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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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.
Before it’s here, it’s on Smartkarma