Daily BriefsEvent-Driven

Event-Driven: Haier Electronics Group Co, Allcargo Logistics, Masmovil Ibercom and more

By September 14, 2020 No Comments

In today’s briefing:

  • Haier (1169 HK): Back To Entry Levels
  • Allcargo Logistics (AGLL IN): Indian Delisting Offer Trading Cheap
  • MásMóvil: End of Acceptance Period

Haier (1169 HK): Back To Entry Levels

By David Blennerhassett

On the 31 July, Haier Electronics Group Co (1169 HK) (HEG) announced a pre-conditional Scheme such that HEG shareholder will receive 1.6 new Haier Smart Home (600690 CH) (HSH) H shares plus HK$1.95 in cash. 

The pre-condition concerned approval from HSH’s shareholders and CSRC approval. The pre-conditions were fulfilled on the 1 September. The next step in this process is for HEG shareholders to vote on the Scheme. The despatch of the Scheme Doc has now been extended to the 30 November, from 4 September previously.

 A 632-page Application Proof for the listing of HSH H-shares has now been lodged. This will be a listing by introduction.

The question at the time of the Scheme announcement, as it is now – is where will the HSH (as yet unlisted) H-shares trade with respect to the HSH A-shares? 

An independent valuer backed out an indicative value under the Scheme of HK$31.11-HK$31.90 – or $31.51 at the mid-point. However, this was just a valuer’s opinion. There is no guarantee this is where the Hs will trade. 

The market is assigning around a 37% discount (HSH Hs vs. HSH As). Relative to a basket of liquid A/Hs and listed A/H peers, this is a level to get involved.

More below the fold.

Allcargo Logistics (AGLL IN): Indian Delisting Offer Trading Cheap

By Janaghan Jeyakumar, CFA

Here is another interesting delisting situation in India. 

On 24th August 2020, India-based integrated logistics company Allcargo Logistics (AGLL IN) announced they had received a “Delisting Proposal Letter” from members of its Promoter Group (Shashi Kiran Shetty and Talentos Entertainment Private Limited).

The Promoters collectively hold 172.0mn shares in Allcargo representing a 70.01% stake and the Offer will be made to acquire the remaining 73.7mn shares representing a 29.99% stake. At the current share price, this translates to a deal size of ~USD120mn. 

The Final Offer Price will be determined upon completion of the Reverse Book Building (RBB) process. Following the completion of the transaction, the Promoters will voluntarily delist the shares of Allcargo from BSE Limited and National Stock Exchange of India Limited.

In this insight, we will look at the upside potential of the event. 

MásMóvil: End of Acceptance Period

By Jesus Rodriguez Aguilar

  • On 10 September, Lorca Telecom Bidco SAU communicated to the CNMV that the offer had been accepted by more than 50% of the shares of Masmovil Ibercom (MAS SM) (therefore meeting the minimum accepance condition).
  • On 11 September ended the acceptance period of the takeover bid by Lorca Telecom Bidco SAU for Masmovil Ibercom (MAS SM) .
  • MásMóvil last closed at EUR 22.42
    • a gross spread of 0.35% to the takeover offer.
  • Using ten estimates, the mean target price on Capital IQ consensus is 25.5 per share.
  • Polygon sent a second letter to the CNMV with valuation details backing its assertions and refuting PwC’s valuation, on which the CNMV based its judgment that Lorca’s bid was fair.
    • In a nutshell, regarding the price offered, Polygon has expressed its “complete disagreement” with the content and conclusions of the valuation report published as an annex to the brochure and issued by PwC on July 24.
    • Polygon believes that the PwC valuation is at least “seven or eight euros below a fair offer” (i.e. in the neighbourhood of EUR 30).
  • I believe that Polygon is going to fight this one. A EUR 3 per share improvement would mean additional spending by Lorca of EUR 394 mn.
  • According to the takeover law, investors have three months from the end of the acceptance period to request that the company buy its shares at the same price at which the offer was made.
  • While it makes complete sense to cash in the chips, and I guess most institutionals would have done so, staying long and holding for an improved offer (with a 15% upside) does not look a foolish option either.

(Please, see timetable in the note)

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