Event-Driven: Jardine Matheson Holdings, Fujitsu Frontech, Trip.com, Seegene Inc, FamilyMart Co Ltd, Investor AB and more

In today’s briefing:

  • StubWorld: Would Jardines Move Back To HK?
  • Fujitsu TOB For Fujitsu Frontech At a Discount?
  • Ctrip in Talks with Investors for Nasdaq Delisting; Ability to Attract a Large Premium Seems Limited
  • MSCI Korea Index August IR: Inclusions & Exclusions
  • (Mostly) Asia M&A: July 2020 Roundup
  • Selected European Holdcos and a DLC: July Report

StubWorld: Would Jardines Move Back To HK?

By David Blennerhassett

This week in StubWorld …

Jardine Matheson Holdings (JM SP) is trading “cheap” at a 32% discount to NAV, adjusting for cross-holding. Jardine Strategic Holdings (JS SP) is even wide at 51% discount to NAV, also adjusting for cross-holdings. Is the time ripe for the Keswicks to collapse the structure? Would a move back to Hong Kong help narrow the discount?

Jardine Cycle & Carriage (JCNC SP) was trading cheap on a NAV and stub basis this time last month (StubWorld: Matheson Buybacks As Ratio Mean Reverts; JCNC Looking Cheap). It is now even cheaper. Time for a JCNC breakout.

Preceding my comments on Jardines, are the weekly setup/unwind tables for Asia-Pacific Holdcos.

These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold – the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent – of at least 20%.

Fujitsu TOB For Fujitsu Frontech At a Discount?

By Travis Lundy

The recent past has seen some MBOs and Parent Company takeouts of companies (where incumbent shareholders and management own a large stake) and the takeout prices have been at insufficient premia, well below investor-perceived fair value, and generally opportunistic.

Current ‘live’ situations include Itochu (8001)’s takeover of Familymart (8028) (discussed here, here, and here (accompanied by a great piece by Michael Causton)), Bain’s MBO for Nichii Gakkan Co (9792 JP) which is currently also trading at a premium (discussed in a series here, here, and here; with public activist commentary linked here), and now on Naver/Softbank Corp’s takeout of LINE (discussed here, here, and here (with an earnings-related add-on here). 

Fujitsu Ltd (6702 JP) has today one-upped those pikers. 

Today, Fujitsu announced a Tender Offer for its subsidiary Fujitsu Frontech (6945 JP) at a DISCOUNT to the last traded market price, which itself was trading at a discount to book value.

Of course, the stock had experienced a nice run-up in high volume (the three highest volume days ever) in the last few days, most likely on speculation that a deal could be announced when earnings were released. There is reference in the document to the idea that the Tender Offer was “announced” or information “distributed” on 27 July, which caused the stock to go up unnaturally – attributed to “distribution of information by some information distribution companies which indicated the restructuring the group resulting to speculation buying”. I have not found that information and the document does not clarify.

source: tradingview.com, Quiddity

This is going to upset some people.

Based on the lowest trailing 12-month EBITDA figure in 20 years, with management forecast EBITDA expected to rise sharply in coming years, and a lot of non-cash assets which are effectively cash-equivalent for Fujitsu group, the forward EV/EBITDA of the takeout price is probably the wrong level. 

Using the 20yr low EBITDA, and assuming net receivables are factored and the PP&E is sold for a 20% discount to book and leased back would bring Enterprise Value close to zero. That is probably too low a price given management forecasts of respectable free cash flow ahead.

I’ve got popcorn.

Given the propensity for shareholders of Japanese companies to make noise when it is in their interests to do so, I might wish for a pillow instead, but hope springs eternal.

Investors need to understand that the “fairness opinions” of the “independent” valuation agents are based on conflicted target management forecasts, and the “reasonable” price has zero financial logic applied to it. If one can claim a premium is being paid to the market price, it’s probably “reasonable” to most target boards even if the price of the target and its “comparable companies” have been low precisely because of a lack of trust in the governance of the target company.

As always, there is more below the fold.

For more on the rules regulations, practices, and foibles in the M&A world in Japan, please refer to the Quiddity Japan M&A Guide 2019. For more about situations where minority investors should look at their options, please see Japan Needs More Cowbell

Ctrip in Talks with Investors for Nasdaq Delisting; Ability to Attract a Large Premium Seems Limited

By Shifara Samsudeen, ACMA, CGMA

The US-China trade tensions and the US crackdown on Chinese companies listed in the US have led to a large number of US-listed Chinese stocks to look for alternatives. While some companies have sought secondary listings on the Hong Kong Stock Exchange, another set of companies have been delisting their shares from the US stock exchanges.

Earlier this week, the Chinese tech giant Tencent offered to buy out and take private the Beijing based web search company Sogou.

Over the last couple of days, several news media outlets reported that the Chinese online travel firm Ctrip (Trip.com) is now considering delisting its shares from Nasdaq. In this insight, we take a look at Ctrip, intention to delist its shares from Nasdaq and its valuation.

MSCI Korea Index August IR: Inclusions & Exclusions

By Sanghyun Park

We are nearing the MSCI August IR.

Here are the requirements of the quarterly index review.

  • The market cap of at least 1.8 times the market cap cutoff
  • The free float-adjusted market cap of at least 0.9 times the market cap cutoff
  • FIF: at least 0.15
  • Reference date: as of the close of a randomly selected trading day in the last ten trading days of July

(Mostly) Asia M&A: July 2020 Roundup

By David Blennerhassett

For the month of July, 17 new deals were discussed on Smartkarma with an overall announced deal size of ~US$32bn.

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)




National Storage REIT (NSR AU) Storage??????
Renewed Takeover Talks for National Storage After Abacus’ Stake Creep
O-Net Technologies (Group) (877 HK) Fibre-optic0.3Scheme23.5%

O-Net Tech (877 HK): Tripping The Light Fantastic

O-Net (877 HK): Swish Switches Offer


Hong Kong

Beijing Jingneng Clean Energy (579 HK) Energy??????
Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?
Car Inc (699 HK) Auto rental0.2N/AN/A
Car Inc (699 HK): Deals On Wheels



INEOS Styrolution India Limited (INEOS IN) Thermoplastics0.1DelistingN/A

INEOS Styrolution India – A Tiny Delisting to Watch How the RBB Sausage Is Made

INEOS Styrolution – Looks Like We Have a Price. Now We Wait For The Promoter’s Answer

J.B. Chemicals & Pharmaceut (JBCP IN) Pharmaceutical0.2Partial4.1%
J.B.Chemicals (JBCP IN): Partial Tender Offer by KKR


FamilyMart Co Ltd (8028 JP) Convenience5.5Tender offer31%

FamilyMart Tender Offer – Winnie and HunnyPot Redux

The Amended FamilyMart Document Is A MUST READ For Investor-Stewards

Japan Needs More Cowbell

OOTOYA Holdings (2705 JP) Restaurants0.1Partial45.81%
Colowide Partial Tender for Ootoya Is a Sell


ESR-REIT (EREIT SP) / Sabana Shari’ah Compliant Industrial REIT (SSREITR SP) REIT0.3MergerN/A
ESR-REIT/Sabana-REIT Merger
ESR-REIT/Sabana Merger – Buying Well Below Book


Viglacera Corp (VGC VN) Construction0.1Possible Partial??
Gelex Officially Decides to Go After Viglacera – A Vietnamese Pre-Event



Sina Corp (Class A) (SINA US) Online media2.7Take private20%
Sina Corp: Management Buyout Offer
Sogou Inc (SOGO US) Search engine3.5Take-private57%
Sogou/Tencent: The Latest Chinese Internet Privatisation
Sohu – The Better Play on Sogou


Aker Solutions (AKSO NO) Oil & gas1.8MergerN/A
Aker Solutions – Kværner Agreed Merger
Cello Health plc (CLL LN) Healthcare0.2Scheme43.8%
Cello Health: Trading Above Terms, Bump Needed?
Neles Oyj (NELES FH) Engineering2.0Cash Offer32.8%
Neles – Alfa Laval Agreed Offer
Rockrose Energy PLC (RRE LN) Oil & gas0.3Scheme63.7%
RockRose-Viaro Deal: Trading Close to Terms

Middle East

Samba Financial Group (SAMBA AB) /

National Commercial Bank (NCB AB) 

Finance15Non-binding MergerN/A
Doing the Big Bank Samba in KSA
Source: Smartkarma Insights

The big one – Samba Financial Group (SAMBA AB) / National Commercial Bank (NCB AB) – is non-binding. Both Sina Corp (Class A) (SINA US) & Sogou Inc (SOGO US) are also non-binding. There is no deal for Car Inc (699 HK) – just a major stake sale. No offer price has yet to be announced for Beijing Jingneng Clean Energy (579 HK).

The average premium for the new deals announced (or first discussed) in July was ~36% and the YTD average premium for all deals discussed on Smartkarma (86 all-in) is 32%.  The average for all deals discussed on Smartkarma in 2019 (145 deals all-in) was 31.5%.

The charts below provide a snapshot of deals YTD discussed on Smartkarma. Where the deal is a merger of equals or similar, I’ve assigned no premium.

Summary of News in July 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. Where a new insight was written on these names in July, I’ve included a link, in bold, to that insight in italics.)


Comments (with links to announcements & insights)

8-Jul: Cardinal Resources (CDV AU) has completed the issuance of shares (26mn or A$11.96mn) to Shandong as per the BIA. Bidder/Target Statements due out on or before the 22 July. 

15-Jul: Cardinal Resource (CDV AU): Nordgold Reloads

22-Jul: Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer

28-Jul: As expected – Cardinal Resources (CDV AU) recommends Shandong’s A$0.70/share Offer.

No July update

1 Jul: Ara’s Offer price of A$0.90 will be “reduced by any dividends or distributions declared, determined or paid after 23 June“. Therefore following the distribution of A$0.01875 that went ex on the 29 June, the Offer price has been reduced to A$0.882125.

20-Jul: ARA’s Bidder’s Statement has been issued. ARA’s laundry list of issues with Cromwell’s board can be found on page 3 & 4. On page 34 – ARA said it has received a notice of no objection from FIRB. This was one issue raised by Cromwell. Cromwell says its Target Statement will be released early to mid-August. It continues to advise shareholders to reject ARA’s Offer, and that the Bidder’s Statement contains misleading statements and material omissions. 
21-Jul: The Cromwell Property (CMW AU) Offer is not a 100% pro-rata trade. This is a “proportional” offer, not a “partial” offer. You can only accept the Offer in full for 29% of your Cromwell holding – not a greater or lesser proportion. The is spelled out under Question 2 on page 11 of the Bidder’s Statement. This was not immediately apparent from reading the initial announcement. Therefore the “arb grids” are not relevant with respect to this deal. Apologies.

3-Jul: Infigen Energy (IFN AU) released First Target Statements for both the UAC and Iberdrola SA (IBE SM) Bids. The Board continues to unanimously recommend that investors REJECT the UAC Offer. And unanimously recommend that investors ACCEPT the Iberdrola Offer in the absence of a superior proposal.

7-Jul: Iberdrola SA (IBE SM)released its Secondary Bidder’s Statement on Infigen Energy (IFN AU) announcing the FIRB condition had been fulfilled.

16-Jul: UAC Energy lodges a notice as to the status of defeating conditions. Iberdrola has bumped its stake to 24.06% from 20%. It has also declared its Offer unconditional

17-Jul: Infigen Energy (IFN AU) Bidder UAC, controlled by Ayala Corporation (AC PM) made an announcement (ASX link) that it would not change the terms of its Offer. 

22-Jul: Iberdrola SA (IBE SM)‘s Unconditional Offer A$0.89 expires on 30 July. Iberdrola announced a conditional offer bump to A$0.92/share IF Iberdrola SA (IBE SM) gets an additional 13% of shares out by 30 July. 

29-Jul: UAC bumps stake to 19.94% from 13.40%. 

17-Jul: indicative Scheme timetable out

No July update

28-June: Village Roadshow (VRL AU) has extended its exclusivity with BGH to the 4 August.

13-Jul: “Early stage submissions in relation to the Scheme indicate a risk …. the Scheme may not be passed“. The announcement mentions a substantial shareholders, together with a number of minor shareholders, holding 19.59mn Zenith shares, or 22.25% of shares out, will vote against the Scheme. One of the dissenting shareholders is believed to be Westoz.

154-Jul: The Scheme has been approved by FIRB.

21-Jul: Zenith Energy: Done Deal As PEP Bumps

Hong Kong

Comments (with links to announcements & insights)

29-Jul: In its monthly update, CGN says there is no update. on the deal.

13-Jul: The Offer closes with the Offeror holding 88.20%. It will take measures to restore the float. Oddly, there is no mention shares will be suspended. 

9-Jul: Golden Meditech Holdings (801 HK) announced that an “application has been made by the Company and the Offeror to the Executive for consent to the extension of the latest date for despatching the Scheme Document from 8 July 2020 to 26 August 2020 and the Executive has granted the consent.” That about 10 days past my initial estimate. 

16-Jul: In its monthly announcement in compliance with the Takeovers Code, Haier Electronics Group Co (1169 HK) said the Offeror continues to explore a privatisation proposal.
30-Jul: Haier Electronics Group Co (1169 HK) suspended “pursuant to the Code on Takeovers and Mergers”. This could be the big one, finally. 

21-Jul: Huadian Fuxin Energy Corp (816 HK) announces that the “approvals of the Merger by the competent PRC authorities“, a pre-condition to the Offer, are not yet fulfilled. 

3-Jul: As expected, the dispatch of the Scheme Doc has been delayed to the 17 August (6 days past my initial estimate) from 3 July.

3-Jul: The Offer doc has been delayed until the 31 July, from 8 July originally. This is largely to be expected.

20-Jul: Skyworth (751 HK): Proposed Coocaa Spin-Off

27-Jul: Skyworth (751 HK): Partial Buyback Circular Despatched

6-Jul: The Composite Doc has been delayed until the 7 April 2021, to allow time for the satisfaction of all conditions.


Comments (with links to announcements & insights)

24-Jul: The results of the Adani Power Ltd (ADANI IN) postal ballot were announced. Shareholders approved the special resolution to delist the shares from the Stock Exchanges. Institutions voted on 84% of the shares held by them. Of those, 96% voted in favour and 4% against. Non-institutions voted on 56% of the shares held by them. Of those, 98.5% voted in favour and 1.5% against.

9-Jul: Hexaware Technologies (HEXW IN)announced that the Board had approved the Post Ballot document.  e-voting on the Delisting proposal will start on 10 July and end on 8 August at 5pm. Results will likely be made public. Because the promoter owns less than the max and because the float on Hexaware is mostly held by institutions, I expect a) there will be no issue with quorum and support, and b) that it will get passed. 

No July update

2-Jul: The IMSC has decided to replace Vedanta Ltd (VEDL IN) from various indices on account of proposed voluntary delisting. The changes shall become effective from July 31, 2020 (close of July 30, 2020). This will affect the NIFTY 50, NIFTY Next 50, NIFTY 500, NIFTY 100, NIFTY LargeMidCap 250, NIFTY 200, NIFTY Metals, NIFTY Commodities, NIFTY MNC, NIFTY 50 Value 20, and a few others. 

13-Jul: Bloomberg and Bloomberg Quint reported yesterday that Vedanta Ltd (VEDL IN) subsidiary Hindustan Zinc (HZ IN) was looking to raise up to INR 50bn or roughly US$660mm in bonds so as to be able to increase the dividend paid out to shareholders to repay the US$2.75bn loan that Vedanta Resources is looking to take out to be able to pay for the delisting offer for Vedanta Limited. 

14-Jul: Putting Sightlines on the Vedanta Discovered Price



No July update…. Waiting….. Waiting…. Waiting….


Comments (with links to announcements)

No July update
No July update
No July update
The Hitachi Ltd (6501 JP) / Honda Motor (7267 JP) / Showa Corp (7274 JP) / Keihin Corp (7251 JP) / Nissin Kogyo (7230 JP) deal is now progressing. We FINALLY have the ECC filing as of the 7th. I expect this has simply been an exceptionally long pre-notification period to get here so it could go smoothly, and I expect this probably has to do with an exceptionally long pre-notification period for Japan. 

22-Jul:  Results are out in the LIXIL VIVA (3564 JP) Tender Offer conducted by Arcland Sakamoto (9842 JP). Arcland now has cleared the minimum, so the squeezeout will proceed via EGM. The record date for the EGM will be August 10th. Just a matter of time now.

No July update

9-Jul: Bain Capital has extended the expiry of their TOB for Nichii Gakkan Co to Aug 3 from July 9. There is no increase (for now) of the TOB price.

No July update

14-Jul: Sony Corp (6758 JP)‘s Tender Offer for Sony Financial Holdings (8729 JP) has ended with SONY getting 93.46% of shares, or about 90% of the float. That indicates that either passive investors tendered, or people borrowed the passive shares to tender and buy back at a small discount.
The remaining float of 6.54% is 50% owned by the Nikkei 225 and TOPIX ETFs. It is possible that these shares have been tendered, but it is unlikely that they have been tendered by the ETF managers themselves. It is more likely that they shares have been tendered by arbitrageurs who would be looking to buy the shares when they get kicked out of the index.

16-Jul: Out of the MSCI and FTSE.
27-Jul: Out of the TOPIX.


Comments (with links to announcements)

23-Jul: The despatch of the circular is now expected to occur in mid-Nov. This is because the valuation report on the properties has exceeded their six-month validity.

The EGM is expected to take place at the end of November. 

New Zealand

Comments (with links to announcements and insights)

1-Jul: Centuria Capital (CNI AU) has made an announcement on the ASX that it intends to increase the cash component of the offer from NZ$0.20 to NZ$0.22 per share and also intends to declare the offer unconditional if it receives acceptances to the offer which, together with Centuria’s existing shareholding in Augusta Capital (AUG NZ), amount to 63.5% of Augusta’s shares.

 9-Jul: Centuria Capital (CNI AU) declared the Augusta Capital (AUG NZ) takeover offer unconditional. Acceptances so far represent 65.86% of Augusta Capital (AUG NZ) shares.

13-Jul: The independent directors of Augusta Capital (AUG NZ) have recommended that shareholders accept the Centuria Capital (CNI AU) offer and tender their shares.

 28-Jul: Centuria Capital (CNI AU) has received acceptances in respect of their full takeover offer that take its ownership of Augusta Capital (AUG NZ) to over 75%. They are still short of the 90% level where they could do a squeeze-out of the remaining minorities.

6-Jul: Metlifecare: EQT Blinks And Tables A Revised Offer

10-Jul: As expected, Metlifecare Ltd (MET NZ) has entered into a new Scheme Implementation Agreement with Asia Pacific Village Group Limited/EQT to acquire all Metlifecare’s shares for NZ$6.00/share. “The parties have also agreed to discontinue all litigation and settle all disputes related to the original SIA, with the parties to cover their own costs in relation to the litigation.”

12-Jul: Metlifecare/EQT: The Retirement Solution


Comments (with links to insights and announcements)

5-Jul: Major Accordia Golf Trust Shareholder Has Issues With Price & Process

7-Jul: Accordia Golf Trust (AGT SP) announces that the Circular will be issued in due course and that the EGM has been set for 14 September.

19-Jul: Major Accordia Golf Trust Shareholder Has Issues With Price & Process

28-Jul: Hibiki Path Advisors – the #2 shareholder of Accordia Golf Trust (AGT SP) issued a press release noting that jointly with 50+ other investors, it had submitted a request to Accordia Golf Trust requesting an EGM. 

28-Jul: Accordia Golf Trust Deal Gets More Complicated

22-Jul: Capitaland Mall Trust (CT SP) / Capitaland Commercial Trust (CCT SP) have announced that: “the CMT Manager and the CCT Manager are working towards convening the CMT EGM, CCT EGM and Trust Scheme Meeting (as the case may be) before 30 September 2020, being the Long-Stop Date“.

23-Jul: CCT+CMT: CCT 2Q20 Results Update

23-Jul: Keppel Corp Ltd (KEP SP) put out a Profit Warning notice for its Q2 earnings, which are scheduled to be released on 30 July. This looks like a setup.

26-Jul: Keppel “Material Impairments” May Mean A MAC Mess

3-Jul: Perennial Real Estate Holdings (PREH SP) have dispatched the offer document and the closing date is 3 August. 

21-Jul: Perennial Real Estate Holdings (PREH SP)‘s Offer has now been declared unconditional in all respects. The final closing date to accept the offer is the 17 August.


Comments (with links to insights and announcements)

13-Jul: D Link Corp (2332 TT) announced on Friday that it intended to tender 89,035,834 shares into the Qisda Corp (2352 TT) Tender Offer for Alpha Networks (3380 TT). This effectively lowers the minimum pro-ration I calculated because my assumption based on the voting was that D-Link was acting in concert with Qisda. 

13-Jul: Alpha Networks – D-Link Decision Means Lower Pro-Ration? 

No July update



The offer period is from 5 June to 8 August (45 biz days). The settlement is the 14 August.

Selected European Holdcos and a DLC: July Report

By Jesus Rodriguez Aguilar

With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.

All the discounts to NAV have remained stable, with no major changes to the holdcos portfolios, with the exception of Kinnevik. Most represent an attractive entry point from fundamentals, in my view.

I note there have been market rumours about a combination of Unilever and Reckitt Benckiser. Certainly, a collapse of the DLC structure would allow Unilever to offer own shares as a currency in M&A.

The most compelling situations in this report are:

  • GBL
  • Heineken
  • Investor AB

Please read on for charts and comments.

Before it’s here, it’s on Smartkarma