Daily BriefsEvent-Driven

Event-Driven: LG Energy Solution, Hitachi Construction Machinery, Crown Resorts, 51 Job Inc Adr, LG Chem Ltd, Irongate Group and more

In today’s briefing:

  • LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List
  • Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy
  • HCM – Hitachi Partial Stake Sale to Itochu
  • Crown Resorts: Blackstone’s Winning Bet
  • 51job (JOB US): 27.6% Reduction In Terms
  • Blackstone’s Fourth Bid for Crown Resorts
  • 51job’s Lowered Privatisation Bid
  • KRX K-New Deal Index Rebalancing: Detailed Methodology & Changes Preview
  • Irongate (IAP AU) Rejects Third Proposal From 360 Capital

LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List

By Brian Freitas

  • The LG Energy Solution (373220 KS) IPO will be the largest ever in Korea and will result in Fast Entry to a lot of local and global indices.
  • A lot of the passive flow will be front loaded across the KOSPI200, local Battery indices, BBIG, MSCI Korea, FTSE All-World with back end flow on global battery indices.
  • Given the passive assets tracking the Battery ETFs locally and globally, a significant portion of LG Energy Solution (373220 KS)‘s float will be locked up in passive products.

Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy

By Travis Lundy

  • An NHK report today post-close said Hitachi Ltd (6501 JP) would sell “about half” its stake in sub Hitachi Construction Machinery (6305 JP) to Itochu and Japan Industrial Partners.
  • That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.
  • The big question is What Next? and What Impact for shareholders? That’s a tough couple of questions. 

HCM – Hitachi Partial Stake Sale to Itochu

By Mio Kato

  • NHK reports that Hitachi will be selling roughly half of its 51% stake in HCM to Itochu and Japan Industrial Partners. 
  • HCM has outperformed Komatsu over the last year and it is possible that some investors were expecting a buyout. 
  • If so, and if there is a negative reaction to this news we would be looking to buy.

Crown Resorts: Blackstone’s Winning Bet

By David Blennerhassett

  • Blackstone and affiliates have increased its Offer for Crown Resorts (CWN AU) to A$13.10/share in cash, from A$12.50 previously, and up from A$11.85/share initially.  
  • The proposal is subject to the same conditions as the Blackstone proposal announced on 19 November, including completing further due diligence, regulatory approvals, and unanimous support from Crown’s Board.
  • Crown will engage further with Blackstone on a non-exclusive basis and its current intention is to recommend that shareholders vote in favour should both parties enter into a binding agreement.

51job (JOB US): 27.6% Reduction In Terms

By David Blennerhassett

  • Not an overreaction after all. After shares closed down 19.2% on the 8 November, 20% adrift of indicative terms, that appeared overdone.
  • Now 51 Job Inc (JOBS US) has announced the Offeror has proposed reducing the merger consideration from US$79.05 in cash per common share to US$57.25.
  • Shares closed up, but still at a 14.5% gross spread to terms. The new construct, and the reasons for doing so, are decidedly baffling.

Blackstone’s Fourth Bid for Crown Resorts

By Arun George

  • Blackstone Group (BX US) has returned for a fourth time with a revised indicative offer of A$13.10 cash per share, a 4.8% bump to its previous offer of A$12.50.
  • The Board intends to recommend a binding offer of no less than A$13.10 per share. CPH, the largest shareholder, is “encouraged by today’s announcement.
  • The Board’s willingness to recommend a binding offer may draw out rival suitors. At the last close of A$12.65, the shares trade at a 3.6% gross spread to the offer.

51job’s Lowered Privatisation Bid

By Arun George

  • The consortium’s updated transaction has lowered the offer price -27.6% to $57.25 in cash per ADS, a 24.92% premium to the last trading price (11 January 2022).
  • The combination of the dramatically lower price, spurious justification for lowering the price and the shares recently trading higher than the revised price is unlikely to win over minorities.
  • Meeting the two-thirds shareholder approval threshold is likely a challenge due to the need to convince around 27% of disinterested shareholders to vote in favour of the transaction. 

KRX K-New Deal Index Rebalancing: Detailed Methodology & Changes Preview

By Sanghyun Park

  • These indices use the GICS for classification. Bio and Internet are very straightforward. But qualitative judgment may be involved in Battery and Game.
  • The passive impact of SoulBrain is estimated to be the largest, and LG Chem wouldn’t be negligible either.
  • If AfreecaTV and Douzon Bizon are swapped, they will experience an impact of +2.0x ADTV and -5.0x ADTV. So they will shine the most if the swap takes place.

Irongate (IAP AU) Rejects Third Proposal From 360 Capital

By David Blennerhassett

  • Property group Irongate Irongate Group (IAP AU) has rejected the third unsolicited offer from 360 Capital (TGP AU) in as many months. 
  • Under the latest proposal, 360 Capital was offering $1.72 /security, a 7.2% increase over the initial approach. 
  • Trading slightly below the rejected terms. Expect 360 Capital to return to the trough. 

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