In today’s briefing:
- FTSE All-World/All-Cap Index Rebalance Preview: Some Big Changes in China
- Seven & I Sale of Sogo Seibu Moves Closer
- Merger Arb Mondays (04 Jul) – Link Admin, Ramsay, DTAC/True, Australian Unity Office Fund, Yashili
- WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations
- AOF Trading at the Dividend-Adjusted Unaffected Price
- Tassal: Cooke Remains a Determined Suitor
FTSE All-World/All-Cap Index Rebalance Preview: Some Big Changes in China
- The price review period for the FTSE All-World/All-Cap September 2022 SAIR ended on 30 June. The changes are expected to be announced on 19 August and implemented on 19 September.
- There are a lot of potential inclusions to the indices for China -some changes are a result of stocks being included in Northbound Stock Connect.
- Gcl Poly Energy Holdings Limited (3800 HK) is the largest potential inclusion (in terms of passive flow) in the index following resumption of trading in November 2021.
Seven & I Sale of Sogo Seibu Moves Closer
- Initial reports suggest that Fortress Investment, part of the Softbank group of funds, is now the frontrunner in negotiations to acquire Sogo Seibu department stores from Seven & I.
- Reports suggest Fortress is already in discussions with privately owned retailer Yodobashi Camera to take over management of the chain’s better stores, beginning with Seibu Ikebukuro.
- The loss of ¥500 billion or so in turnover won’t be missed not will the ¥8.8 billion losses but activist investors won’t stop there.
Merger Arb Mondays (04 Jul) – Link Admin, Ramsay, DTAC/True, Australian Unity Office Fund, Yashili
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
- The highest spreads are Sezzle Inc (SZL AU), Link Administration (LNK AU), 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Australian Unity Office Fund.
- The lowest gross spreads are Hwa Hong Corp (HWAH SP), Irongate Group (IAP AU), Giordano International (709 HK), Uniti Group Ltd (UWL AU), Excelpoint Technology (EXLP SP).
WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations
- Among the local theme indexes in Korea, we have three noteworthy ones for July. They are the WISE theme indexes. They will all rebalance on July 15.
- Due to some constituents’ recent significant price movements, we can now expect some notable passive flows.
- These names are worthy of our attention: SKIET, Solus Advanced, Kangwon Land, Hanatour, T’way Air, Yong Pyong Resort, HYBE, CJ ENM, and Studio Dragon.
AOF Trading at the Dividend-Adjusted Unaffected Price
- Australian Unity Office Fund (AOF AU) has extended Aliro’s exclusive due diligence to 15 July. Shares slid 1.8% on concerns of Aliro lowering the offer or walking away.
- Encouragingly, Aliro confirmed its intention to pursue the proposal at a price not lower than the offer price and will return with an updated proposal within two weeks.
- The offer price (including Sep distribution) of A$2.465 is 14.7% above the last close. The downside is low as the shares are trading in line with the dividend-adjusted unaffected price.
Tassal: Cooke Remains a Determined Suitor
- On 1 July, Cooke, the spurned suitor, disclosed that it further increased its stake from 5.40% to 7.60% at an average price of A$4.59 per share.
- The Tassal (TGR AU) Board decided not to engage with Cooke as its third offer of A$4.85 per share did not reflect the fundamental value of the business.
- Cooke’s recent actions suggest that it will not be easily deterred. We think that it is likely that Cooke returns with another offer which will force the Board to engage.
Before it’s here, it’s on Smartkarma
