In today’s briefing:
- [Japan Event/Buyback] The Sony Financial Spinoff – ‘Maybe’ BUYBACK Complicates Planning
- Peak Rare Earths (PEK AU): A Done Deal at an Attractive Spread
- Uranium’s Shortfall And Nuclear Viability
- Timing the HHI–Mipo Spread Play Around the Passive Inflow Kick
- Copper Convergence — Anglo–Teck’s Path to Scale and Value
- BMPS–Mediobanca: Control Secured; Re-Open Week Sets the Next Leg
[Japan Event/Buyback] The Sony Financial Spinoff – ‘Maybe’ BUYBACK Complicates Planning
- The Sony Financial Holdings (8729 JP) (now called Sony Financial Group Inc (“SFGI”)) spinoff approaches. It will start trading 20 days from now.
- Yesterday, the TSE confirmed approval (outline, Securities Report (J), Corporate Governance Report (J). The company provided details of a possible ToSTNeT-3 buyback on Day 2 pre-open. That complicates things.
- The introduction of that type of buyback flexibility indicates that supply overhang may be managed better than buyers would hope. Means other strategies may be necessary.
Peak Rare Earths (PEK AU): A Done Deal at an Attractive Spread
- On 5 September, Shenge increased its minimum scheme consideration for Peak Rare Earths (PEK AU) to A$0.443, a 23% premium to the previous minimum cash consideration.
- The IE considers the offer fair and reasonable. The key conditions are approval from the Fair Competition Commission of Tanzania and shareholder approval (vote scheduled for 16 September).
- This is a done deal, as Tanzania approval and the vote are low-risk. At the last close and for a 30 September payment, the gross/annualised spread is 5.5%/147%.
Uranium’s Shortfall And Nuclear Viability
- Back in April 2022, around six weeks after Russia’s invasion of Ukraine, I touched on the disruption to the uranium supply chain in Uranium: Fuelling Fears.
- The war spurred renewed interest in nuclear energy as a source of domestic power. Uranium prices have tripled since the invasion.
- A recent report from the World Nuclear Association forecast a significant step-up in demand for uranium for reactors, together with a material output drop from mines “as deposits are exhausted”.
Timing the HHI–Mipo Spread Play Around the Passive Inflow Kick
- HHI–Mipo spread holds 3–4%; cancellation risk minimal. Market views HHI as the cleaner MASGA play vs. Mipo, keeping the spread sticky and unlikely to tighten soon.
- Potential kicker for widening comes from passive inflows when Mipo halts, as HHI gains weight in Global Standard vs. Mipo’s Small Cap.
- HHI may see ~4x DTV passive inflow as it absorbs Mipo; pre-announcement flows could start late October, potentially widening the swap spread ahead of the Nov 27 halt.
Copper Convergence — Anglo–Teck’s Path to Scale and Value
- Anglo and Teck agreed an at-market merger of equals, creating a copper-tilted major. Pro forma ownership about 62%/38%; HQ Vancouver, primary LSE listing. Anglo plans a sizeable pre-close special dividend.
- Scenario-Based synergy valuation indicates multi-billion upside, with recurring cost savings earlier and long-dated Chile adjacency optionality subject to partner alignment and permitting. This frames interloper incentives, break-price support, and re-rating.
- Approvals hinge on Canada’s net-benefit test and multi-jurisdictional antitrust; shareholder hurdles look manageable. I favor a hedged long-TECK/short-AAL pair capturing a double-digit spread, with dividend liabilities on the AAL short.
BMPS–Mediobanca: Control Secured; Re-Open Week Sets the Next Leg
- BMPS has secured control of Mediobanca following improved terms; the offer will briefly reopen in mid-September. Market pricing has tightened the spread, reflecting convergence momentum into settlement and governance changes.
- Acceptance dynamics likely favor incremental tenders during the re-open window as control clarity rises and strategy signals firm. Catalysts cluster around board composition, formal results notices, and subsequent settlement milestones.
- For risk-arb, positioning now focuses on convergence mechanics and disciplined hedging around headlines; sensitivity to bidder shares remains material while post-offer pathways may include on-market top-ups and medium-term threshold considerations.
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