In today’s briefing:
- Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours
- But Wait … Even More Penalties In The Link Admin/D&D Situation
- Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
- True/DTAC Pop As Council Of State Rules NBTC Has No Teeth
- Fengxiang (9977 HK): MGO Expected To Follow Judicial Auction
- DTAC/True Merger: Council of State’s Decree Paves the Way for Completion
- Vistry/Countryside Partnerships: Agreed Offer
- EQD | SX7E(SX7E Index): Value or Value Trap? Use High Vols to Sell Premium and Play the Range
- ActivistTalk: Is Bed Bath & Beyond Heading For Bankruptcy? Altman Versus The Bond Market
- Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)
Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours
- Activist Murakami-san and entities spent 4+ years going from 2% to 30% of Central Glass (4044 JP). In that period, they helped management change governance.
- There were buybacks, asset sales, cross-holding sale decisions, and a new Mid-Term Management Plan. The stock went up, so now it is time to get out.
- True to Murakami-san style/form, it is an own-share Tender Offer by the TargetCo which means most other active holders can’t really participate. It’s high-quality greenmailgagement.
But Wait … Even More Penalties In The Link Admin/D&D Situation
- Earlier this week, Link Administration (LNK AU) rejected Dye & Durham’s revised proposal to factor in any redress payments from the UK’s FCA in regards to the Woodford Fund.
- FCA has now assessed an appropriate penalty of £50mn in addition to the previously announced restitution payment of £306.1mn.
- The FCA is all but telegraphing it will default LFSL unless Link steps in. Link says it has made no such commitment. D&D should walk.
Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
- Today, Nagoya Premier-listed Chubu Steel Plate (5461 JP) announced that it had applied today to be listed in Tokyo.
- It is one of very few Japan names not listed in Tokyo. A TSE listing examination will be conducted, and there is a possibility it moves to TSE Prime.
- There are 6 key segment transfer and listing requirements to gain a listing in TSE Prime. Chubu Steel Plate is really close.
True/DTAC Pop As Council Of State Rules NBTC Has No Teeth
- According to media reports, Thailand’s Council of State has ruled the NBTC has no authority to approve or reject the True Corp (TRUE TB) / Total Access Communication (DTAC TB) merger.
- The NBTC can prescribe measures to govern the deal but these appear almost of no consequence.
- The ruling is a positive development for the merger getting over the line. Both stocks enjoyed strong gains today.
Fengxiang (9977 HK): MGO Expected To Follow Judicial Auction
- The controlling shareholders of Shandong Fengxiang Co Ltd-H (9977 HK), a company engaged in chicken breeding, slaughtering, and processing, are unable to meet their debts.
- As such, these shareholders who hold 70.92% of shares out in Fengxiang, via domestic shares, have been forced into a judicial auction, the completion of which may trigger an MGO.
- Taking pointers from Dongzheng Automotive Finance (2718 HK)‘s recent auction means we back out a possible payment around late December – on the assumption an unconditional MGO is triggered.
DTAC/True Merger: Council of State’s Decree Paves the Way for Completion
- The press reports that the Council of State has stated that the regulator, NBTC, can only prescribe measures to govern the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger.
- The Council of State decree paves the way for the merger to complete and the launch of the VTOs. The NBTC remedial measures will likely focus on consumer protection measures.
- The current share price ratio is 9.150x vs the swap ratio of 10.221x. At last close, DTAC and True’s gross spread to the VTO price is 4.4% and 1.8%, respectively.
Vistry/Countryside Partnerships: Agreed Offer
- FTSE-250 constituent Vistry Group (VTY LN) has agreed to buy rival Countryside Partnerships (CSP LN) in a recommended cash&stock deal that values embattled Countryside at c.£1.25 billion (lower than previous offers).
- Consideration is 1 CSP LN=0.255 VTY LN+60p, 9.1% premium, 7.0x EV/Fwd EBITDA and 1.3x P/Fwd BV, which seems cheap. The sector is pricing in many potential bad news.
- Gross spread is +2.1%. It has only been negative during three days since the deal announcement. I would wait for the spread to become negative before taking a position.
EQD | SX7E(SX7E Index): Value or Value Trap? Use High Vols to Sell Premium and Play the Range
- European banks are screening cheap and the sell side are once again banging the drum on the upside
- Recession risks in broader economy are likley to counteract the positive effects of rate rises
- Implied vols have moved higher, representing an oportunity to sell premium
ActivistTalk: Is Bed Bath & Beyond Heading For Bankruptcy? Altman Versus The Bond Market
- Bed Bath & Beyond’s fundamentals have continued deteriorate resulting in the departure of the man brought in to turn the struggling home goods retailer less than 3 years ago
- Amid an unfriendly operating environment and short term liquidity issues, the specter of bankruptcy for this one-time iconic retailer has been raised
- The Altman Z-Score model which has decent track record for bankruptcy prediction, suggests there is no imminent danger. If correct, there is a potentially lucrative trade in BBBY’s bonds
Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)
- For Grupo Gilinski to achieve shareholder control of BanColombia seems increasingly unlikely, and there increased opposition from Grupo Sura and the Grupo Empresarial Antioqueño (GEA)
- Nonetheless, Gilinski is effectively creating shareholder value by behaving like an activist investor putting pressure on management teams, particularly in BanColombia and in the other core components of the GEA
- BanColombia is delivering improved fundamental performance, as seen in 1Q22 and 2Q22 results, with 2022E ROE guidance of c20% yet to be reflected in its modest PBV ratio of 0.9x
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