In today’s briefing:
- Korean Policy Tailwinds: Preferred Shares Rerating Play
- [Japan M&A] Pacific Industrial (7250) MBO Officially Being Done Dirt Cheap
- How Many Companies Will Be Able to Keep up with the Next Revision of the Corporate Governance Code?
- Ainsworth (AGI AU): A Dicey Scheme Vote Underwritten by an Alternative Takeover Offer
- Prosus and Just Eat Takeaway Deal Close to Completion: Deletions Across Major Indices
- Weekly Update (AAF, NLOP, KHC)
Korean Policy Tailwinds: Preferred Shares Rerating Play
- Most expect prefs to be in policy crosshairs soon—watch for tighter rules on dividends, discounts, and liquidity, plus likely incentives for redemption or cancellation ahead of commons.
- If Korea rolls out a pref stock overhaul, long-biased rerate plays could pop—focus on liquid, high-yield large-cap prefs trading at 35%+, yield north of 3%, and solid daily turnover.
- Korea Inv, Kumho Petro, CJ Cheil, CJ Corp prefs already screen well; Doosan and Hanwha 3PB could join if dividend hikes materialize on back of strong sub earnings.
[Japan M&A] Pacific Industrial (7250) MBO Officially Being Done Dirt Cheap
- The MBO for Pacific Industrial (7250 JP) starts with the father+son Chairman and CEO, – combined stake 2.92% – putting nothing in to buy this, with help from banks.
- The Takeover Price is priced at 0.7x book, and a Net Debt to EBITDA of 2x (when adjusted for securities+pension assets+DTLs) and 5-6x average 2026-2030 FCF.
- This is being done too cheap: Toyota is the main customer, one third of revenues comes from Japan, and the company is set for a transition to EVs.
How Many Companies Will Be Able to Keep up with the Next Revision of the Corporate Governance Code?
- It seems unlikely that there’ll be an increase in formal criteria for corporate governance, like in the previous revision. It looks like there’ll be more demand for human capital disclosure.
- Many companies don’t fully understand human capital, and there’s concern that achieving disclosure criteria will become the goal, rather than original objective of investing in human capital to create value.
- The revised Corporate Governance Code requires verification that management resources are being appropriately allocated to investment and shareholder returns. It seems that simpler questions are better than difficult “technical terms.”
Ainsworth (AGI AU): A Dicey Scheme Vote Underwritten by an Alternative Takeover Offer
- The Ainsworth Game Technology (AGI AU) IE considers Novomatic’s A$1.00 to be fair and reasonable, as it falls within its A$0.93-1.07 valuation range. The vote is on 29 August.
- The offer has drawn opposition from several notable shareholders. There remains at least a 50% chance that the scheme vote fails.
- Novomatic can switch to an alternative takeover offer, which limits the downside risk. At the last close and for a 26 September payment, the gross/annualised spread was 1.5%/8.2%.
Prosus and Just Eat Takeaway Deal Close to Completion: Deletions Across Major Indices
- Prosus NV (PRX NA) is acquiring Just Eat Takeaway.com NV (TKWY NA) in an all-cash tender offer of €20.30 per share, valuing the deal at approximately €4.1 billion.
- The transaction is awaiting Phase 1 regulatory approval from the European Commission, anticipated by late July 2025.
- Upon completion, Just Eat Takeaway.com NV (TKWY NA) will be removed from multiple major indices, potentially causing significant passive fund outflows.
Weekly Update (AAF, NLOP, KHC)
- Kraft Heinz (KHC) is currently evaluating a plan to spin off a significant portion of its grocery business into a new, distinct entity. The WSJ reported that this transaction is likely to occur.
The news comes a decade after the infamous merger of two of the biggest names in packaged foods that was orchestrated by Warren Buffett and Brazilian private equity firm 3G Capital Partners.
- This new entity, which can be referred to as “SpinCo,” would encompass many of the traditional Kraft products. The remaining company, or “RemainCo,” would strategically focus its operations on faster-growing segments, specifically sauces, spreads, and condiments.
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