In today’s briefing:
- [Japan M&A] YAGEO Upping the Stakes in the Game of 🐓 over Shibaura (6957 JP)
- Merger Arb Mondays (25 Aug) – Dongfeng, ENN Energy, Shibaura, Santos, Lynch, Smart Share
- Shibaura Electronics (6957 JP): Method in the Madness as Yageo Bumps Twice in Two Days
- ENN Energy (2688 HK): Chipping Away at the Precondition
- Weekly Deals Digest (24 Aug) – Mayne Pharma, PointsBet, Lynch, Dongfeng Motor, ENN Energy, Shibaura
- A/H Premium Tracker (To 22 Aug 2025): BIG Beautiful Skew Corrects
- HK Connect SOUTHBOUND Flows (To 22 Aug 2025); Big Swing Out of ETFs Into Tech Realised,
- Merger Arbitrage, Trial Delays, Strategic Reviews, and Buybacks
- Weekly Update (BRSL, SUNN, CON)
[Japan M&A] YAGEO Upping the Stakes in the Game of 🐓 over Shibaura (6957 JP)
- On 14-Aug, Minebea Mitsumi (6479 JP) upped their TOB on Shibaura Electronics (6957 JP) from ¥5,500 to ¥6,200, but set the close before rival bidder YAGEO’s likely FEFTA approval date.
- On 21-Aug, YAGEO responded by upping the bid 7% to ¥6,635. Minebea responded by saying no raise, no extension. Minebea was playing chicken. Shares fell Friday.
- Very early Saturday, the Nikkei reported YAGEO would raise to the “¥7,100 range.” Reuters later reported YAGEO had raised to ¥7,130. Exactly 15% above Minebea. On YAGEO’s website.
Merger Arb Mondays (25 Aug) – Dongfeng, ENN Energy, Shibaura, Santos, Lynch, Smart Share
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Dongfeng Motor (489 HK), Mayne Pharma (MYX AU), Smart Share Global (EM US), ENN Energy (2688 HK), Santos Ltd (STO AU), Shibaura Electronics (6957 JP).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Ainsworth Game Technology (AGI AU), Ashimori Industry (3526 JP), PointsBet Holdings (PBH AU).
Shibaura Electronics (6957 JP): Method in the Madness as Yageo Bumps Twice in Two Days
- On 21 August, Yageo Corporation (2327 TT) increased its Shibaura Electronics (6957 JP) offer by 7.0% to JPY6,635. On 23 August, Yageo further increased its offer by 7.5% to JPY7,130.
- The offer is partially in reaction to Minebea’s recent comments around Yageo securing FEFTA approval. Crucially, Yageo finally provided an update suggesting that only a few issues remained.
- Yageo’s JPY7,130 offer is not over-the-top, as Minebea’s 10x EV/EBIT pricing guideline outlined on 18 August potentially justified a JPY7,300 offer. The likelihood of Minebea walking has increased.
ENN Energy (2688 HK): Chipping Away at the Precondition
- ENN Natural Gas (600803 CH) has made steady progress in satisfying the precondition for its ENN Energy (2688 HK) offer. On 22 August, NDRC approval was obtained.
- The appraised offer HK$80.00 value is the key debating point. Based on several methodologies, I estimate a realistic offer value of HK$74.44 (range of HK$67.84 to HK$83.64).
- The protest votes for director re-elections at the 23 May AGM are a risk. On balance, the scheme vote should pass as the offer is reasonable and strategically sensible.
Weekly Deals Digest (24 Aug) – Mayne Pharma, PointsBet, Lynch, Dongfeng Motor, ENN Energy, Shibaura
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Aux Electric Co Ltd (0917839D HK) is seeking to raise US$600 million, Tata Capital Limited (TATACAP IN) is seeking to raise US$2.0 billion.
- Event-Driven developments: Mayne Pharma (MYX AU), PointsBet Holdings (PBH AU), Lynch Group Holdings (LGL AU), Dongfeng Motor (489 HK), ENN Energy (2688 HK), Shibaura Electronics (6957 JP).
A/H Premium Tracker (To 22 Aug 2025): BIG Beautiful Skew Corrects
- HUGE, rampaging, “Beautiful Skew”… unwinds. Big swings in H/A ratios continue, this time on average with 2.3% H underperformance vs As, 4% wider on the highest AH premia.
- Last week’s long reco on Guangzhou Automobile Group (2238 HK) was up 1 tick on the week in Hs and Hs underperformed the A by 1.5%.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there free for SK readers.
HK Connect SOUTHBOUND Flows (To 22 Aug 2025); Big Swing Out of ETFs Into Tech Realised,
- Gross SOUTHBOUND volumes US$20+bn a day this past 5-day week. Net buying much more limited. Big ETF buying turned into ETF selling and tech buying, as suggested.
- Last week’s reco Tencent (700 HK) was the top net buy in SOUTHBOUND this past week, up 2.2%, outperforming major HK benchmarks.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there free for SK readers.
Merger Arbitrage, Trial Delays, Strategic Reviews, and Buybacks
- Smart Share Global’s management consortium offered $1.25/ADS, with Hillhouse’s competing bid at $1.77/ADS, a 33% spread.
- Mayne Pharma’s trial delayed to September 22, with Harvest Lane trimming its stake; spread to Cosette’s offer is 47%.
- Gore Street Energy Storage faced significant shareholder dissent; RM Funds calls for Chairman’s resignation amid strategic review efforts.
Weekly Update (BRSL, SUNN, CON)
In December 2024, Continental’s (XTRA: CON) Executive Board approved spinning off the Automotive group sector by end of 2025, with preparations wrapping up by Q3 2025
The new Automotive company (“Aumovio”) which generates ~€20BN in sales, will begin regular way trading in September.
The automative business has struggled, but management has plans in place to improve margins over time.
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