In today’s briefing:
- [Quiddity Index] Light & Wonder (LNW US/AU) US Delisting Event – Updating The Assumptions/Estimates
- On China Shengmu (1432)’s Conditional MGO
- ChiNext/ChiNext50 Index Rebalance Preview: Maxing Out the Changes
- China Shengmu (1432 HK): Possible Offer, Potentially Problematic 50% Min Acceptance Condition
- Strategic Reviews, Mergers, and Financing Updates: Key Developments in Biopharma, Hospitality
- Permira’s Recommended Cash Offer for JTC Plc
- TrueCar’s Acquisition by Fair Holdings: Potential Returns, Funding Challenges
[Quiddity Index] Light & Wonder (LNW US/AU) US Delisting Event – Updating The Assumptions/Estimates
- Light & Wonder (LNW US) will be delisted at the close of tomorrow US time (two trading days left) and shares converted to Australian CDIs.
- After studying the matter we have amended our assumptions on how flows work. More net selling than expected in November, irksome uncertainy in December, more buyback flows in the meantime.
- The stock was higher on earnings in Australia, skipped a day, then skipped another day, then jumped in the US yesterday.
On China Shengmu (1432)’s Conditional MGO
- On the 30th October, China Modern Dairy (1117 HK) (CMD) entered into a conditional SPA to acquire a 1.28% stake in raw milk producer China Shengmu Organic Milk (1432 HK) (CSM).
- CMD currently holds 29.99% in CSM. Should the SPA complete, CMD clears 30% and will be obligated to make an Offer for all shares not held.
- The Offer Price will be A$0.35/share, a 14.75% premium to undisturbed. The Offer will be conditional on a 50% acceptance hurdle.
ChiNext/ChiNext50 Index Rebalance Preview: Maxing Out the Changes
- With the review period complete, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
- The largest flows will be in 2 stocks that are forecast adds for both indices. There are 14 stocks with over 0.5x ADV to trade from passive trackers.
- The forecast adds outperformed the forecast deletes from June to August, but there has been significant underperformance since then. Outperformance could resume as positioning kicks in prior to announcement.
China Shengmu (1432 HK): Possible Offer, Potentially Problematic 50% Min Acceptance Condition
- On 30 October, China Modern Dairy (1117 HK) announced a conditional share purchase agreement to acquire 1.28% of outstanding China Shengmu Organic Milk (1432 HK) shares at HK$0.35 per share.
- The SPA is conditional on SAMR and independent CMD shareholder approval. SPA completion will trigger a mandatory conditional cash offer at HK$0.35 per share.
- Post-Completion, CMD and concert parties will hold a 31.26% stake. The offer is conditional on a 50% minimum acceptance condition, which is problematic as the offer is not particularly attractive.
Strategic Reviews, Mergers, and Financing Updates: Key Developments in Biopharma, Hospitality
- Generation Bio (GBIO) is undergoing a strategic review with potential outcomes including liquidation, reverse merger, or sale, with insiders owning 22%.
- Sotherly Hotels (SOHOO) is being acquired by two PE firms, with preferred shares trading at a wider spread than common shares.
- LakeShore Biopharma (LSBCF) signed a definitive privatization agreement at $0.90/share, with closing expected in Q1 2026.
Permira’s Recommended Cash Offer for JTC Plc
- Tight spread: JTC trades 1.7% below Permira’s 1,340p cash offer, implying a modest ~2% annualised return and ~94% market-implied completion probability.
- Low risk: Fully financed, board-backed, minimal antitrust hurdles; interloper risk negligible after Warburg’s withdrawal.
- Recommendation: Treat as cash-equivalent carry; lock in gains and redeploy to wider-spread, higher-return opportunities.
TrueCar’s Acquisition by Fair Holdings: Potential Returns, Funding Challenges
- TrueCar has signed a definitive agreement to be acquired by Fair Holdings for $2.55 per share in cash.
- The acquisition deal is 72% funded, with Fair Holdings needing to raise an additional $60 million.
- TrueCar’s past legal issues are unlikely to impact Fair’s fundraising efforts for the acquisition.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
