In today’s briefing:
- Read-Through on the Samsung/Hynix ADR-Listing Noise
- Makino Milling Machine (6135 JP): Tender Offer Risk/Reward
- AU Small Finance Bank (AUBANK IN): Increased FOL & Large Passive Flows/ Impact
- A Potential Listing of ADRs for SK Hynix Using Its Treasury Shares?
- [Japan Activism/M&A] Activist Launches Partial Tender to Put Microcap Broadmedia (4347 JP) In Play
- ANE Cayman (9956 HK): On S329 Reports And Letters Of Interest
- More Detailed Insight into Hynix’s Internal Situation Regarding the ADR Issue
- Worthington Steel – Kloeckner: Strategic Optionality Emerges as Worthington’s Due Diligence Advances
Read-Through on the Samsung/Hynix ADR-Listing Noise
- ADR odds are tiny. Both Samsung and Hynix have thin control stakes, making governance risk too high. Neither is willing to chase a valuation pop at the expense of stability.
- Still can’t ignore it, since the ADR chatter is meaningfully swinging the pair trades. Samsung pref spread and Hynix/Square are both getting pushed around.
- ADR noise cooled today, but it can easily resurface and skew the setup. Treat as noise, but be ready to hit aggressive reversion trades when it pops again.
Makino Milling Machine (6135 JP): Tender Offer Risk/Reward
- Makino Milling Machine Co (6135 JP)’s pre-conditional tender offer from MBK Partners is at JPY11,751 per share. The gross spread has increased to 9.9% due to several concerns.
- The wide gross spread reflects the risk in satisfying the precondition, the fallout from the Homeplus saga and breaching the long stop date (16 January 2026).
- While these concerns have merit, there are mitigating factors. The risk/reward is favourable as the upside (9.9% spread) exceeds the downside (6.3% to my estimated deal break price).
AU Small Finance Bank (AUBANK IN): Increased FOL & Large Passive Flows/ Impact
- AU Small Finance Bank Limited (AUBANK IN) has received approval from the Ministry of Finance to increase its Foreign Ownership Limit from 49% to 74% (the maximum permitted).
- The increased FOL will result in passive inflows from global index trackers in February and March. The inflows are multiple days of ADV.
- There has been little increase in positioning. The increased Foreign Ownership Limit and the passive flows to come could lead to the stock moving higher over the next few weeks.
A Potential Listing of ADRs for SK Hynix Using Its Treasury Shares?
- According to numerous local media, SK Hynix is considering on listing its treasury shares (2.4% of outstanding shares representing 17.4 million shares) as ADRs.
- SK Hynix could cancel its treasury shares or list them as ADRs. The bigger bang for the buck will likely be to list them as ADRs.
- By listing its shares as ADRs, the valuation gap between SK Hynix and other listed peers (such as MU and TSMC) could be reduced.
[Japan Activism/M&A] Activist Launches Partial Tender to Put Microcap Broadmedia (4347 JP) In Play
- Today after the close, Broadmedia Corp (4347 JP) announced that UK-based Japan activist AVI and one of its funds would launch a tender offer for just over 10% of shares.
- The Tender Offer comes at a 29.5% premium, and it would take the activist to ~40% – close to board-spilling influence.
- This creates an interesting setup. One wonders whether this is meant to spill the Board post-tender, and whether the Company will seek alternate solutions.
ANE Cayman (9956 HK): On S329 Reports And Letters Of Interest
- ANE Cayman Inc (9956 HK)‘s Offer, by way of a Scheme from Centurium Partners, a pre-IPO investor, in tandem with Temasek, has displayed some unique (unusual?) firsts.
- There is the 9%+ stake held by CDH – another pre-IPO investor – a shareholder that fails to appear in subsequent annual/interim reports; or even Hong Kong disclosure announcements.
- Then late last week, the Offeror opted not to raise the cap on the scrip option alternative, despite shareholders expressing interest.
More Detailed Insight into Hynix’s Internal Situation Regarding the ADR Issue
- They’re maxing out M15X ahead of schedule, facing a fab gap until ’27, and now need more capex than their KRW 28tn cash pile comfortably covers.
- SK doesn’t want an Hynix ADR; they’re focused on tapping the KRW 150tn Growth Fund to fill the capex gap while avoiding dilution and protecting their already-fragile control stack.
- ADR noise spiked because Hynix’s near-term capex needs exceed Growth Fund capacity, pushing them toward a 2.4% treasury dump—but I still don’t see SK pulling the ADR trigger.
Worthington Steel – Kloeckner: Strategic Optionality Emerges as Worthington’s Due Diligence Advances
- Worthington’s due diligence introduces a credible takeout path, with Kloeckner trading on event probability rather than fundamentals. Concentrated ownership means pricing must satisfy the 41% anchor shareholder to advance discussions.
- Standalone equity value sits near €7.05 per share once full balance-sheet obligations are incorporated. Identifiable synergies of €60–85m annually support a realistic takeover corridor of €8.25–9.78 per share.
- Worthington has ample balance-sheet capacity to fund the acquisition. Pro forma leverage of 2.7–3.2× under a standard mixed-financing structure is comfortably financeable, making the transaction large but feasible.
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