In today’s briefing:
- Cleanaway (CWY AU): EQT Deal on Track, but the Vote Won’t Be a Formality
- [Japan Partial Tender] Maki-San Threatens BASE (4477 JP) Tender – Financial Engineering Risk Rises
- A Tender Offer of 19% Stake in Hanwha Machinery & Service Holdings By Kim Dong-Seon
- EBOS (EBO AU): Still Under The Hammer Post Sigma/Chemist Warehouse Merger
- AkzoNobel / Axalta: EU Remedies Take Shape
- StubWorld: Stay With Colowide (7616 JP); Bullet Dodged On Genting (GENT MK)
- Strategic Reviews and Takeover Proposals: Updates on RYAM, MTY, MDT, and More
- Weekly Update (IDT, MSGS, MSGR)
Cleanaway (CWY AU): EQT Deal on Track, but the Vote Won’t Be a Formality
- EQT has reconfirmed its A$3.13 offer (A$3.095 net of dividend) for Cleanaway Waste Management (CWY AU) three times. Financing is well covered, and a SID looks likely.
- Shares fell 3.6% to A$2.66 today, likely reflecting sell-the-news profit-taking, a third exclusivity extension, growing institutional opposition and the 22 October AGM overhang.
- The scheme vote should pass, as confirmed dissent (10.3%) is insufficient to block it, but industry funds (14%) joining and the AGM spill risk make it contested, not a formality.
[Japan Partial Tender] Maki-San Threatens BASE (4477 JP) Tender – Financial Engineering Risk Rises
- On Friday 9 October, largest BASE Inc (4477 JP) shareholder MAKI Hiroyuki who is also President and CEO Melco Holdings (6676 JP) (a.k.a. Buffalo Inc), announced his new larger stake.
- Or part of it. He got to 23.32% by 2 October. I expect it’s 26-27% as of now, but could be slightly higher. He also released a change in purpose.
- That change suggests substantial disagreement with and distrust of management. It threatens a Tender Offer to get over 30% (which he says he intends). Interesting times lie ahead.
A Tender Offer of 19% Stake in Hanwha Machinery & Service Holdings By Kim Dong-Seon
- Kim Dong-seon (third son of Hanwha Group Chairman Kim Seung-youn) has launched a tender offer of a 19% stake in Hanwha Machinery & Service Holdings (0220W0 KS) (HMSH).
- The tender offer is for 16.06 million common shares at 8,000 won per share, running from 12 October to 2 November.
- I have a positive view on this tender offer and on HMSH whose share price fell excessively post split and Kim Dong-seon is trying to capitalize on this price decline.
EBOS (EBO AU): Still Under The Hammer Post Sigma/Chemist Warehouse Merger
- EBOS Group (EBO AU), a healthcare and animal-care distribution group, is currently trading around a six-year low.
- That seems a tad harsh with bottom-line earnings up 39% over that timeframe. And a trailing yield of ~6.5%, well above peers.
- The Sigma Healthcare (SIG AU)/Chemist Warehouse combination remains a structural competitive concern. But right here, I’d be surprised if (potential) suitors are not running a ruler over EBOS.
AkzoNobel / Axalta: EU Remedies Take Shape
- EU clearance appears increasingly likely following reports of a proposed vehicle-refinish divestiture, although the scope of the remedy, disposal proceeds and impact on synergies remain undisclosed.
- Our revised synergy DCF values the $600m annual savings programme at €3.61bn after a 25% execution-risk discount. Losing $50–100m of annual savings would reduce that valuation by €0.33–0.66bn.
- AkzoNobel’s Asian disposals have secured attractive multiples, but the merger spread is just 0.2%. We see insufficient compensation for the remaining risks and would not initiate an arbitrage position.
StubWorld: Stay With Colowide (7616 JP); Bullet Dodged On Genting (GENT MK)
- Stick with restaurant group Colowide Co Ltd (7616 JP), despite the elevated implied stub and NAV discount. And Genting Bhd (GENT MK) craters on rights issue plan.
- Preceding my comments on Colowide and Genting are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Strategic Reviews and Takeover Proposals: Updates on RYAM, MTY, MDT, and More
- RYAM’s strategic review nears completion with potential 60%+ upside; stock dropped 25% recently, creating entry opportunity.
- MTY Food Group ends strategic review without sale, raises dividend 35%, reinstates buybacks, considers small issuer bid.
- EQT reconfirms A$3.13/share offer for CWY; OFX deal stalled at financing stage, Forager discloses 5.4% stake.
Weekly Update (IDT, MSGS, MSGR)
- The S&P 500 is sitting near 7,800, a record high.
- At the same time, the 25-day average of new lows on the NYSE has spiked to levels we last saw in the April 2025 selloff.
- The index is at an all-time high while a lot of individual stocks are trading like it’s a bear market.
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