In today’s briefing:
- Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book
- Daito Trust Buys Out Listed Private Co Ascot (3264 JP) – Small Done Deal at ¥260
- Ascot Corp (3264 JP): Daito Trust Construction (1878 JP)’s Tender Offer a Done Deal
- Sabadell’s Dividend Strategy and the BBVA Takeover Bid
- EQD | NSE Nifty Bank Index – Implied Volatility Not (Yet) Rich Enough.
- Nikkon Pays 273% Premium for Chuoh Pack (3952 JP) In Takeover
- EQD | S&P/ASX 200 Option Strategy – Today’s All-Time-High Calls for Proactive Hedging
- EQD | Global Option Implied Volatility – Option Opportunities Across the Regions
- Freebit (3843) Buys Out Minorities in Giga Prize (3830) – Light, But Tough to Block
Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book
- 6-7 years ago Sanyo Special Steel (5481 JP) bought out a large foreign specialty steel company, and funded it by getting Nippon Steel to inject capital at below book.
- Now Nippon Steel is buying the rest of Sanyo Special Steel in a Tender Offer at 0.66x book, where most of book is Net Receivables, Inventory, WIP, and Materials.
- This is the second time in a decade where the Board has decided to sell control of itself at far below book value. They should be ashamed of themselves.
Daito Trust Buys Out Listed Private Co Ascot (3264 JP) – Small Done Deal at ¥260
- Ping An Insurance bought into a small Tokyo-based condo developer in 2017 at ¥255/share. In 2020, it reinvested on the dip with SBI at ¥155/share.
- Ping An and SBI started with zero shares. By 2020 they had 80+% of shares. Now they are selling out to Daito Trust Construct (1878 JP).
- This is a done deal at a slight premium to book value. Daito Trust buys Real Estate Available for Sale and assumes debt. That’s it. Easy peasy done deal.
Ascot Corp (3264 JP): Daito Trust Construction (1878 JP)’s Tender Offer a Done Deal
- Ascot Corp (3264 JP) announced a tender offer from Daito Trust Construct (1878 JP) at JPY260 per share, a 20.4% premium to the last close.
- Ascot currently does not meet the 25% tradeable share ratio criterion. The offer is attractive compared to historical trading ranges but below the mid-point of the IFA DCF valuation range.
- This is a done deal, as irrevocables represent an 82.78% ownership ratio, well above the minimum acceptance condition (67.86% ownership ratio).
Sabadell’s Dividend Strategy and the BBVA Takeover Bid
- Sabadell plans a €500 million share buyback to maintain stock value, reducing the attractiveness of BBVA’s exchange offer and increasing shareholder resistance to the takeover.
- Regulatory scrutiny intensifies as BBVA-Sabadell would control 39.63% of Catalonian banking credit, raising competition concerns, particularly in SME lending and payment services.
- The market expects BBVA to raise its offer by 10-20%, but BBVA’s CEO insists there is “no room” for improvement, making shareholder approval uncertain.
EQD | NSE Nifty Bank Index – Implied Volatility Not (Yet) Rich Enough.
- NSE Nifty Bank Index implied volatility could be seen as rich when compared to its own history and in comparison to realized volatility.
- Putting implied volatility into context with the NSE Nifty Bank Index 200 day moving average will lead to a different conclusion. Selling volatility might not be the opportunity it seems.
- This Insight provides a quantitative indication at which level implied volatility can be assessed as rich.
Nikkon Pays 273% Premium for Chuoh Pack (3952 JP) In Takeover
- Today, Nikkon Holdings (9072 JP) announced it would take over Chuoh Pack Industry (3952 JP) for ¥5,034/share. It closed today at ¥1,349. This is a HUGE win for governance.
- The 273% premium is not the big win here. For holders it is, of course, but for Japan Inc shareholders everywhere, the win was the auction process.
- This could have come out at 100% premium and that might have been OK. As it is, cross-holders and one big holder together get this deal done. Congrats!
EQD | S&P/ASX 200 Option Strategy – Today’s All-Time-High Calls for Proactive Hedging
- Today, the S&P/ASX 200 (AS51 INDEX) reached a new all-time high while implied volatility is near record low levels. The combination makes for a good opportunity to hedge.
- Volatility assessment trough conventional volatility metrics and one new chart not seen anywhere else.
- An actionable example of a put option hedge is presented, striking a balance between protection and cost.
EQD | Global Option Implied Volatility – Option Opportunities Across the Regions
- Global option markets present a diverse picture, offering a broad opportunity set.
- Several markets make for good hedging-candidates after a strong January and amid cheap options.
- Although several Indian indices show high implied volatility, contextual analysis indicates volatility may be fairly priced relative to their bear trends.
Freebit (3843) Buys Out Minorities in Giga Prize (3830) – Light, But Tough to Block
- Today, Freebit Co Ltd (3843 JP) announced it would launch a Tender Offer next Monday to buy out minorities in 60.9%-owned Giga Prize (3830 JP).
- The multiple is not terribly impressive. It could be better. But they only need 5.8% of the 39.1% they do not own to get this over the hump.
- Synergies are clear. They are expected. They are not priced in the valuation. This is disappointing. Again.
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