In today’s briefing:
- CATL (3750 HK)’s Concentration Warning
- [Japan Activism/M&A] – Thinking About Positioning Around the Tsuruha/Welcia Vote
- Soundwill Holdings (878 HK): An Opportunity or Another HK Arbageddon?
- HD Hyundai Marine Solution Block Deal Sale of 8.5% of Outstanding Shares
- Clearing Confusion on Samsung C&T’s Forced Holding Co Conversion: Key Trade Angle in Biologics Split
- Pony AI IPO Lockup – US$4.3bn Lockup Release with Stock at 69x EV/Sales
- Samsung Biologics: Creation of a Holding Company to Split CDMO and Biosimilar Businesses
- Air Canada’s Odd-Lot Tender Offer: Potential Upside Amid CapEx Challenges and Transborder Revenue Declines
- No Compromise: Deal on Hold, and UniCredit Won’t Pay More
CATL (3750 HK)’s Concentration Warning
- Contemporary Amperex Technology (3750 HK) (CATL H), a global leader in providing battery solutions, was listed on the 20th May at $263/share. Here is the prospectus.
- Via the H-share listing, CATL raised ~US$5.2bn. Shares have since gained ~26% and trade at HK$330/share, as I type.
- It is worth noting the HKEx issued a high concentration warning in CATL’s H shares the day before shares were listed.
[Japan Activism/M&A] – Thinking About Positioning Around the Tsuruha/Welcia Vote
- The Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) AGMs to elect directors and approve the share exchange agreement to merge the two.
- 10% Tsuruha shareholder Orbis objects to the merger ratio AND the later tender whereby Aeon goes to 51%, saying everything is underpriced. ISS/GlassLewis recommend voting against the merger.
- I haven’t seen the proxy reports but I’ve done the math. Investors/arbs should look at the possibilities/probabilities and understand what dependencies exist. Shareholders are not helpless, no matter the outcome.
Soundwill Holdings (878 HK): An Opportunity or Another HK Arbageddon?
- The spread to the Foo family’s HK$8.50 offer for Soundwill Holdings (878 HK) has materially increased to 15.8% over the last two trading days. The vote is on 23 May.
- Several readers have asked if the Soundwill offer will mirror the Goldlion Holdings (533 HK) deal break. The two schemes share similarities but are also different in several ways.
- The share price action either reflects an imminent deal break or a result of a negative feedback loop. Tread carefully as this is a high-risk/high-reward situation.
HD Hyundai Marine Solution Block Deal Sale of 8.5% of Outstanding Shares
- After the market close today, it was announced that KKR is selling 3.81 million shares (8.5% of outstanding shares) of HD Hyundai Marine Solution in a block deal sale.
- The expected block deal sale price is 145,000 won to 148,000 won per share, which represent 7.96% to 9.83% discount to the closing price of 160,800 won on 22 May.
- Once this block deal is completed, KKR’s remaining stake in HD Hyundai Marine Solution will be reduced to 11% (4.94 million shares).
Clearing Confusion on Samsung C&T’s Forced Holding Co Conversion: Key Trade Angle in Biologics Split
- Samsung C&T’s holding ratio mainly hinges on its Samsung Biologics stake; Samsung Electronics’ 5% isn’t counted, and Samsung SDS is excluded since Samsung Electronics is its largest shareholder.
- This ties to calls for Samsung’s governance overhaul, aiming for C&T to avoid forced conversion while boosting control over Samsung Electronics via bold, more aggressive moves than expected.
- Samsung C&T will likely sell some Biologics shares around its in-kind contribution to Epis, timing sales based on post-listing price action.
Pony AI IPO Lockup – US$4.3bn Lockup Release with Stock at 69x EV/Sales
- Pony AI (PONY US) raised around US$260m in its upsized US ADR listing in Nov 2024. The lockup on its pre-IPO investors is set to expire soon.
- As per Frost & Sullivan, Pony AI was among the first companies in China to obtain licenses to operate fully driverless robotaxis in all four Tier-1 cities in China.
- In this note, we will talk about the lockup dynamics and possible placement.
Samsung Biologics: Creation of a Holding Company to Split CDMO and Biosimilar Businesses
- On 22 May, Samsung Biologics (207940 KS) announced that that it plans to establish a new holding company called Samsung Bioepis Holdings through a spin-off.
- Samsung Bioepis Holdings will fully incorporate Samsung Bioepis as a wholly owned subsidiary. Samsung Bioepis will focus on the biosimilars business. Samsung Biologics will focus on the CDMO business.
- There is likely to be mixed reactions to Samsung Biologics’ announcement to create a holding company structure to split the CDMO and biosimilar businesses.
Air Canada’s Odd-Lot Tender Offer: Potential Upside Amid CapEx Challenges and Transborder Revenue Declines
- Air Canada is conducting a tender offer for ~8% of shares, prioritizing odd-lot holders, with potential upside.
- The company plans significant CapEx for fleet modernization, impacting free cash flow and financial projections until 2028.
- Air Canada’s valuation is low compared to peers, trading at 3.3x EBITDA, with a 54% EBITDA growth target by 2028.
No Compromise: Deal on Hold, and UniCredit Won’t Pay More
- Consob suspends offer: Italy’s market regulator halts UniCredit’s bid amid unresolved regulatory conditions and growing uncertainty.
- Shareholders push back: With Crédit Agricole holding 19.8%, resistance builds against a bid lacking premium or clarity.
- Higher bid unlikely, but Possible: UniCredit has room to raise terms, but tighter capital impact and ROI pressure post-DC rejection make an improved offer improbable without regulatory or shareholder shifts.
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