In today’s briefing:
- Dongfeng Motor (489 HK): DFM’s Attractive Privatisation Offer
- Dongfeng (489 HK)’s Privatisation And EV Backdoor Listing
- [Quiddity Index] The Sony Financial Spinoff – What To Do?
- Merger Arb Mondays (25 Aug) – Dongfeng, ENN Energy, Shibaura, Santos, Lynch, Smart Share
- [Japan M&A] YAGEO Upping the Stakes in the Game of 🐓 over Shibaura (6957 JP)
- NIFTY50/NEXT50 Index Rebalance: Bunch Of (Mostly) Expected Changes; Positioning Increases
- Nissan Motor Placement – Discount Is Enticing but Track Record and Momentum Aren’t Great
- Merger Arbitrage, Trial Delays, Strategic Reviews, and Buybacks
- Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Surprise National Assembly Moves: 2nd Commercial Act Amendments & Yellow Envelope Law
Dongfeng Motor (489 HK): DFM’s Attractive Privatisation Offer
- Dongfeng Motor (489 HK) disclosed a pre-conditional privatisation by merger by absorption by Dongfeng Motor Corporation, along with a proposed distribution and listing of VOYAH shares.
- The offer comprises HK$6.68 + 0.3552608 VOYAH H Shares per H Share, which is valued at HK$10.85 per H Share, a 81.7% premium to the last close price.
- The vote is low risk as the offer is attractive. It values the remaining business at a premium multiple, and the appraised value of HK$11.735 per VOYAH share is conservative.
Dongfeng (489 HK)’s Privatisation And EV Backdoor Listing
- Dongfeng Motor (489 HK) has announced a privatisation; together with a concurrent listing of its EV arm.
- The same day as the dual proposals, Dongfeng announced an interim loss (1H25). Evidently, the way forward – from an investor standpoint – is electric, not internal combustion engines.
- The cash terms + scrip (into the EV listing) under the proposals are attractive. Even after this morning’s move (+53.6%) in Dongfeng’s share price.
[Quiddity Index] The Sony Financial Spinoff – What To Do?
- Sony Financial Group (perhaps 8729 JP) will be spun off from SONY on 29 September 2025. The nominal share price will be “low” – likely 4-6% of Sony’s price.
- Index treatment is largely known with the exception of a market cap trigger to stay in or get the boot from one major global index provider’s set of large-midcap indices.
- There is a buyback to come which will offset global active manager “I don’t want this” overhang. There are technical trades to do here too but overall I am positive.
Merger Arb Mondays (25 Aug) – Dongfeng, ENN Energy, Shibaura, Santos, Lynch, Smart Share
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Dongfeng Motor (489 HK), Mayne Pharma (MYX AU), Smart Share Global (EM US), ENN Energy (2688 HK), Santos Ltd (STO AU), Shibaura Electronics (6957 JP).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Ainsworth Game Technology (AGI AU), Ashimori Industry (3526 JP), PointsBet Holdings (PBH AU).
[Japan M&A] YAGEO Upping the Stakes in the Game of 🐓 over Shibaura (6957 JP)
- On 14-Aug, Minebea Mitsumi (6479 JP) upped their TOB on Shibaura Electronics (6957 JP) from ¥5,500 to ¥6,200, but set the close before rival bidder YAGEO’s likely FEFTA approval date.
- On 21-Aug, YAGEO responded by upping the bid 7% to ¥6,635. Minebea responded by saying no raise, no extension. Minebea was playing chicken. Shares fell Friday.
- Very early Saturday, the Nikkei reported YAGEO would raise to the “¥7,100 range.” Reuters later reported YAGEO had raised to ¥7,130. Exactly 15% above Minebea. On YAGEO’s website.
NIFTY50/NEXT50 Index Rebalance: Bunch Of (Mostly) Expected Changes; Positioning Increases
- InterGlobe Aviation Ltd (INDIGO IN) and Max Healthcare Institute (MAXHEALT IN) replace Hero Motocorp (HMCL IN) and Indusind Bank (IIB IN) in the NIFTY Index (NIFTY INDEX) in September.
- There are 5 constituent changes to the Nifty 100 Index (NSE100 INDEX) leading to 4 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX).
- There will be global passive buying in Swiggy (SWIGGY IN) on Tuesday. Then there will be net selling in the stock at the close on 29 September.
Nissan Motor Placement – Discount Is Enticing but Track Record and Momentum Aren’t Great
- Mercedes-Benz Pension Trust aims to raise around US$330m via selling its 3.8% stake in Nissan Motor (7201 JP).
- The discount seems enticing, however, the company’s recent share performance and longer term track record aren’t great.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Merger Arbitrage, Trial Delays, Strategic Reviews, and Buybacks
- Smart Share Global’s management consortium offered $1.25/ADS, with Hillhouse’s competing bid at $1.77/ADS, a 33% spread.
- Mayne Pharma’s trial delayed to September 22, with Harvest Lane trimming its stake; spread to Cosette’s offer is 47%.
- Gore Street Energy Storage faced significant shareholder dissent; RM Funds calls for Chairman’s resignation amid strategic review efforts.
Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Last evening, Hang Seng announced a methodology change for the Hang Seng Internet & Information Technology Index (HSIII Index) with implementation in two phases.
- The capping methodology will be updated at the September rebalance and the turnover and sector requirements will be updated at the December rebalance.
- The updated capping scheme increases turnover and flow in September, while there could be one constituent change for the index at the December rebalance.
Surprise National Assembly Moves: 2nd Commercial Act Amendments & Yellow Envelope Law
- Major governance shake-up: >KRW 2T companies face mandatory cumulative voting, giving minorities real board influence, while audit committee split votes expand from 1 to 2+, boosting independence.
- Trade sweet spot is holdcos and brokers with high treasury stock and retail float. Bloated buybacks may drive cancellations, sparking quick momentum trades in messy-governance names.
- Today, holdcos and brokers with 10%+ treasury stock and >₩500bn market cap are leading pops, driving action and attracting fast-money flows.
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