In today’s briefing:
- Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely
- OZ Minerals May Be Narrowing the Price Gap to a BHP Deal
- Toshiba – Japan Industrial Partners The Only Real Bid?
- Link’s On Again-Off Again Scheme Is All but Off
- Trading Angles of Hyundai Green Food Demerger, with Potential Tender & Hive-Off
Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely
- Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
- If no deal, there’s downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
- I don’t see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.
OZ Minerals May Be Narrowing the Price Gap to a BHP Deal
- Six+ weeks ago, BHP Group Ltd (BHP AU) approached OZ Minerals Ltd (OZL AU) with a bid of A$25/share. Oz very quickly rejected it and said it was worth more.
- The back and forth immediately post-rejection was not conciliatory. My expectation was that if they came back quickly, they’d have to pay A$30. But coming back quickly was tough.
- There are hints now that may be the price. But it may not be. It will take time.
Toshiba – Japan Industrial Partners The Only Real Bid?
- Since the second of Jun Toshiba is down 14.7% while TOPIX is up 0.7%.
- This underperformance against TOPIX and industry peers suggests that some of the implied acquisition premium has dissipated.
- With reasonable potential for some form of bid coming through we consider the news about Japan Industrial Partners growing its consortium.
Link’s On Again-Off Again Scheme Is All but Off
- Dye & Durham/DND has proposed a revised Link Administration (LNK AU) offer to address any FCA redress payments. Around A$1.00 per share will hang on the outcome of the FCA investigation.
- The Link Board has said it cannot recommend the revised proposal based on value, structure and alternatives available to Link. We agree with the Board’s view.
- The scheme is all but dead. The shares are now a back-end play and remain attractive for value investors.
Trading Angles of Hyundai Green Food Demerger, with Potential Tender & Hive-Off
- The value accretion that will occur by unlocking treasury shares will be more significant than Hyundai Dept. The treasury shares account for 10.64%, compared with 6.61% for Hyundai Dept.
- Neither Holdco nor Opco will likely remain in the KOSPI 200 after relisting. So we cannot expect PASSIVE inflow at the time of relisting.
- A tender will likely follow. However, neither is available for shorting. So, we should use Opco’s overheated price adjustment as an exit timing for our positions aimed at value accretion.
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