In today’s briefing:
- Osaka Steel (5449) Large Buyback At a Discount Ruins Fun For Activists
- India: Potential Free Float Changes & Passive Flows in February
- FXI ETF: Potential Changes in the Year of the Snake
- KRX New Deal Index Rebalance Preview: Smaller Deal Than Usual
- Merger Arb Mondays (03 Feb) – ESR, LifeStyle China, Vesync, Giga Prize, Sanyo, Ascot, Seven & I
- Chuoh Pack Industry (3952 JP): NIKKON (9072 JP) Offer’s 273% Premium Results from an Auction
- Weekly Deals Digest (02 Feb) – NTT UD REIT, Sanyo, Ascot, Giga Prize, Lifestyle China, Dada, LG CNS
- Fosun Tourism (1992 HK): No Love For The Scrip Alternative
Osaka Steel (5449) Large Buyback At a Discount Ruins Fun For Activists
- Osaka Steel (5449 JP) is 65% owned by Nippon Steel Corporation (5401 JP). They make a relatively simple set of steel products used by shipbuilders, construction companies, and warehouse builders.
- Activist Effissimo Capital went over 5% in October 2016 and is still a top holder. Activist Strategic Capital went over 5% in December 2023 and now owns 10+% of votes.
- The “hope” had been that Nippon Steel buy out minorities and Osaka Steel would be rescued from mediocre capital returns. That was not to be. Activists are disappointed.
India: Potential Free Float Changes & Passive Flows in February
- Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-June.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
- Depending on the date that the shareholding was published, there could be 13 stocks with passive inflows from global trackers while 4 could see passive outflows in February.
FXI ETF: Potential Changes in the Year of the Snake
- There could be 1/2 changes to the iShares China Large-Cap (FXI) (FXI US) in March. Then there will be more changes as large Chinese companies list H-shares on the HKEX.
- Fast Entries and regular inclusion of newly listed H-shares will change the characteristics of the FXI and there could be further deviations from the Hang Seng China Enterprises Index (HSCEI INDEX).
- That will provide opportunities for index rebalance traders as well as volatility traders that are active on the iShares China Large-Cap (FXI) (FXI US) options.
KRX New Deal Index Rebalance Preview: Smaller Deal Than Usual
- The review period for the March rebalance ended on 31 January, changes will be announced first week of March and implemented at the close of trading on 13 March.
- We forecast two changes for the Bio Index and one change for the Internet Index. Plus there will be capping changes for all indices.
- The largest flows will be in Samsung SDI, LG Energy Solution, POSCO Holdings, Alteogen, Naver Corp, Legochem Biosciences, Netmarble and Celltrion Inc.
Merger Arb Mondays (03 Feb) – ESR, LifeStyle China, Vesync, Giga Prize, Sanyo, Ascot, Seven & I
- We 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: Chuoh Pack Industry (3952 JP), Giga Prize (3830 JP), Sanyo Special Steel (5481 JP), Ascot Corp (3264 JP), Lifestyle China (2136 HK), Seven & I Holdings (3382 JP).
- Lowest spreads: Makino Milling Machine Co (6135 JP), Avjennings Ltd (AVJ AU), Fuji Soft Inc (9749 JP), Macromill, Inc (3978 JP), Millennium & Copthorne Hotels Nz (MCK NZ).
Chuoh Pack Industry (3952 JP): NIKKON (9072 JP) Offer’s 273% Premium Results from an Auction
- Chuoh Pack Industry (3952 JP) has recommended Nikkon Holdings (9072 JP)’s tender offer at JPY5,034, a 273.2% premium to the last close.
- The extraordinary premium resulted from a competitive auction, enabling Toyota Motor (7203 JP), the largest shareholder, to sell most of its stake.
- The offer is well above the target IFA’s DCF valuation range and more than double the all-time high. Stating the obvious, this is a done deal.
Weekly Deals Digest (02 Feb) – NTT UD REIT, Sanyo, Ascot, Giga Prize, Lifestyle China, Dada, LG CNS
- 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: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million, and Guming Holdings (GUM HK) seeks to raise US$300 million.
- Event-Driven developments: NTT UD REIT Investment Corporation (8956 JP), Ascot Corp (3264 JP), Giga Prize (3830 JP), Sanyo Special Steel (5481 JP), Lifestyle China (2136 HK), Dada Nexus (DADA US).
Fosun Tourism (1992 HK): No Love For The Scrip Alternative
- Back on the 10th December 2024, Fosun Tourism (1992 HK) announced a rare Scheme buyback, with a Cancellation Price of $7.80/share (not declared final), a punchy 95% premium to undisturbed.
- A successful Scheme would result in Fosun International (656 HK) and concert parties holding 100% in Fosun Tourism – without having to outlay a cent.
- A scrip alternative was afforded IF expressions of interests from 1% of shares out occurred. That didn’t happen. Still a clean deal. Scheme Doc dispatch is the 14th Feb.
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