Daily BriefsEvent-Driven

Event-Driven: Jardine Matheson Holdings, Amorepacific Corp, Mainstream Group Holdings Ltd, Japan Post Insurance, McPherson’s Ltd, Celltrion Inc, Celltrion Healthcare, Intouch Holdings, Hanwha Corporation and more

In today’s briefing:

  • Jardine Matheson: Lessons in Dissent
  • Korea’s Full List of Single-Subsidiary Holdcos with Current Sigma & Loan/Float Ratio
  • Mainstream (MAI AU): Three-In-A-Row! Bullseye!
  • JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End
  • McPherson (MCP AU): Arrotex Derails Kin’s Offer
  • Top 50 Most Shorted Stocks in KOSPI & KOSDAQ (Short Sale Vol/Free Float Vol)
  • Korea Short Selling: Service Resumes Monday
  • (Mostly) Asia M&A: April 2021 Roundup
  • Our NAV Analysis of Hanwha Corp and A Pair Trade with Hanwha Solution

Jardine Matheson: Lessons in Dissent

By David Blennerhassett

As discussed in Jardine Matheson: Strategic Buyout Done, after Jardine Strategic Holdings (JS SP) shareholders voted through, as expected, the Offer from Jardine Matheson Holdings (JM SP), after the vote, Matheson said a number of shareholders in Strategic voted against the acquisition, but also that:

a large number of shares voted against the resolution were held by investors who were not shareholders at the time of the announcement of the Acquisition on 8 March 2021. Some investors have indicated an intention to apply to the Court in Bermuda to appraise the fair value of their shares, in accordance with the process described in the shareholder circular issued by Jardine Strategic in connection with the Acquisition.

I initially wrote “Matheson appears to be suggesting that those who held shares before the announcement, and those who held after, potentially have different cases to argue.”

But after consulting with my colleague Travis Lundy, I omitted this line, as it was effectively moot.

Matheson would have singled out these short-term investors – hedge funds – irrespectively. Yet, such a statement is irrelevant. All shareholders, as at the record date of the Special General Meeting, have the same rights to be treated fairly and rights to dissension.

I note some recent commentary in the media addressing Matheson’s oblique reference to hedge funds, so I’ll provide some commentary sourced from legal references.

Of greater importance is what these dissenters will cost Matheson at the end of the day.

More below the fold.

I’ve extensively dealt with appraisal rights in the Cayman Islands in past insights, which can also provide guidance as to how dissension may be interpreted in Bermuda (where Strategic is incorporated):

Homecoming For Chinese Companies: Appraisal Rights & Fair Value

Trina Solar: Appraisal Rights Judgment Another Setback for Dissenters

Changyou (CYOU US): Short-Form Merger Dissent Now Permitted

Korea’s Full List of Single-Subsidiary Holdcos with Current Sigma & Loan/Float Ratio

By Sanghyun Park

This is the complete list of Korea’s single-sub holding companies. They are typically direct targets of holdco pair trades.

Amorepacific Group002790Amorepacific Corp090430
BGF Co Ltd027410BGF Retail Co Ltd282330
Halla Holdings Corp060980Mando Corp204320
Hanjin Kal180640Korean Air Lines Co Ltd003490
Hankook & Company Co Ltd000240Hankook Tire & Technology Co Ltd161390
HANSAE YES24 HOLDINGS CO., LTD.016450Hansae Co., Ltd.105630
HDC Holdings Co Ltd012630HDC Hyundai Development Co294870
Nexen Corporation005720Nexen Tire Corp002350
Nongshim Holdings Co Ltd072710Nongshim Co Ltd004370
ORION Holdings Corp001800Orion Corp271560
Poongsan Holdings Corporation005810POONGSAN CORPORATION103140
Youngone Holdings Co Ltd009970Youngone Corporation111770
Source: KRX

Hansae Yes24, Nexen Corp, and Youngone Holdings are currently at less than -1.0σ on a 20-day moving average.

Again, Nexen Corp and Hansae Yes24 have the widest price-ratio diversion to YTD average. Hanjin Kal and Hankook & Co follow. On the other hand, Orion Holdings has wildly outperformed its subsidiary, Orion Corp. 

We have 6 holding companies with an average daily trading value of +₩5.0B, including Hansae Yes24, which recently saw a hike in trading value.

Mainstream (MAI AU): Three-In-A-Row! Bullseye!

By Janaghan Jeyakumar, CFA

On 9th March 2021, Australia-based third party fund administration services provider Mainstream Group Holdings Ltd (MAI AU) announced they had signed a Scheme Implementation Deed to be acquired by Hong Kong-headquartered Vistra in an all-cash deal that valued the company at a market cap of ~A$170mn. The Offer Price was A$1.20/share which I felt was light on a growth-adjusted basis as I discussed in Mainstream Group (MAI AU): Go-Shop Provision Makes It Interesting

THE TRADE: I would get LONG at or below A$1.23 during the go-shop period. Since the fall to the undisturbed price is not very large and since the Offer Price appears light on a fundamental basis, I would be tempted to play ‘Bumpitrage’ during the go-shop period. (written 9th Mar 2021)

Hit 1

Almost a month later, on 12th April 2021, MAI announced that they had received a superior bid from US-based financial technology company Ss&C Technologies (SSNC US) at an Offer Price of A$2.00/share which was 66.7% higher than Vistra’s original bid of A$1.20.

Hit 2

In my follow-up insight, Mainstream (MAI AU): Massive Overbid by SS&C, Now Vistra Has to Respond, I continuing to be Bullish on the situation as I saw this as a “low-cost Bump option”. MAI shares were at A$1.975 and I wrote “I would be long at or below the current trading price”. A couple of days ago, on 27th April, 2021, MAI announced that SS&C has bumped the Offer to A$2.25/share valuing the company at a market cap of ~U$250mn and I discussed this in Mainstream (MAI AU): More Competition Forces SS&C to Bump reiterating my Bullish stance on the situation. 

Hit 3

Today, MAI announced that SS&C has revised Terms upwards again to A$2.35/share. 

More below the fold. 

For more information about M&A rules, regulations, and practices in Australia, please refer to Quiddity Australia M&A Guide 2019 and Quiddity M&A: Australia Foreign Investment Reforms


JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.

A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. 

Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio for the 2021 Rebalance based on April-end data. 

McPherson (MCP AU): Arrotex Derails Kin’s Offer

By David Blennerhassett

Back on the 25 March, consumer products outfit Mcpherson’s Ltd (MCP AU) announced an unconditional, on-market cash Offer of $1.34/share from the Kin Group, via Gallin P/L. The Offer price was a 9.8% premium to last close. Unlisted Kin Group also announced it held 6.35mn shares or 4.95% of shares out.
MCP issued a Target Statement on the 8 April recommending shareholders reject the Offer, which is expected to close on the 10 May, unless extended.

The New News

In its FY21 reading and operational review update, MCP announced the receipt of a non-binding, indicative proposal from pharmaceutical giant Arrotex Australia, by way of a Scheme, for A$1.60/share. 
Arrotex’s Offer is subject to a four-week due diligence period. MCP’s board intends to work with Arrotex to develop a transaction that can be put to shareholders.
The board continues to reject Gallin’s Offer.

More below the fold.

Top 50 Most Shorted Stocks in KOSPI & KOSDAQ (Short Sale Vol/Free Float Vol)

By Douglas Kim

In this insight, we discuss the top 50 most shorted stocks in KOSPI and KOSDAQ, respectively in terms of Short Sale Volume/Free Float Volume, respectively. The KRX provides updated short sale data in terms of short sale volume amount/market cap. However, it does not provide the data in terms of free float basis which is probably a better figure to use when analyzing the short sale data. 

We divided the tables for the KOSPI and KOSDAQ short sale volume into two parts. 

  • First, the 50 stocks are ranked in order of the short sale volume/free float volume ratio.
  • Second, because many institutional investors deal with larger market cap companies, we included only those companies with more than 1 trillion won in market cap. We also included data on the changes in the foreign ownership YTD. 

Korea Short Selling: Service Resumes Monday

By Brian Freitas

Normal service resumes for short selling in Korea from Monday, 3 May – but will be limited to constituent stocks of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX).

Short interest in the KOSPI and KOSDAQ markets have plummeted as the indices have rallied. We highlight stocks that have seen the largest short covering and have exhibited patterns that stand out – rapid price rises as short interest drops followed by price drops as short interest flatlines.

Other stocks that will be in the spotlight are potential deletions from the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX), KOSDAQ 150 Index (KOSDQ150 INDEX) and MSCI indices that will be announced in the next few weeks and implemented a few weeks after the announcement.

Preferred stocks that are trading at a deep discount to the ordinary shares and near their widest levels will also be on the radar since the ordinary shares can be short sold while the preferred shares will not be short sell eligible.

(Mostly) Asia M&A: April 2021 Roundup

By David Blennerhassett

For the month of April, nine new deals were discussed on Smartkarma with an overall announced deal size of ~US$36bn.

Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow-up discussions, or simply click on the insight link(s) below the name.

New Deals


Size (US$bn)




Galaxy Resources (GXY AU) / Oroco Resource Corp (OCO CN) Lithium mining3.0MergerN/A

Orocobre – Galaxy: Merger of Equals

Orocobre/Galaxy Resources: On A Charge

Primewest Group Ltd (PWG AU) Real estate0.5MergerN/A
Primewest (PWG AU): Centuria’s Off-Market Takeover Bid Could Trigger ASX/S&P 200 Index Inclusion

Hong Kong

Zhejiang Cangnan Instrument (1743 HK) Gas Meters0.1Cash Offer15.2%
Zhejiang Cangnan (1743 HK): H-Share Buyback


Mphasis Ltd (MPHL IN)  IT Services1.1Partial Offer26.0%
Blackstone Sells Mphasis Stake To…. Blackstone and Investors Get a CHEAP Option 


Fuji Kosan Company (5009 JP) Petroleum-related0.1Tender Offer12.5%
Aslead Capital Hostile Offer for Fuji Kosan (5009)
Hitachi Metals (5486 JP) Advanced metals4.0Tender Offer15.1%

Hitachi Metals – Limited Upside Despite Bain Capital News But Let’s Find the Offshoot Ideas

Bain Bids Up BIG For Hitachi Metals (5486) – Now We Wait

Invesco Office J Reit (3298 JP) REIT1.5Tender Offer13.3%

Starwood Hostile REIT Tender Launched

Invesco Office J-REIT Responds to Starwood’s Hostile Offer

Starwood Rejection of Extension Means Full Hostile Tender

Toshiba Corp (6502 JP) Conglomerate20.0

Toshiba – CVC Capital Partners Bid Highlights Value

Toshiba – The CEO Gets His MBO Bidder and Toshiba Will Get Interestinger

Gaming Out a CVC Bid for Toshiba – The Right Noises, The Wrong Price, and Toast

Toshiba – The King Is Dead, Long Live the King

How Much of Toshiba Is Owned By “Activists”?

CVC Suspending Its Bid Is Just That – The Cat Is Still Out Of the Bag

Toshiba – CVC Turns Tail but You Shouldn’t



Intouch Holdings (INTUCH TB) Telco5.4VTO11%
Intouch Holdings: Gulf’s Inexplicable Offer
Source: Smartkarma Insights

Arguably, there is no firm Offer for Toshiba Corp (6502 JP).

The average premium for the new deals announced (or first discussed) in April was ~16%, with a year-to-date average of ~30% (66 deals). This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively. 

Summary of News in April of Arb Situations On Smartkarma’s Radar

(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation)


Comments (with links to announcements & insights)

19-Apr: Merger docs despatched

24-Apr: Asaleo Care Ltd (AHY AU)‘s Scheme Doc has been released. The Scheme Meeting will be held on the 1 June. IFA says fair & reasonable. 

23-Apr: Bingo Industries (BIN AU) says CPE Capital and MIRA’s due diligence has completed, but arrangements remain to be finalised. 
27-Apr: Bingo Industries (BIN AU): Macquarie Cleans Up

6-Apr: Coca Cola Amatil (CCL AU): This Is It
16-Apr: Coca Cola Amatil (CCL AU)‘s independent shareholder approved the Scheme. 81.55% of independent shareholders we in attendance, of which 99.03% approved the Scheme Resolution.

19-Apr: Crown Resorts (CWN AU) has announced that it has received an “unsolicited, preliminary, non-binding and indicative proposal from a company on behalf of funds managed and advised by Oaktree Capital Management, L.P., to provide a funding commitment of up to ~A$3.0bn to Crown via a structured instrument with the proceeds to be used by Crown to buy-back some or all of the Crown shares which are held by Consolidated Press Holdings Pty Limited (“CPH”) on a selective basis. CPH currently has a shareholding of ~37% in Crown.” Crown has not yet formed an opinion on the proposal. That stake is worth almost exactly A$3bn at the current price.

No April Update

7-Apr: Roc bumps Offer for Vitalharvest Freehold Trust (VTH AU) to A$1.16.  MAFM now has until the 14 April to match.

16-Apr: Roc bumps its Offer for Vitalharvest Freehold Trust (VTH AU) to A$1.18/unit. MAFM has matching rights until the 22 April.
23-Apr: Vitalharvest (VTH AU): Bumpity Bumpity Berry Bidding

No April Update

21-Apr: WPP AUNZ (WPP AU) shareholders approved the Scheme. 87.5% of minorities turned up at the meeting, and 96.45% approved the Scheme resolution. Shares to be suspended at the close on the 26 April. Implementation to occur on 18 May. The special dividend has been approved.

Hong Kong

Comments (with links to announcements & insights)

12-Apr: Beijing Digital (6188 HK): Zhuhai SASAC’s MGO On Track

18-Apr: Beijing Digital Telecom (6188 HK)‘s Composite has been delayed again until 30 April – on or before. 

2-Apr: PRC approval, a pre-condition, to the Offer remains outstanding in a monthly update from China Machinery Engineering (1829 HK).

19-Apr: The Scheme Doc is out for China Youzan Limited (8083 HK) – the SGM will be held on the 6 May. IFA says fair & reasonable.

16-Apr: Independent shareholders of I.T Ltd (999 HK) overwhelmingly approved the scheme resolution. Cheques are expected to be despatched on the 7 May. Last day of trading is the 29 April.

9-Apr: Kerry Logistics Network (636 HK) has announced that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.

12-Apr: Shareholder approval received

16-Apr: The Scheme Document together with the respective notices of the Court Meeting and the EGM to be held on Monday, 10 May 2021 and the relevant proxy forms will be despatched to the Polytec Asset Holdings (208 HK)‘s shareholders on 16 April. I don’t see it on HKEx though.

No April update

2-Apr: The Sichuan Languang Justbon Service Group (2606 HK) / Country Garden Services Holdings (6098 HK) transaction is understood to be under SAMR simple case review. 

16-Apr: Sichuan Languang Justbon Service Group (2606 HK)‘s Composite Doc has been delayed until the 3 May, on or before. This was wholly expected – I have the 5 May in my timetable above. 

16-Apr: Country Garden Services Holdings (6098 HK) completed the second tranche – the first tranche of 750k domestic shares was completed the day before -and now holds 65.04% of Sichuan Languang Justbon Service Group (2606 HK)

19-Apr: The % held by Country Garden Services Holdings (6098 HK) in Sichuan Languang Justbon Service Group (2606 HK) is now 71.17%.

10-Apr: In its monthly update regarding a potential, China Traditional Chinese Medicine (570 HK) says there is no update.

16-Apr: Offer unconditional in all respects. closes on the 14 May.


Comments (with links to insights)

5-Apr:  Vedanta (VEDL) Offer Coming To A Close: Watch For Antics
7-Apr: Final result appears to be 374.229mm shares confirmed and 3.291mm shares not yet confirmed for 377.52mm shares tendered in across 6,106 orders. This is a pro-ration of 100%. It tells you a LOT of people did not tender their Vedanta Ltd (VEDL IN) shares.


Comments (with links to announcements & insights)

6-Apr: Just for kicks, Travis checked the Bloomberg download of TOPIX constituents and weights and noted that the number of shares of BeNEXT Group (2154 JP) is now 40.8119463mm shares against the level of 19.317465mm shares as of mid-March. That told him the TSE included the shares at month-end despite the index team telling us (Janaghan communicated on this but Travis was CCed) they would not make the share change at delisting if the notice was so short.Turns out they did. 
28 April: The two companies (including Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) announced all the corporate reorganisation measures which would be voted upon at the AGMs
15 April: The tender offer is completed. Suntory reaches 93.51%. 
23 April: Suntory executes Demand for Share Cash-Out and announces delisting for 28 May. 

No April update

20-Apr: It may have been too light but in the end, people sold their shares of IGNIS Ltd (3689 JP) to Bain.  This is now done and the combination of Bain and the principals own two-thirds or more. This will get delisted and minorities will be squeezed out.

Throughout the month:  JAG and CIE joust in court, eventually the court sides with Murakami-san and the rights offer is cancelled. 
27-Apr: City Index Eleventh OFFICIALLY Launches Next Japan Asia Group (3751) Hostile Tender Offer

14-Apr: Maeda Road Construction Co (1883 JP) shareholders, as expected, approved the Special Dividend of JPY 650/share (record date March 6th). This is on top of the 100 yen/share of regular plus special commemorative dividend which went ex- on March 30th. 

16-Apr: The Shoko Co Ltd (8090 JP) deal had a minimum hurdle of 5.663mm shares.  It got 6.069mm shares, which is very low “clearance” vs the minimum. Lots of people obviously did not like this one. Combined with Showa Denko K.K. (4004 JP)‘s remaining 14.97%, that gets them to about 70.4% of shares out. This is enough to push a squeezeout, but it may also be enough outstanding to be worthwhile thinking about an Appraisal Rights case. 

2-Apr: Takeei Corp (2151 JP) today announced it had bought back 19,600 shares for 23.5mm yen during the month of March. The company bought back 153,600 shares or about 0.7% of shares out in the program meant to buy back as much as 2.1% of shares out. The program is now ended

New Zealand

Comments (with links to insights)


Comments (with links to announcements)

15-Apr: Tender Offer Report. The closing date is the 5 May.


Comments (with links to announcements & insights)

26-Apr: Offer closes

12-Apr: At the Jardine Strategic Holdings (JS SP) Special General Meeting today, 92% of shares were voted in favour of the acquisition by Jardine Matheson Holdings (JM SP). The SGX announced is here, and a Jardines infographic is here.
Jardine Matheson: Strategic Buyout Done

29-Apr: Jardine Matheson: Lessons in Dissent

21 April: final level of acceptances take the Controlling Shareholder to 80.05%

Throughout April, there have been a number of letters from shareholders who hold non-negligible quantities that they intend to vote against the Partial Offer. Link here.

21 April: Offer declared unconditional.


Comments (with links to insights)



No April update

Our NAV Analysis of Hanwha Corp and A Pair Trade with Hanwha Solution

By Douglas Kim

Our NAV analysis of Hanwha Corporation (000880 KS) suggests NAV of 3,845 billion won (51,298 won per share). This represents a 62% upside from the current price of 31,600 won. The biggest component of the company’s value is its investments in other Hanwha Group related companies. Hanwha Corp’s 37% stake in Hanwha Solution is worth 3.3 trillion won, which represents 60% of the value of the company (pre-holdco discount).

With the resumption of the partial short selling of Korean stocks on May 3rd, more hedge funds and other active investors will likely to employ pair trade strategies involving holdcos and opcos in Korea. The pair between Hanwha Corp and Hanwha Solution is the one which have shown one of widest gaps in share price performance in the past year. In our view, there is a good chance that this price gap narrows between Hanwha Corp and Hanwha Solution in the coming months.

Before it’s here, it’s on Smartkarma