In today’s briefing:
- HSBC (5 HK)’s Fair Offer for Hang Seng (11 HK)’s Minorities
- [Japan Activism] Sun Corp (6736) Gets ANOTHER Public Activist – ValueAct Reports 7.9%
- Soft99 Corp (4464 JP): Potential Outcomes as the Board Responds to Effissimo Allegations
- Hang Seng Bank (11 HK): HSBC (5 HK)’s Scheme Privatisation Is a Done Deal
- [Japan M&A/Activism] Soft99 Board Rebuts Effissimo’s Rebuttal. Still An Awful “Fiduciary” Response
- Fortis Healthcare (FORH IN): Indian Regulators Cleared Long-Awaited Open Offer of IHH
- Dickson Concepts Faces Potential Privatization as Founder Poon Considers Renewed Bid After Failed Attempt
- Pacific Smiles (PSQ AU): Genesis Returns To Dislodge Co-Founder
- BBVA-Sabadell: Final Stretch — Risk/Reward Tilting Sharply
HSBC (5 HK)’s Fair Offer for Hang Seng (11 HK)’s Minorities
- Hang Seng Bank (11 HK) has announced an Offer from controlling parent (63.3551%), HSBC Holdings (5 HK), by way of a Scheme, in a HK$106bn (US$13.6bn) deal.
- The Scheme Consideration is HK$155/share, a 30.3% premium to last close. The price is final. A “third interim dividend” will be added. Optically, the price is bang on.
- The long stop for conditions is the 30th September 2026. I think this transaction can be wrapped up in around five months.
[Japan Activism] Sun Corp (6736) Gets ANOTHER Public Activist – ValueAct Reports 7.9%
- Today after the close, Value Act reported that it owned 7.87% of shares outstanding in Sun Corp (6736 JP) and it may make proposals to management.
- This has been trading cheaply (and I pointed it out on 13 Aug and 12 Sep). Cellebrite DI (CLBT US) is up 35% in those 8 weeks. Sun Corp +50%.
- ValueAct had owned 4.9+% for at least a few months before, but now it has gone public. They were likely in already under a different name in March, now public.
Soft99 Corp (4464 JP): Potential Outcomes as the Board Responds to Effissimo Allegations
- The Soft99 Corp (4464 JP) Board has responded to Effissimo’s allegations. As expected, the Board accuses Effissimo of stating half-truths.
- The Board’s missive indirectly suggests that incremental acceptances since October 1 have been tepid, KeePer has not tendered, and the MBO is struggling to meet the minimum tendering condition.
- The two likeliest outcomes are 1) the MBO succeeds at current terms with KeePer likely joining BidCo, and 2) both offers fail. The risk/reward is unattractive at the last close.
Hang Seng Bank (11 HK): HSBC (5 HK)’s Scheme Privatisation Is a Done Deal
- Hang Seng Bank (11 HK) announced a scheme privatisation offer from HSBC Holdings (5 HK) at HK$155, a 30.3% premium to the undisturbed price.
- Based on an estimated 2025 third dividend of HK$1.3 per share, the total consideration is HK$156.30 per share. The offer price is final.
- The offer is attractive compared to peer multiples and historical trading ranges. At the current price and for a late March payment, the gross/annualised spread is 2.9%/6.2%.
[Japan M&A/Activism] Soft99 Board Rebuts Effissimo’s Rebuttal. Still An Awful “Fiduciary” Response
- Today after the close, Soft99 Corp (4464 JP)‘s Board issued a statement on “Our View” of Effissimo’s “Our View” Press Release. It’s bad.
- But it points out the “weaknesses” that Effissimo’s Tender Offer Press Release had as it concerns a counterbid. And that tells you how Effissimo should amend their Tender Offer docs.
- Soft99 Board’s response is interesting. It asks Effissimo to not be coercive (i.e. bid for 50%+) in response to the MBO Bid’s coerciveness. Not a winning argument but not impossible.
Fortis Healthcare (FORH IN): Indian Regulators Cleared Long-Awaited Open Offer of IHH
- SEBI has approved IHH Healthcare’s open offer for acquisition of up to 26% stake in Fortis Healthcare (FORH IN). If materializes, this should uplift IHH’s holding in Fortis to 57%.
- In 2018, Fortis’ original open offer price was INR170 per share, and the offer size was INR33B. Currently, Fortis share is trading at INR1,054, up more than 6x since 2018.
- IHH will make appropriate announcement ‘in a timely manner’, which should provide clarity on open offer pricing. Unless an attractive revised price is announced, the shareholders acceptance will be limited.
Dickson Concepts Faces Potential Privatization as Founder Poon Considers Renewed Bid After Failed Attempt
- Dickson Concepts trades at a 40% discount to net cash, with a market cap of HK$2bn and HK$3.3bn in cash.
- Founder Dickson Poon attempted privatization at HK$7.20/share, blocked by minority shareholders with 10.16% voting against.
- Business remains profitable despite downturn, with average net income of HK$200m and HK$1.4bn operating business value.
Pacific Smiles (PSQ AU): Genesis Returns To Dislodge Co-Founder
- Earlier this year, Genesis Capital secured ~89..27% in Pacific Smiles (PSQ AU), an operator of dental centers, via a A$1.90/share tendering Offer. Co-founder Alison Hughes resolutely maintained her 10.01% stake.
- PSQ has now announced Genesis has returned to the well with a A$2.20/share unconditional Offer.
- That’s a solid 37.5% premium to last close. And within the IE’s revised fair value range of A$2.13-A$2.56/share, who declared termns fiar and reasonable.
BBVA-Sabadell: Final Stretch — Risk/Reward Tilting Sharply
- BBVA secures 20%+ acceptance with one day left; gross spread at close is +2.9%. Market focus now on final institutional flows and threshold risk into 10 Oct deadline.
- Most hedge funds expected to tender to avoid being caught in a non-event or downside skew if BBVA walks; second OPA would be all-cash but at the same price.
- Long SAB / short BBVA remains tactically attractive, with asymmetry reduced but not gone. Borrow demand light but may rise as index tracking and hedge unwinds converge into result publication.
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