In today’s briefing:
- Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
- CNBM (3323 HK): A Closer Look At Proration
- Korea’s First ATS Launching March 4: Arb Opportunities to Watch
- Talgo Acquisition: Sidenor’s Bid and Competitive Landscape
- Indra’s Transformation into a Pure-Play Defence and Space Company
- Naturgy Acquisition Talks: Diplomatic and Financial Hurdles Persist
Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
- The TFTC approved in early January, The TFTC said market power would be limited and competition unrestricted. Another CNA article suggested the two FHCs were completing employee placement plans.
- Apparently, as of a month ago, only the Shin Kong Bank employee settlement plan had not been completed but the FSC has rules about that. Consideration likely proceeds.
- There are specific rules about how these things are dealt with. In the meantime, the spread – still wide – is narrowing.
CNBM (3323 HK): A Closer Look At Proration
- Back on the 6th December, China National Building Material (3323 HK) (CNBM), China’s leading building materials company, offered to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
- As this elevates CNBM’s parent’s stake to 50.01% of total shares from 45.02% currently, independent H-shareholder will vote on a whitewash waiver on the 19th February.
- Minimum pro-ration is 19.24%. It is likely to be higher. The question is whether to buy, and/or borrow, and tender; or simply short outright.
Korea’s First ATS Launching March 4: Arb Opportunities to Watch
- Korea’s first ATS goes live on March 4, starting with 10 tickers based on liquidity and market cap, expanding to 800 over time. First 10 revealed next week.
- KRX vs ATS arbitrage will be key, with execution speed differences causing price dislocations, especially for KOSPI 200 stocks. Lower ATS fees may shift institutional flow, increasing arb opportunities.
- On top of that, lack of market makers could widen bid-ask spreads, creating opportunities for spread scalpers to profit.
Talgo Acquisition: Sidenor’s Bid and Competitive Landscape
- Sidenor’s non-binding offer: Raised to €4.8 per share for 29.8% of Talgo, with a fixed €4.15 and €0.65 contingent on financial targets in 2027 and 2028.
- Competing interest from Pesa and Jupiter Wagons: Polish and Indian bidders are considering offers, while SEPI explores involvement to maintain Spanish control over Talgo.
- Uncertainty persists: Regulatory approvals, financial conditions, and competing bids complicate Talgo’s ownership future, with binding offers due by February 14, 2025.
Indra’s Transformation into a Pure-Play Defence and Space Company
- Indra is shifting to a pure-play defence and space company, divesting from IT services (Minsait) to achieve higher valuation multiples in line with aerospace and defence peers.
- Hispasat and Hisdesat acquisition will generate €400 million in revenue and €190 million EBITDA by 2026, with synergies reaching €50-70 million EBITDA by 2030.
- Indra’s valuation could rise 40-60% by 2026, as defence and space grow to 65% of revenue, increasing EV/EBITDA multiples from ~7x to 10-12x.
Naturgy Acquisition Talks: Diplomatic and Financial Hurdles Persist
- Diplomatic tensions hinder acquisition: Algeria opposes Taqa’s takeover of Naturgy due to geopolitical conflicts with the UAE, complicating Spain’s energy security and disrupting acquisition negotiations.
- Corporate governance challenges: Naturgy faces board restructuring, with five seats up for renewal and shareholder disputes over representation, potentially impacting governance stability and strategic decision-making.
- Despite acquisition uncertainties, Naturgy is expected to report solid 2024 financial results and unveil a strategic plan focusing on decarbonization, diversification, and operational efficiency in early 2025.
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