In today’s briefing:
- Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications
- India: Preview of Stock Reclassification for Active Funds
- Merger Arb Mondays (9 May) – Alliance Aviation, Ramsay Health, Yashili, VNET, Sezzle, Link
- JAPAN ACTIVISM: Silchester Goes After Bk of Iwate – Cheaper Than Chips
Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications
- The Larsen & Toubro Infotech (LTI IN) and Mindtree Ltd (MTCL IN) merger will create a company with revenue of US$3.5bn and a market cap of US$18bn.
- The merger ratio is 73 shares of Larsen & Toubro Infotech for 100 shares of Mindtree. The merger is expected to complete in 9-12 months.
- There are likely to be some inflows from MSCI and FTSE trackers but the big kicker will be inclusion in the NIFTY Index – but a (smallish) rally is needed.
India: Preview of Stock Reclassification for Active Funds
- Two-Thirds of the way through the review period, we see 7 stocks migrating from MidCap to LargeCap, 8 stocks from LargeCap to MidCap, and 1 new listing added to LargeCap.
- Post listing, Life Insurance Corp of India (LIC) (1248Z IN) should be added to the LargeCap segment while Delhivery (1058656D IN) should be added to the MidCap segment.
- On average, stocks expected to migrate from Mid Cap to Large Cap have outperformed. Stocks expected to migrate from the Large Cap to Mid Cap segment have performed the worst.
Merger Arb Mondays (9 May) – Alliance Aviation, Ramsay Health, Yashili, VNET, Sezzle, Link
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
- This week, the highest gross spreads are Dongzheng Automotive Finance (2718 HK), Yashili International Holdings (1230 HK), 21Vianet Group (VNET US), Sezzle Inc (SZL AU), Alliance Aviation Services (AQZ AU).
- The lowest gross spreads are Beijing Enterprises Urban Resources (3718 HK), Virtus Health (VRT AU), Uniti Group Ltd (UWL AU), China Logistics Property Holdings (1589 HK), Irongate Group (IAP AU).
JAPAN ACTIVISM: Silchester Goes After Bk of Iwate – Cheaper Than Chips
- Silchester has written letters to four Japanese regional banks where they hold large stakes asking for higher dividends and payout ratios. It has proposed a special div AGM agenda item.
- Bank Of Iwate (8345 JP) is nearly 40% held by cross-holders and government-affiliated entities, and Real World Float is less than 50%. Winning at the AGM is tough.
- The collection of banks is mixed. But this one is cheap. Cheap as chips. Or cheaper.
Before it’s here, it’s on Smartkarma