In today’s briefing:
- Merger Arb Mondays (29 Apr) – Azure, Silver Lake, Roland DG, CF Logistics, China TCM, Hollysys
- Sumitomo Chemical (4005): Potential Posterchild of Japan’s Resurgence
- BHP to Consider Sweetened Proposal for Anglo
- Venture Minerals Ltd – Jupiter REE discovery expands the portfolio
Merger Arb Mondays (29 Apr) – Azure, Silver Lake, Roland DG, CF Logistics, China TCM, Hollysys
- 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: Qantm Intellectual Property (QIP AU), Azure Minerals (AZS AU), Hollysys Automation Technologies (HOLI US), Probiotec Ltd (PBP AU), Southern Cross Media (SXL AU), China TCM.
- Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Newmark Property REIT (NPR AU).
Sumitomo Chemical (4005): Potential Posterchild of Japan’s Resurgence
- Sumitomo Chemicals aims to transform from a cyclical company with low market share in declining markets into a focused entity with high market share in secular growth markets.
- We estimate that the stock’s fair value is about 140% above the current price.
- Results meeting on April 30 should confirm that company is on track in returning to positive cash flow and selling off core assets.
BHP to Consider Sweetened Proposal for Anglo
- On 27 April, Reuters reported that BHP is considering making an improved offer for Anglo American after its initial proposal was rejected. Anglo’s shares trade at 0.3% discount to proposal.
- BHP is not paying any control premium. Despite its robust portfolio and recent share price appreciation, Anglo trades at a 18% discount compared to the sum of its parts (3018p).
- Interloper risk is high. Antitrust risk seems low. As a defence, Anglo may conduct some portfolio simplification to unlock value. I would be long at current prices.
Venture Minerals Ltd – Jupiter REE discovery expands the portfolio
- Venture Minerals Limited (ASX:VMS) is an ASX-listed critical minerals explorer with a focus on rare earth elements (REE), precious metals and tin-tungsten deposits in Western Australia and Tasmania.
- The company has recently announced significant drilling assay results from its Jupiter prospect within the Brothers rare earths element project in WA which potentially positions VMS with one of the largest clay-hosted REE prospects in Australia.
- VMS is also undertaking a feasibility study on underground mining at its Mount Lindsay tin-tungsten project in Tasmania and says it has appointed advisers, Argonaut, to undertake a strategic review of its nearby Riley iron ore mine.
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