In today’s briefing:
- 7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
- Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
- Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging
- Young Poong: Announces Cancellation of Entire Treasury Shares and 10:1 Stock Split
- Insignia Financial (IFL AU): Bain and CC Capital Bumps to A$5.00, While Brookfield Drops Out
- Sun Pharmaceutical (SUNP IN): Checkpoint Acquisition Does Not Check All the Boxes
- Sell Kenvue + What I’m Buying
7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
- On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.
- It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update.
- It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.
Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
- The Seven & I Holdings (3382 JP) Board has released a public letter to address Artisan Partners’ letter and provide more details on the Alimentation Couche-Tard (ATD CN) constructive engagement.
- The letter effectively addresses most of Artisan’s concerns. The Board is engaging with Couche-Tard, particularly by agreeing on a strategy to find a solution to secure antitrust approvals.
- However, the statement suggests that the Board retains deep scepticism that the Couche-Tard is viable and is manoeuvring to shift the blame on a failed bid on a flawed proposal.
Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging
- Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
- My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.
- Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.
Young Poong: Announces Cancellation of Entire Treasury Shares and 10:1 Stock Split
- On 10 March, Young Poong (000670 KS) announced that it plans to cancel all of its treasury shares and conduct a 10-to-1 stock split.
- Driven by the treasury shares cancellation and stock split, Young Poong’s share price rose 8.9% to 489,000 won today (10 March 2025).
- Our updated NAV of Young Poong suggests NAV per share of 834,064 per share, representing a 71% upside from current levels.
Insignia Financial (IFL AU): Bain and CC Capital Bumps to A$5.00, While Brookfield Drops Out
- On 7 March, Insignia Financial (IFL AU) disclosed a revised non-binding privatisation offer from Bain and CC Capital at A$5.00, an 8.7% premium to their previous A$4.60 offer.
- The exclusive due diligence period ends on 17 April (six weeks from signing the exclusivity deed). The Board will recommend a binding offer of at least A$5.00.
- The offer is attractive compared to historical trading ranges, peer multiples and precedent transactions. Therefore, a binding offer would gain shareholder support.
Sun Pharmaceutical (SUNP IN): Checkpoint Acquisition Does Not Check All the Boxes
- Sun Pharmaceutical Industries (SUNP IN) (SPIL) announced the plan to acquire Checkpoint Therapeutics (CKPT US), a commercial stage immunotherapy and targeted oncology company, for ~$200M.
- In December, Checkpoint has received FDA approval for its maiden drug, Unloxcyt (cosibelimab), for the treatment of certain type of skin cancer. Unloxcyt has peak sales estimate of $1.6B.
- SPIL’s offer for Checkpoint seems compelling and provides superior risk-adjusted value. However, the acquisition will not be near-term value generator for SPIL, which doesn’t have good track record for acquisition.
Sell Kenvue + What I’m Buying
I’m closing out my Kenvue (KVUE) recommendation and will be selling my shares.
Following the spin-off from Johnson & Johnson (JNJ), KVUE shares performed poorly for a variety of reasons (lockluster growth, Tylenol related litigation, etc.) that I thought were overblown.
At the time, Kenvue was trading at a sharp discount to its consumer health care peers. Today, Kenvue trades at a slight discount to peers (21 P/E vs. 23.3x for the group).
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