In today’s briefing:
- [Japan Partial Tender] Update on SBI’s Tender for BASE (4477 JP)
- NIKKON Holdings (9072 JP): Two Bidders in the Second Round with Suggestions of a Takeunder
- Kadoya (2612 JP): Evaluating a Potential Privatisation
- Companies with Major Shareholders Holding over 40% Stake Account for 30% of All Listed Companies
- Toyobo (3101 JP) – Absorbing the Impact of Rising Naphtha Costs
[Japan Partial Tender] Update on SBI’s Tender for BASE (4477 JP)
- On 28 August, SBI Holdings (8473 JP) announced a Tender Offer to buy 20% of BASE Inc (4477 JP) by Tender Offer at ¥340/share. That was a very small premium.
- My comments were in [Japan Partial Tender] SBI Launches Partial Offer for 20% of BASE (4477 JP) At ¥340 – Needs More. SBI has quite often underpaid on partials.
- Top shareholder Maki-san was released from his confidentiality agreement the same day. Last night he released an updated Large Shareholder Filing Amendment. It tells you something.
NIKKON Holdings (9072 JP): Two Bidders in the Second Round with Suggestions of a Takeunder
- Bloomberg reported that Bain and Lone Star have advanced to the second round of bidding for Nikkon Holdings (9072 JP), which will commence in early September.
- Bloomberg also noted that a takeunder is possible. At first glance, the argument for a takeunder looks compelling, particularly as Nikkon shares have materially outperformed peers YTD.
- However, a takeunder is unlikely for several reasons and is largely a ruse to dampen expectations. An offer around JPY6,000 remains justifiable.
Kadoya (2612 JP): Evaluating a Potential Privatisation
- Mergermarket and Nikkei reported that Kadoya Sesame Mills (2612 JP) is considering taking its shares private to enhance its corporate value in the medium- to long-term.
- The likely offer structure is a Mitsubishi Corp (8058 JP)-led TOB to gain strategic control (distribution exclusivity, supply-chain integration). Mitsui & Co Ltd (8031 JP) is likely to exit.
- Kadoya has materially outperformed its peers over the past 12 months, thereby capping the takeover premium. I estimate an offer of JPY1,950 to JPY2,510.
Companies with Major Shareholders Holding over 40% Stake Account for 30% of All Listed Companies
- The disclosure rules begin as a compromise in response to concerns regarding the burden on listed companies and investor needs. However, it remains unclear what impact these rules will have.
- Since there are so many companies with major shareholders,this means that while there are challenges regarding trading liquidity, there are also many investment opportunities.
- Institutional investors are expected to discuss with the company the future direction of its listing in a way that promotes the sustainable growth of minority shareholders’ interests.
Toyobo (3101 JP) – Absorbing the Impact of Rising Naphtha Costs
- Toyobo delivered a solid Q1 FY3/27, consistently buoyed by Industrial Films, with particular strength in MLCC mold-release films and SRF.
- Concurrently, OP in the Resins & Chemicals segment (within Environmental & Functional Materials) surged 90.2% YoY.
- While elevated naphtha prices stemming from Middle East tensions have led management to guide for a 17.6% YoY decline in FY OP, robust underlying fundamentals and strategic price pass- throughs should keep operating cash flow resilient.
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