In today’s briefing:
- Palliser Capital Goes Activist on LG Chem
- Korea’s Next Policy Play: NAV Discount Squeeze on Low‑Float Large Caps
- First Pacific (142 HK): Maynilad’s IPO Price Firmed
- Weekly Update (JNJ, LEN/MLR, SOLS)
- Horizon Robotics IPO Lockup – Last of the Lockups, Large Pre-IPO Investors Still Holding On
- Catalana Occidente – Inocsa Sweetens Offer: A Modest Bump Amid Sector Outperformance
- Advent – U-Blox: Offer Successful (67.55%); AAP 16–29 Oct; ~0.3% Residual Spread
- 1&1: Telefónica Circling Germany’s #4 Mobile—tight Float, Heavy Remedies, Real Synergies
Palliser Capital Goes Activist on LG Chem
- Palliser Capital started to go activist on LG Chem. According to Palliser Capital, LG Chem’s share price is trading at a 74% discount to its NAV.
- Palliser Capital proposed improving the composition of the board of directors, restructuring the executive compensation system to align with shareholder interests, and higher share buybacks.
- Our updated NAV analysis of LG Chem suggests implied price of 613,438 won per share, which represents a 57% higher levels than current levels.
Korea’s Next Policy Play: NAV Discount Squeeze on Low‑Float Large Caps
- Market sniffing policy push; low-float names flagged as junk risk with skewed control. Desks circling, Palliser hit early—LG Chem trade popped, timing spot on.
- Trade setup: screen >₩1tn caps with low float, parent stakes 60–80%. Policy push likely forces stake cuts, driving float higher and squeezing NAV discounts—LG Chem shows the play.
- Screening >₩1tn caps flags 11 names: parents hold 60–80%. All potential stake-sale plays to boost float, squeeze NAV discount.
First Pacific (142 HK): Maynilad’s IPO Price Firmed
- First Pacific Co (142 HK)‘s 49.9%-held MPIC is spinning off Maynilad, a distributor of potable water and provider of sewage services, on the Philippine exchange.
- The IPO has been priced at PHP 15/share, down 25% from earlier expectations. Proceeds may reach PHP 34bn (~US$580mn), in the largest Filipino IPO since 2021.
- First Pac’s NAV discount has drifted off a recent multi-year narrowing, but remains elevated for a multiple cross-border, difficult to short holdco.
Weekly Update (JNJ, LEN/MLR, SOLS)
- There is a good amount of froth in the market.
- The “Fear & Greed Index” has slipped into “Extreme Fear” which is usually a good contra-indicator.
- For what it’s worth, I’m still finding plenty of ideas that look attractive from a “bottom up” perspective.
Horizon Robotics IPO Lockup – Last of the Lockups, Large Pre-IPO Investors Still Holding On
- Horizon Robotics (9660 HK) raised around US$800m in its Hong Kong IPO in October 2024. Its first set of lockups expired in April 2025. The next one is due soon.
- Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
- In this note, we will talk about the lockup dynamics and possible placement.
Catalana Occidente – Inocsa Sweetens Offer: A Modest Bump Amid Sector Outperformance
- Modest sweetener, same outcome: Inocsa raises its GCO offer to €49.75 (+€0.75/share) after strong sector performance, ensuring fairness optics but still below intrinsic value and peer valuations.
- Timeline drift, limited spread: Seven-month process extended by repeated dividend-driven adjustments; expected settlement in early Jan-2026, offering ~1% gross spread and ~4.9% annualized return for arbitrageurs.
- Delisting inevitable: With 62% control and minimal regulatory risk, Inocsa’s bid remains near-certain; minority shareholders face diminishing upside and liquidity risk once Catalana Occidente exits the exchange.
Advent – U-Blox: Offer Successful (67.55%); AAP 16–29 Oct; ~0.3% Residual Spread
- Offer now successful at 67.55%; Additional Acceptance Period runs 16–29 Oct. Shares at CHF 134.6 versus CHF 135offer leave minimal upside.
- Focus shifts to elections/settlement mechanics: tender elections, UBXNE line, EGM approvals, and remaining clearances. Expect delisting then squeeze-out if thresholds reached; execution risk dominates spread.
- Risk-Arb stance: tender in; keep sizing conservative. Residual carry ~1–2% annualized depending on settlement timing; liquidity remains good but may tighten as AAP progresses.
1&1: Telefónica Circling Germany’s #4 Mobile—tight Float, Heavy Remedies, Real Synergies
- Telefónica evaluating 1&1 takeover; tight float (UI 80.8%, Rentrop 4.5%). Our synergy DCF supports €26–€30/sh takeout (sweet spot €28–€29). Downside €19–€20; October 21, €21.80.
- Probability-Weighted fair value: €23.83/sh (45% at €28.5, 55% at €20.0). Phase-II timeline 9–12 months; PW IRR +12.6% (9m) to +9.3% (12m), ex-fees/hedging.
- Hedge long 1U1 with EU telco basket or DAX; O2 Deutschland short impractical (TEF owns ~96.85%). Key risks: heavy remedies, execution slippage, deal pivot to cooperation-only.
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