In today’s briefing:
- 7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
- JPH Launches “MBO” (LBO with SARs for Family/Execs) For Trucker Tonami Holdings (9070). Too Cheap.
- Japan Post Bank (7182) – Missed Opportunity Leaves Likely Shadow Overhang
- Japan Post Bank (7182 JP): A US$4.2 Billion Secondary Offering
- Japan Post Bank US$4bn Placement – Smaller Deal, Similar Structure, Might Yield Similar Results
- Quiddity JPX-Nikkei 400 Rebal 2025: End-Feb 2025 Ranks
- Daido Steel Co., Ltd (5471 JP): Research Update
- Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings
7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
- The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
- 7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
- The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.
JPH Launches “MBO” (LBO with SARs for Family/Execs) For Trucker Tonami Holdings (9070). Too Cheap.
- Yesterday, Japan Post Holdings (6178 JP) announced an MBO for Tonami Holdings (9070 JP) whereby the family/execs will stay on. JPH will own 99.97%, the execs/family 0.03%.
- This deal is yet another in a line of logistics deals dating back the last 2+ years where the premium has been quite big. This time is +74%.
- But this is not overly expensive. Makes me go hmmmm…
Japan Post Bank (7182) – Missed Opportunity Leaves Likely Shadow Overhang
- The Offering comes in lighter than expected. The buyback is smaller than expected. The resultant overhang is larger than expected.
- The index flows around the delivery date are well-understood. They are what they are.
- Shareholder structure is such that this is not quite a new IPO but needs a lot of new shareholders. BUT… there is one redeeming feature one should not ignore.
Japan Post Bank (7182 JP): A US$4.2 Billion Secondary Offering
- Japan Post Bank (7182 JP) has announced a secondary offering of up to 416.1 million shares (including overallotment), worth around US$4.2 billion.
- The offering includes a ToSTNeT-3 and an on-market buyback. Including the overallotment, Japan Post Holdings (6178 JP) will reduce its stake from 61.50% to 50.00% of voting rights.
- Understanding the potential offer price requires looking at JPH’s past sales and recent large Japanese placements. The pricing date is likely 10 March.
Japan Post Bank US$4bn Placement – Smaller Deal, Similar Structure, Might Yield Similar Results
- Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
- JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework.
Quiddity JPX-Nikkei 400 Rebal 2025: End-Feb 2025 Ranks
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted capped index composed of 400 constituents.
- The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.
- Below is a look at the rankings of potential ADDs/DELs for the JPX-Nikkei 400 August 2025 rebalance based on trading data as of end-February 2025.
Daido Steel Co., Ltd (5471 JP): Research Update
- Daido Steel’s cumulative FY24 Q1~Q3 earnings landed in line with the firm’s revised forecast, with the 9-month OP [IFRS basis] coming in at ¥34,070mil (-10.6% YoY) on sales of ¥433,961mil (-1.1% YoY).
- The decline in OP is primarily due to tough comps – in FY23 the firm reported ¥7,200mil from real estate sales gains.
- Although the 9-month OP has achieved 85% of the full-year guidance, Daido Steel did not change the full-year forecast due to some cost items such as fixed asset tax to be incurred in Q4.
Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings
- Most shareholder benefits items can be used in Japan. There’s history of more companies abolishing shareholder benefits programs because they believed that shareholder returns should conducted rather than shareholder benefits.
- Amid rising foreign ownership and the dissolution of cross-shareholdings, more companies have begun to reverse the trend toward companies approaching individual shareholders with shareholder benefits programs.
- The fact that stock prices of companies offering shareholder benefits tended to fall lower during stock market plunges may be due to the fact that they were mostly defensive stocks.
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