In today’s briefing:
- [Japan M&A] Sumitomo Corp To Buy Out Minorities in SCSK (9719 JP)
- [Japan M&A] Sumi Elec Buys Out Minorities in Sumitomo Riko (5191 JP) For ¥2,600 – Low Price/Multiple
- Jardine Matheson’s Underperformance Post Mandarin Offer
- [Japan M&A] Daiwa House Buyout of Sumitomo Densetsu (1949 JP) At ¥9,760 – A Good Exit
- Hyosung Heavy — Ceiling Reversion Setup, ~0.7x DTV Outflow. Totally off the Market’s Radar
- [Japan M&A] Fujitsu Buys Out Brainpad (3655) At Near 100% Premium
- BrainPad (3655 JP): Fujitsu (6702 JP)’s 100% Premium Tender Offer
- Samsung Electronics: Block Deal Sale of 1.8 Trillion Won for Inheritance Tax Payment by Lee Family
- Sumitomo Densetsu (1949 JP): Daiwa House Industry (1925 JP)’s Attractive Tender Offer at JPY9,760
- Sumitomo Riko (5191 JP): Sumitomo Electric (5802 JP)’s Tender Offer Is Light but Likely Done
[Japan M&A] Sumitomo Corp To Buy Out Minorities in SCSK (9719 JP)
- Yesterday after the close, Sumitomo Corp (8053 JP) announced it would buy out minorities in Scsk Corp (9719 JP) at ¥5,700/share.
- As a “parent takes out subsidiary” deal, this was not unexpected at some point in time. The register looks like there may be a number of people who expected that.
- This gets done pretty easily. It is not a bad price.
[Japan M&A] Sumi Elec Buys Out Minorities in Sumitomo Riko (5191 JP) For ¥2,600 – Low Price/Multiple
- Today with the earnings announcement, Sumitomo Electric Industries (5802 JP) announced it would buy out minorities in Sumitomo Riko Company (5191 JP), its rubber products subsidiary.
- The price is low, and especially so when one considers the significant net receivables and inventory number (about 2mos of revenue, but one turn of annual EBITDA).
- Crossholders and insiders, however, own nearly 15% of the company, and that makes blocking this deal difficult, despite its low price, and lack of synergies considered in the price.
Jardine Matheson’s Underperformance Post Mandarin Offer
- Concurrent with the sale of 13 floors of OCB to Alibaba, Jardine Matheson (JM SP) announced on the 17th October an Offer for Mandarin Oriental (MAND SP)‘s minorities at US$3.35/share.
- This is a clean, full, “dull” Offer. And MAND is trading super tight to terms at ~2.1% gross, with possible payment (my estimate) late Feb 2026.
- Proceeds from the OCB sale will be US$925mn. And taking out MAND’s minorities will set Matheson back ~US$1bn. Yet the market is now assigning US$2.1bn less for Matheson’s stub ops.
[Japan M&A] Daiwa House Buyout of Sumitomo Densetsu (1949 JP) At ¥9,760 – A Good Exit
- Today partway through the day, Daiwa House Industry (1925 JP), Sumitomo Electric Industries (5802 JP), and Sumitomo Densetsu (1949 JP) announced Daiwa House would buy out Sumitomo Densetsu for ¥9,760/share.
- Sumitomo Electric will sell its stake to the company ¥6,877/share. Minorities get 11.9x Mar26 EBITDA. The Bidder is buying at 9.9x.
- At an ATH, and a nice premium, and 3x book, this looks like a pretty good takeout price. Daiwa House has plans for it.
Hyosung Heavy — Ceiling Reversion Setup, ~0.7x DTV Outflow. Totally off the Market’s Radar
- Hyosung Heavy (298040 KS) near 29% weight; 10ppt ceiling cut = ~0.6–0.7x DTV outflow. Unlike other ETF heavies, flows here bite — real tradeable setup.
- Hyosung Heavy ceiling cut hits Dec 12 rebalance unless >30% earlier; iSelect enforces next‑day, as seen with Isupetasys (right today) breach in KODEX AI Semicon ETF clipped to 20%.
- Hyosung Heavy again ripping today; watch 30% breach — triggers next‑day ceiling cut. Play the reversion, hedge with other hot AI power basket names.
[Japan M&A] Fujitsu Buys Out Brainpad (3655) At Near 100% Premium
- Today after the close, Fujitsu Ltd (6702 JP), with 110,000 employees, announced a buyout of a small “labour-intensive” AI/ML sysdev business with 200+ data scientists.
- Brainpad Inc (3655 JP) is being bought out from its co-founders and others at a near-100% premium. Not an all-time high, but not a low price.
- Somewhat heavily shorted, this will trade tight, but I expect nobody will come over the top.
BrainPad (3655 JP): Fujitsu (6702 JP)’s 100% Premium Tender Offer
- Brainpad Inc (3655 JP) has recommended a tender offer from Fujitsu Ltd (6702 JP) at JPY2,706, a 100.0% premium to the undisturbed price.
- The offer is attractive compared to historical trading ranges and is above the midpoint of the target IFA DCF valuation range.
- The huge takeover premium resulted from an auction. The tender offer runs from 31 October to 15 December (30 business days). This is a done deal.
Samsung Electronics: Block Deal Sale of 1.8 Trillion Won for Inheritance Tax Payment by Lee Family
- It was announced today that Samsung’s Lee family members are selling about 1.8 trillion won worth of Samsung Electronics (005930 KS) through an after-hours block trade.
- The purpose of the block trade is for the Lee family members to pay for inheritance taxes and repay stock-backed loans.
- The block trade selling level is between 102,200 won and 104,100 won, representing a discount of 0% to 1.8% compared to the closing price of the day.
Sumitomo Densetsu (1949 JP): Daiwa House Industry (1925 JP)’s Attractive Tender Offer at JPY9,760
- Sumitomo Densetsu (1949 JP) has recommended a tender offer from Daiwa House Industry (1925 JP) at JPY9,760, a 28.1% premium to the undisturbed price.
- The process is deficient due to the lack of an auction and the offeror’s reliance on less than 100% voter turnout to pass the EGM share consolidation vote.
- Nevertheless, the offer is attractive, as it represents an all-time high and is above the high end of the IFA DCF valuation range.
Sumitomo Riko (5191 JP): Sumitomo Electric (5802 JP)’s Tender Offer Is Light but Likely Done
- Sumitomo Riko Company (5191 JP) has recommended a tender offer from Sumitomo Electric Industries (5802 JP) at JPY2,600, a 20.6% premium to the undisturbed price.
- The offer is arguably attractive as it is above the midpoint of the special committee/target IFA DCF valuation range and represents an all-time high.
- The offer is light as it implies a discount to peer multiples. However, the significant cross-holders on the register suggest that the minimum tendering condition should be met.
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