In today’s briefing:
- Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3
- New Deal for Benefit One (2168) Could Mean Lots More Money for Pasona (2168)
- Benefit One (2412 JP): Dai-Ichi Life Counters M3 with a Privatisation Offer
- Hankyu Hanshin Takeout of OS Corp
- 2024 High Conviction: Sapporo Poised for a Strong Year Driven by Tax Revision & Investor Activism
- Cash Generation from the Sale of Subsidiary Shares Is the Default, but the Issue Remains Postponed
- 2Q Follow-Up – Copro-Holdings (7059 JP)
- Aoyama Zaisan Networks Company (8929JP) – Focusing on the Quality of Earnings
Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3
- Today post-close, life insurer Dai Ichi Life Insurance (8750 JP) announced plans to launch a Tender Offer to buy out all minorities in Benefit One Inc (2412 JP) at ¥1,800/share.
- M3’s Partial (55%) Tender at ¥1,600/share ending next week is obviously a question.
- This is GREAT news for M&A in Japan. It’s good for holders of Benefit One and Pasona Group (2168 JP) too.
New Deal for Benefit One (2168) Could Mean Lots More Money for Pasona (2168)
- Today, Dai Ichi Life Insurance (8750 JP) announced a proposed counter/over-bid for Benefit One Inc (2412 JP). ¥1800/share for minorities and a better (undefined) outcome for Pasona Group (2168 JP).
- This throws the cat amongst the pigeons as it is unsolicited, for 100% not just to get Pasona’s stake, and it will require Benefit One recommend or not.
- For Pasona, this deal structure would likely increase the net result from the stake sale, possibly substantially so. It’s in the details.
Benefit One (2412 JP): Dai-Ichi Life Counters M3 with a Privatisation Offer
- Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY1,800 (floor price) + share of Pasona Group (2168 JP)’s TOB tax benefits.
- The pre-conditions relate to the Board recommendation, Pasona support, and M3 Inc (2413 JP) offer not completing its partial offer. The tender offer starts in mid-January 2024 (20 business days).
- While the Dai-ichi Life offer is light, M3’s engagement in a bidding war is low. The proposed minimum acceptance condition (15.51% ownership ratio) requires a 32% minority acceptance rate.
Hankyu Hanshin Takeout of OS Corp
- The flip-side of the Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV. is the Hankyu-Hanshin deal to buy OS Corp (9637).
- Tokyo-Based Toho buys out Kansai-based Hankyu-Hanshin’s stake in Tokyo-based Rakutenchi. HH buys out Toho’s stake in Kobe-based OS Corp. This is a “TOB Swap”. HH owns 21.7% of Toho too.
- Like Rakutenchi, it is being done at a PBR higher than 1, but a decent discount to NAV. But this one is horribly, horribly illiquid (1,000 shs/day)
2024 High Conviction: Sapporo Poised for a Strong Year Driven by Tax Revision & Investor Activism
- Buoyed by strong post-pandemic domestic consumption and the return of inbound visitors to Japan, Sapporo Holdings (2501 JP) has been firing on all cylinders in recent quarters.
- Business fundamentals for next year look strong, with the company positioned to benefit the most from Japan’s liquor tax revisions.
- Additionally, activist investor 3D Investment Partners could successfully advance their proposals to divest the Real Estate business.
Cash Generation from the Sale of Subsidiary Shares Is the Default, but the Issue Remains Postponed
- By canceling the IPO of Rakuten Securities, it is assumed that Rakuten Group wanted to generate cash on schedule even if it was 10 billion yen less than originally planned.
- Although Rakuten Group could generate cash in the predetermined time. it remains unclear whether the company has secured a path to improve cash flow in the pending cell phone business.
- If Rakuten Securities went to public, another parent-subsidiary listing would have been created, so the cancellation of the IPO can be evaluated as positive for the quality of the market.
2Q Follow-Up – Copro-Holdings (7059 JP)
- COPRO-HOLDINGS. Co., Ltd., (COPRO) announced its 2Q FY24/3 results after market close on Tuesday, November 14, 2023.
- Key consolidated figures included net sales of ¥11,137 mn (+28.5% YoY), operating profit of ¥737 mn (+56.9% YoY), ordinary profit of ¥810 mn (+71.8% YoY), and net income attributable to the parent company of ¥510 mn (+81.9% YoY).
- Sales were largely in line with initial forecasts, while profits were 61.4% higher than initial forecasts, mainly due to lower back-office-related labor costs.
Aoyama Zaisan Networks Company (8929JP) – Focusing on the Quality of Earnings
- A positive surprise – Q1-3 FY12/2023 results highlighted the positive demand environment for AZN’s services, with Inheritance consulting sales growing 47.1% YoY driven by new customer acquisitions.
- The company’s aim to improve the quality of earnings is demonstrated by improvements in underlying profitability with the sales mix shifting towards Wealth Consulting, while Real Estate Solutions provides cross-selling opportunities and strong access to engage with new customers.
- The company has revised its FY12/2023 earnings estimates and on track to book record-high earnings, and has currently maintained its FY dividend forecast of ¥41 per share.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
