Daily BriefsEvent-Driven

Daily Brief Event-Driven: Two Bits of Non-Bullish Toshiba News and more

In today’s briefing:

  • Two Bits of Non-Bullish Toshiba News
  • FTSE All-World/​​​​All-Cap Index Rebalance Preview (Dec): Quieter Than Usual as IPOs Dry Up
  • Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
  • EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
  • O2Micro’s “Reasonable” Homecoming Offer
  • O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS
  • Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
  • Noteworthy Lockup Releases for the Next Two Months in Korea

Two Bits of Non-Bullish Toshiba News

By Travis Lundy

  • On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
  • Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba’s announcement on the Privatisation process status implied some delay.
  • Today the shares are getting hit vs Peers. It’s still a problem of lots of moving parts. 

FTSE All-World/​​​​All-Cap Index Rebalance Preview (Dec): Quieter Than Usual as IPOs Dry Up

By Brian Freitas

  • We see 4 potential inclusions to the FTSE All-World and All-Cap indices that will be implemented at the close of trading on 16 December.
  • There are a couple of other recent listings that are close to the investable market cap threshold and could be added to the All-Cap index.
  • Given the lack of IPO in the April to August period, the rebalance will be quieter than usual though lock-up expiries will keep things interesting.

Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry

By Douglas Kim

  • Saudi Arabia’s Savvy Games Group has a grand ambition to invest in the global gaming industry. It recently announced that it will invest US$37.8 billion in the global gaming industry.
  • There has been a sharp appreciation of the USD and Riyal versus JPY which could help to accelerate more M&As of Japanese game companies by SGG.
  • Saudi Arabia’s aggressive push to expand into the global gaming industry could aid this sector in the coming months as it could result in further major M&As in this sector.

EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options

By Simon Harris

  • Stock has fallen 17% since Sep 15th, and implied vols have picked up
  • The fundamentals remain strong and tech momentum may be shifting
  • We suggest two directional trades using options to play earnings

O2Micro’s “Reasonable” Homecoming Offer

By David Blennerhassett

  • O2Micro International (OIIM US), an integrated circuits play, has announced a definitive privatisation transaction.
  • The acquirer, led by the CEO and CFO of O2Micro, are offering US$5.00/ADS, a 68.9% premium to the undisturbed price. 
  • The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. Roughly 30% of shares out appear to be supportive. This Offer is expected to close in the 1Q23.

O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS

By Arun George

  • O2Micro International (OIIM US) entered into a definitive agreement for going private with FNOF Precious Honour Limited at US$5.00 per ADS, a 54.8% to the undisturbed price (17 March).
  • Shareholders representing two-thirds of shares present and voting need to approve the deal. The rollover shareholders represent 16.90% of voting rights.
  • The offer is attractive in the context of O2Micro’s weakening performance and grim market conditions. At the last close, the gross spread is 18.2%. Expect a 1Q23 deal close.

Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake

By Sumeet Singh

  • In early Jun 2022, Alipay raised around US$386m via selling 3.3% of outstanding shares of Kakao Pay (377300 KS). That was the first selldown by Alipay  (Alibaba (ADR) (BABA US)).  
  • Despite pricing the shares at an enticing 11.8% discount to last close, the stock failed to hold the deal price and hasn’t looked back since.
  • In this note, we will talk about the previous deal and the upcoming lockup expiry.

Noteworthy Lockup Releases for the Next Two Months in Korea

By Sanghyun Park

  • K Car’s major shareholder is Hahn & Company, which has already fully recovered the initial investment. So, there is an actual probability that it will make an aggressive exit.
  • SingEel’s 3-month IPO institutional and VCs will be released, 6.18% of SO. All of them are in a profit zone, there is a possibility that an aggressive overhang will occur.
  • Kakao’s 47% holdings in Kakao Pay will be released. The possibility of lowering the stake seems quite low. Nevertheless, we must consider the risk that this will affect market sentiment.

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