In today’s briefing:
- [Japan M&A] – Three+ Years Later, Shimizu Comes In To Buy Out Minorities in Nippon Road (1884)
- Frasers Hospitality Trust (FHT SP): Frasers Property & TCC Reload Scheme
- Mayne Pharma (MYX AU): High Risk/Reward as an FDA Letter Causes a Tailspin
- Insignia Financial (IFL AU): Bain Walks Due To “Macro Uncertainty”. CC Capital’s Still In. For Now
- Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year
- Mayne Pharma (MYX AU): Firm Support From Cosette Would Be Welcome About Now
- [Japan M&A/Activism] Infroneer To Buy Out Activist Target Sumi Mits Construction (1821) Cheapish
- Webjet (WJL AU) In Play: BGH/Weiss’ NBIO And Helloworld’s Substantial Stake
- Sankyo Co: Big Buyback + Five Years Left Until Opening of Mega MGM Osaka Integrated Casino Resort
- Fraser Hospitality Trust (FHT SP): Frasers Property’s Light Scheme Offer
[Japan M&A] – Three+ Years Later, Shimizu Comes In To Buy Out Minorities in Nippon Road (1884)
- In February 2022, Shimizu Corp (1803 JP) bought an additional 25% to get to 50.1% of Nippon Road (1884 JP). It wasn’t a great price.
- It was, however, a good trade to buy the dip after, as recommended. I expected Shimizu to come back in one to three years. It took three.
- Like last time, the price is light. The multiple is low. There are no synergies in the price analysis, in specific violation of the METI Fair M&A/CorpTakeover Guidelines. Bah humbug.
Frasers Hospitality Trust (FHT SP): Frasers Property & TCC Reload Scheme
- Frasers Hospitality Trust (FHT SP) (FHT) has announced a Scheme Implementation Deed was signed for the S-REIT’s privatisation by its current sponsor, Frasers Property Limited.
- The Scheme Consideration is S$0.71/unit in cash against the latest adjusted NAV estimate of S$0.63904/unit (vs last NAV of S$0.64160/unit).
- Back in September 2022, ~3% of units (~4.7% of minorities) voted against Frasers/TCC’s S$0.70/unit Offer. But only 18.8% of minorities actually voted. That deal just failed.
Mayne Pharma (MYX AU): High Risk/Reward as an FDA Letter Causes a Tailspin
- Mayne Pharma (MYX AU) shares declined 15.76% after the public disclosure of an untitled FDA letter relating to NEXTSTELLIS promotional materials.
- Mayne opines that the letter is not price sensitive as it does not prevent ongoing NEXTSTELLIS sales. Its response will likely withdraw the problematic presentation and adopt a compliance program.
- The scheme is unlikely to be derailed, as I estimate that the MAC clause should not be triggered in the worst-case scenario of no NEXTSTELLIS sales. Risk/reward is attractive.
Insignia Financial (IFL AU): Bain Walks Due To “Macro Uncertainty”. CC Capital’s Still In. For Now
- You could see this coming. With due diligence expected to close on the 15th May, Bain has notified Insignia Financial (IFL AU) it won’t proceed due to macro uncertainties.
- Discussions remain ongoing with CC Capital. No fixed timeline on those talks, although it appears negotiations will extend beyond the 15th May.
- NBIOs were not an ideal place to hide amid Trump’s trade war. They still aren’t. Insignia is down 14.9% as I type.
Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year
- Jiangsu Hengrui Medicine (600276 CH) could raise up to US$1.6bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the possibility of Fast Entry inclusion to global indexes.
- Jiangsu Hengrui (1276 HK) should be added to Southbound Stock Connect from the open of trading on 20 June following the end of the Price Stabilisation period.
Mayne Pharma (MYX AU): Firm Support From Cosette Would Be Welcome About Now
- They say bad things come in threes. First, Mayne Pharma (MYX AU)announced TherapeuticsMD (TXMD US)‘s legal lawsuit. Then shares buckled in the wake of Trump’s executive order on pharma.
- The final straw was the FDA accusing Mayne of giving misleading impression of the risks of its oral birth control pill. Shares are now a whopping 29% adrift of terms.
- Mayne reckons the lawsuit and the FDA letter are not materially price sensitive; and it intends to move forward with the Scheme. A similar intention from Cosette would be welcome.
[Japan M&A/Activism] Infroneer To Buy Out Activist Target Sumi Mits Construction (1821) Cheapish
- Noted activist Yoshiaki MURAKAMI and associates owned ~12.5% in March 2024, perhaps a tad more. Now they own ~29%.
- Integrated Construction Co INFRONEER Holdings (5076 JP) – congenitally allergic to paying full price for acquisitions – is buying Sumitomo Mitsui Construction (1821 JP) well below FAs’ DCF range midpoints.
- But MURAKAMI-san has tossed his cards in, agreeing to tender. This looks like it gets done, but there are interesting angles.
Webjet (WJL AU) In Play: BGH/Weiss’ NBIO And Helloworld’s Substantial Stake
- In Webjet (WJL AU): Undisclosed Buyer Buying, I addressed the rumours that an undisclosed buyer with ~5% was seeking to add an additional 5% (19.6mn shares).
- On the 12th May, Helloworld Ltd (HLO AU) emerged with a 5.015% stake. The same day, BGH said it had 10.76%. BGH followed with a A$0.80/share NBIO.
- BGH wants a controlling stake in Webjet (WJL AU), and potentially maintaining the listing; suggesting an off-market Offer, with say, a 50% acceptance hurdle being one possibility.
Sankyo Co: Big Buyback + Five Years Left Until Opening of Mega MGM Osaka Integrated Casino Resort
- On 12 May, Sankyo Co Ltd (6417 JP) announced a big share buyback worth 13.66% of total issued shares (excluding treasury shares).
- Aggregate amount of the purchase cost is up to 60 billion yen (9.7% of its current market cap).
- We continue to have a Positive view of Sankyo which continues to demonstrate its commitment to deliver higher shareholder returns through aggressive share buybacks.
Fraser Hospitality Trust (FHT SP): Frasers Property’s Light Scheme Offer
- Frasers Hospitality Trust (FHT SP) announced a scheme privatisation from Frasers Property Ltd (FPL SP) at S$0.71 cash and permitted distributions (estimated at S$0.0086 per unit).
- The 2022 scheme failed because it narrowly missed the 75% approval threshold. The current offer is light compared to the 2022 offer in several ways.
- Emerging retail opposition could make satisfying the headcount test challenging. The offer has not been declared final, and a bump is possible.
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