In today’s briefing:
- Merger Arb Mondays (28 Jul) – Shibaura, Abacus Storage, Insignia, Mayne, Santos, ENN, Smart Share
- [Japan M&A] Pacific Industrial (7250) MBO Officially Being Done Dirt Cheap
- Bank of Japan’s Rate Decision on 31 July: Market Calm, Watch for Tail Risk
- How Many Companies Will Be Able to Keep up with the Next Revision of the Corporate Governance Code?
- AeroEdge (7409 JP)
- Chugai Pharmaceutical (4519 JP): Actemra Shine Bright Amid Margin Pressure, 2025 Guidance Reiterated
- Sumco (3436): So, This Is How Slumps Die
Merger Arb Mondays (28 Jul) – Shibaura, Abacus Storage, Insignia, Mayne, Santos, ENN, Smart Share
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Mayne Pharma (MYX AU), Yichang HEC Changjiang Pharma (1558 HK), ENN Energy (2688 HK), Pacific Industrial (7250 JP), Santos Ltd (STO AU), Smart Share Global (EM US).
- Lowest spreads: Bright Smart Securities (1428 HK), Hainan Meilan International Airport (357 HK), Humm Group (HUM AU), New World Resources (NWC AU), Nippon Concept (9386 JP).
[Japan M&A] Pacific Industrial (7250) MBO Officially Being Done Dirt Cheap
- The MBO for Pacific Industrial (7250 JP) starts with the father+son Chairman and CEO, – combined stake 2.92% – putting nothing in to buy this, with help from banks.
- The Takeover Price is priced at 0.7x book, and a Net Debt to EBITDA of 2x (when adjusted for securities+pension assets+DTLs) and 5-6x average 2026-2030 FCF.
- This is being done too cheap: Toyota is the main customer, one third of revenues comes from Japan, and the company is set for a transition to EVs.
Bank of Japan’s Rate Decision on 31 July: Market Calm, Watch for Tail Risk
- Ahead of the Bank of Japan’s 31 July 2025 policy meeting, markets broadly expect rates to remain on hold at 0.5%.
- The new US–Japan trade deal may influence the tone of the upcoming quarterly outlook—if not the rate decision itself.
- With limited precedent for rate changes but a high rate of surprises when they do occur, this Insight combines historical data with option-implied volatility to help investors assess tail risks.
How Many Companies Will Be Able to Keep up with the Next Revision of the Corporate Governance Code?
- It seems unlikely that there’ll be an increase in formal criteria for corporate governance, like in the previous revision. It looks like there’ll be more demand for human capital disclosure.
- Many companies don’t fully understand human capital, and there’s concern that achieving disclosure criteria will become the goal, rather than original objective of investing in human capital to create value.
- The revised Corporate Governance Code requires verification that management resources are being appropriately allocated to investment and shareholder returns. It seems that simpler questions are better than difficult “technical terms.”
AeroEdge (7409 JP)
- Earlier this month, Substack writer Gezzogero mentioned AeroEdge (7409 JP) (7409 JP — US$88 million) on his blog.
- I thought it was a fantastic write-up and wanted to dig into it myself.
- The company is a supplier of aircraft components. It manufactures low-pressure turbine blades for the well-regarded LEAP jet engine, which is used in narrow-body aircraft such as the Airbus (AIR FP) A320neo and Boeing (BA US) 737 MAX.
Chugai Pharmaceutical (4519 JP): Actemra Shine Bright Amid Margin Pressure, 2025 Guidance Reiterated
- Chugai Pharmaceutical (4519 JP) reported 5% YoY rise in core revenue in 1H25, as overseas sales grew 7% YoY and domestic market revenue was up 3%.
- Actemra witnessed growth in both overseas and domestic market. Hemlibra overseas sales stood at ¥151B (30% of total sales), down 6% YoY.
- In 1H25, two significant developments that happened are successful P3 trial of orforglipron and positive results from phase I/II study of NXT007.
Sumco (3436): So, This Is How Slumps Die
- Capacity utilization at Sumco’s largest customer, TSMC, jumped 10% in Q2, with another core customer, Renesas, showing consecutive improvements.
- Surging AI chip demand and geopolitical shifts favoring non-Chinese suppliers are set to boost demand for high-end silicon wafers.
- The stock trades at 0.7x book and 4.9x EV/EBITDA. These are levels we think the stock can make a meaningful upward advance from if the improvement in customer inventories broadens.
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