In today’s briefing:
- Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium
- S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete
- Seiko PMC (4963 JP): Carlyle’s JPY1,070 Tender Offer
- Weekly Deals Digest (03 Sep) – JSR, Seiko PMC, Eoflow, ENM, Doosan Robotics, ARM, Integral Corp
- Kunlun Energy (135 HK): The Story Is Still Going On
- Liontown Warms To Abermarle’s Bump
Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium
- Carlyle Group is buying Seiko Pmc Corp (4963 JP) from 54+% owner Dic Corp (4631 JP) and minorities in a Tender Offer with optical premium of 89%.
- It looks good, takes advantage of tax code particularities, and the nature of the company disguises some value. Shareholder structure means this is basically a done deal before it starts.
- With minimal foreign active investor ownership, and significant crossholder, ESOP, and director ownership, only a bit of retail actually needs to tender to make this successful.
S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises
- There is 1 change for the S&P/ASX100 Index, 5 adds/ 6 deletes for the S&P/ASX 200 INDEX, and 10 adds/ 8 deletes for the S&P/ASX300 Index at the September rebalance.
- There will be 4-14 days of ADV to trade on the S&P/ASX100 Index and S&P/ASX 200 INDEX adds while the impact on the deletions is between 3-12 days of ADV.
- On average, the adds to the S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index have outperformed the deletes over the last few months.
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete
- The review period for the MVIS Global Rare Earth/Strategic Metals Index ended 31 August. The changes will be announced on 8 September and implemented at the close on 15 September.
- Coming in around the 85% cutoff, Rising Nonferrous Metals Share (600259 CH) is a potential inclusion. There are two stocks that are very close to the 98% deletion threshold.
- Lake Resources Nl (LKE AU) is a deletion from the S&P/ASX 200 (AS51 INDEX) at the September rebalance and there could be more to sell if deleted from this index.
Seiko PMC (4963 JP): Carlyle’s JPY1,070 Tender Offer
- Seiko Pmc Corp (4963 JP) has recommended Carlyle Group / (CG US)’s tender offer of JPY1,070 per share, an 88.7% premium to the undisturbed price.
- Dic Corp (4631 JP) will not tender but vote for the share consolidation at the EGM. Post consolidation, DIC will sell its 54.51% stake to Carlyle at JPY799 per share.
- Achieving the minimum ownership ratio (12.16%) requires a 26.7% acceptance rate, which is doable as the offer is attractive. The tender offer runs from 4 September to 17 October.
Weekly Deals Digest (03 Sep) – JSR, Seiko PMC, Eoflow, ENM, Doosan Robotics, ARM, Integral Corp
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Doosan Robotics (454910 KS), ARM Holdings (1822695D US), Integral Corporation (5842 JP) and S.F. Holding (002352 CH) IPOs.
- Event-Driven developments – JSR Corp (4185 JP), Seiko Pmc Corp (4963 JP), Eoflow (294090 KS), ENM Holdings (128 HK), Shougang Fushan Resources (639 HK), Costa Group Holdings (CGC AU).
Kunlun Energy (135 HK): The Story Is Still Going On
- We think Kunlun Energy (135 HK) will see its operating momentum accelerate in 2H23, leading by better natural gas sales growth and sustained positive dollar margin performance.
- It has strengthened its financial position in 1H23, with net cash amounting to 36% of market cap. This has demonstrated its cash-generating capability and controlled capex.
- Its 7.0x and 6.6x PERs for FY23 and FY24 are inexpensive. Its annualised ROE of 10.6% is also attractive. There is room for the other businesses to recover in 2H23.
Liontown Warms To Abermarle’s Bump
- Back on the 28 March, Liontown Resources (LTR AU) rejected the third proposal of $2.50/share from Albemarle (ALB US), the world’s largest lithium producer, citing terms were opportunistic.
- Then everything went quiet. There appeared to be an interested party building a stake ~$2.75/share, but nothing concrete emerged.
- Now Albemarle has returned with a revised indicative proposal of $3.00/share – best and final. Due diligence has been granted. The board is supportive if terms are firmed.
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