Daily BriefsEvent-Driven

Event-Driven: Hitachi Transport System, KakaoBank, Roxy Pacific Holdings, LG Energy Solution, Virtus Health, Swire Pacific (A) and more

In today’s briefing:

  • Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities
  • KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS
  • Roxy-Pacific (ROXY SP): Circular Out. IFA Says Not Fair But Reasonable
  • MSCI Korea: Potential Inclusions & Exclusions in February 2022 Highlighted by Locals
  • Virtus Health (VRT AU): CapVest’s Bid Edges BGH Capital
  • StubWorld: Cathay Pacific – Still Grounded
  • Virtus Receives a Competing Offer from CapVest

Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities

By Travis Lundy

  • Hitachi is, as the media fuss suggests, in the last stages of its re-formation after ridding itself of nearly two-dozen listed subs over the last decade-plus.
  • Hitachi Transport System (9086) is the last major sub/affiliate without a new home. Hitachi owns just under 40%. SG Holdings (9143 JP) owns just under 10%. Both want to sell.
  • It is not clear HTS wants to be taken private, but there could be an interesting financial engineering solution to suit the sellers. 

KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS

By Sanghyun Park

  • For Kakao Bank, the 6M IPO lockup (2.79%) will hit the market. Also, the possibility that the 4.48% stake held by Anchor/TPG will hit the market should be left open.
  • In Krafton’s case, Tencent is the most notable player, owning 13.56%. It recently suggested a reduction in overseas holdings. So, some of this 13.56% stake should appear in the market.
  • The 4.84% stake held by Premier Superior is available after February 14. Samsung Electronics and Samsung SDS shares by the Samsung family are also likely to take place in February.

Roxy-Pacific (ROXY SP): Circular Out. IFA Says Not Fair But Reasonable

By David Blennerhassett

  • An Offeror consortium, led by Teo Hong Lim, founder of Roxy Pacific (ROXY SP), is offering S$0.485/share, a 19.8% premium to last close. The Offer Price will NOT be increased. 
  • The Circular was dispatched yesterday (the Offer Doc was issued on the 5 January), in which the IFA considered the terms not fair but reasonable). 
  • Trading to terms. The first close is the 3 February. 

MSCI Korea: Potential Inclusions & Exclusions in February 2022 Highlighted by Locals

By Douglas Kim

  • We discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement (10 February) that are being highlighted by the locals. 
  • The potential candidates for inclusion in the MSCI Korea Index emphasized by locals in February 2022 include Meritz Financial Group, Meritz Fire & Marine Insurance, HHI, and LG Energy Solution. 
  • In our view, if MSCI decides to include LG Energy Solution in the MSCI Korea index in February, this will likely be an extra boost to this stock in February. 

Virtus Health (VRT AU): CapVest’s Bid Edges BGH Capital

By David Blennerhassett

  • UK-Based CapVest Partners is offering A$7.60/share, in cash, for Virtus Health (VRT AU), compared to BGH Capital’s bid last month of A$7.10/share. Virtus has granted exclusive due diligence. 
  • CapVest’s Offer is non-binding. No doubt due to BGH holding 20% of shares out, CapVest will concurrently run an alternate off-market bid with a 50.1% acceptance condition at A$7.50/share. 
  • At a ~5% spread to the indicative Scheme terms, I would look to get involved. 

StubWorld: Cathay Pacific – Still Grounded

By David Blennerhassett

  • Cathay Pacific Airways (293 HK) dangles bonuses for pilots and first officers amid Hong Kong’s stringent crew quarantine requirements. 
  • Preceding my comments on Cathay – and Swire Pacific (A) (19 HK)– are the current setup/unwind tables for Asia-Pacific Holdcos. 
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Virtus Receives a Competing Offer from CapVest

By Arun George

  • Virtus Health (VRT AU) announced an offer from CapVest comprising of A$7.60 per share via a scheme (a 7.0% premium to BGH’s A$7.10 offer) or A$7.50 via an off-market takeover. 
  • CapVest’s offer is contingent on exclusivity and cost recovery protections. The Board will recommend a binding offer of at least A$7.60 via a scheme or A$7.50 via an off-market takeover.
  • Due to the healthy premium to historical multiples and share prices implied by the CapVest offer, it is likely that BGH will be hesitant to start a bidding war.    

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