
- Dickson Concepts (113 HK) (DC)’s Chairman, Dickson Poon (& relatives), holding 61.98%, have tabled an Offer by way of a Scheme for shares not held, at HK$7.20/share (best & final).
- That compares to DC’s net cash (as at 30 Sept 2024) of HK$7.44/share. Plus financial assets comprise an additional ~HK$2.16/share.
- The IFA will cite liquidity and DC’s historical discount to NAV, and opine “reasonable”, and perhaps even “fair”. It is neither. Minorities should vote this down. But probably won’t …
8. Merger Arb Mondays (28 Apr) – Seven & I, Shibaura, Makino, Bright Smart, ENN Energy, Tam Jai
- We 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: Oneconnect Financial Technology (6638 HK), Insignia Financial (IFL AU), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Smart Share Global (EM US).
- Lowest spreads: Shibaura Electronics (6957 JP), Makino Milling Machine Co (6135 JP), Sinarmas Land (SML SP), Millennium & Copthorne Hotels Nz (MCK NZ).
9. Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62
- Haikou Meilan International Airport Company entered an SPA with Hainan Island Construction (600515 CH) to sell its Hainan Meilan International Airport (357 HK) 50.19% stake at RMB9.85 per share (HK$10.62).
- The SPA completion requires several regulatory approvals, which are low-risk, particularly as Hainan SASAC is the largest shareholder of the offeror and the seller.
- Under Rule 26.1 of the Takeovers Code, upon completion, the offeror will be required to make an unconditional mandatory cash offer at HK$10.62 per share. The MGO price is final.
10. Dickson Concepts (113 HK): Sir Poon’s Scheme Offer Below Net Cash
- Dickson Concepts Intl (113 HK) disclosed a Bermuda scheme offer from the controlling shareholder (Sir Poon) at HK$7.20, a 50.6% premium to the last close price.
- The offer is final. While the offer represents an all-time high and is attractive compared to historical trading ranges, it is below net cash.
- No disinterested shareholder holds a blocking stake, and retail seems supportive (lowering the risk of the headcount test). The offer, while light, will likely succeed.