Brief M&A: Bumrungrad Hospital’s Tender Offer from Bangkok Dusit and more

In this briefing:

  1. Bumrungrad Hospital’s Tender Offer from Bangkok Dusit
  2. Aso Corp Running at Kosaido (7868)

1. Bumrungrad Hospital’s Tender Offer from Bangkok Dusit

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Bumrungrad Hospital Pub Co (BH TB) is one of the leading healthcare providers in Thailand and the Southeast Asian region. On 26 February, BH received an unsolicited voluntary tender offer from Bangkok Dusit Med Service (BDMS TB), its largest shareholder. The tender offer is at THB125 cash per share or a higher price of not more than 20% of the offering price. The final tender price will be announced after the four conditions precedent is met or waived. 

Crucially, the launch of a tender offer at a modest premium is a sensible way to test if the further acquisition of shares would pass the scrutiny of the Thai merger control provisions, in our view. The tender offer is intended to shake out the marginal holder rather than have a broad-based appeal. Consequently barring a market rally, we don’t think that BDMS has much incentive to materially increase its tender price from its opening gambit. 

2. Aso Corp Running at Kosaido (7868)

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Kosaido has been a “pet” of mine since the Bain-led MBO led to a Murakami activist opposition, a bumped then broken deal, and then a change in governance. 

That change in governance has been remarkable. After the failed MBO, the company switched out its management and its board and its shareholder returns policy. 

The company sold off its publishing business, quickly spent more on its main business, started getting leaner at its printing business, and then as discussed in Kosaido Governance Ever Better – Death Is a Growth Business last month, they did a GREAT thing for shareholders by announcing it would try to buy in minorities (mostly Buddhist temples and families related to the legacy businesses) in its funeral parlor business, then merge with it at the end of March 2020. 

Previous Insights on the Kosaido Situation Published on Smartkarma…

DateBuy/SellPriceInsight
21-JanBuy¥609Smallcap Kosaido (7868 JP) TOB: Wrong Price But Whaddya Gonna Do?
7-FebSell¥775Kosaido: Activism Drives Price 30+% Through Terms
19-FebSell¥703Kosaido (7868 JP) Situation Gets Weird – Activists+Indie Opposition to MBO
26-FebBuy¥738Kosaido (7868 JP) TOB Extended
19-MarBuy¥748Kosaido (7868 JP) – Reno Goes Bigger But TOB Price Is Final So What Next?
21-MarBuy¥737Murakami-San Goes Hostile on Kosaido (7868 JP), Overbids Bain’s “Final” Offer
24-MarSell¥859Kosaido (7868 JP) Reaches Value You Can Sell
25-AprSell¥771Kosaido: The Bull Case, The Bear Case, and the Base Case
23-MaySell¥724Murakami Group Tender for Kosaido Fails… Spectacularly
27-MaySell¥708 Kosaido Moves Quickly Post Failed Tenders 
29-NovBuy~¥900 Kosaido (7868): A Story Being Told, A Story Being Bought 
5-Feb-20Buy~1040 Kosaido Governance Ever Better – Death Is a Growth Business 

Several days after my last insight, the company reported Q3 earnings which were “in line” with Revenues, OP, RP all down small year-on-year. Printing and Business Support revenues were down 3.4%yoy while funeral parlour revenues were up year-on-year.

The EGM of the funeral parlour business to approve that is on 7 March 2020.

But that’s not the big news. The big news is in the reshuffling of ownership. This change in ownership has been fierce, with the initial flurry taking place last fall – discussed in Kosaido (7868): A Story Being Told, A Story Being Bought.

Since then, the widow has sold a chunk of shares, Murakami has now sold, and someone who was not on the register as of 6 weeks ago owns 19% of the company.

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