In today’s briefing:
- Macromill (3978 JP) – Five Major Investors Have 50+%; CVC Extends and Will Need to Bump Or Walk
- Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap
- Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel
- Henlius (2696 HK): Hurtling Towards a Likely Deal Break
- Murata Manufacturing (6981 JP) – No Immediate Passive Buying Could Lead to More Weakness
- Foshan Haitian Flavouring & Food (603288 CH): Index Inclusion Post H-Share Listing
- Murata Mfg (6981) Accelerated Overseas Offer – Minimal Index But Low Vol Vs Peers
- Henlius (2696 HK): Musings on the Deal Break Price
- Murata Manufacturing Placement – Recent Momentum Isn’t Particularly Strong
- AVJennings (AVJ AU): Ho Bee Emerges with a Competing Offer
Macromill (3978 JP) – Five Major Investors Have 50+%; CVC Extends and Will Need to Bump Or Walk
- Three pre-existing Large Shareholders have not sold down. Two new 5+% shareholders have appeared since Tender Launch. Together, their reports give them 51.7% of shares out.
- That provides them with a significantly strong implied negotiating hand. Given the midpoint of the Target Company’s Advisor’s DCF Range, I expect a bump.
- Today the Bidder extended for 10 more days. They didn’t have the shares to close. I expect they won’t unless they bump a lot.
Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap
- Bain is buying out JAMCO (a long time ago called Itochu Aircraft Maintenance) from Itochu, ANA, Bain’s own portfolio company, and the public. It’s an expected deal. A done deal.
- It is being done too cheaply. The price is 6x next year’s expected EBIT. This year expected ROE is 22%. Next year could be double that.
- And the company has more in non-operating financial assets than its net equity. And a lot of really old land assets are not marked up. Just a shame.
Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel
- Tokyo Metro (9023 JP) listed on 23 October and was added to the TSE Tokyo Price Index TOPIX (TPX INDEX) at the close on 28 November.
- Tokyo Metro (9023 JP) was not expected to be added to one global index (it was not added), while it was expected to be added to the other (and missed).
- The stock could be added to one global index in February (its close!) and to the other in June (pretty much a sure thing).
Henlius (2696 HK): Hurtling Towards a Likely Deal Break
- The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread has ballooned to 21.8%, which suggests a deal break.
- I previously stated that LVC’s trading behaviour over the coming days will indicate its voting intentions. Unfortunately, this behaviour suggests a high likelihood of blocking the vote.
- Fosun Pharma has two potential options to secure LVC’s backing: increase the share alternative cap or introduce a rollover option. Both have challenges and are, therefore, not viable options.
Murata Manufacturing (6981 JP) – No Immediate Passive Buying Could Lead to More Weakness
- A group of 7 shareholders are looking to sell 61.3m shares in Murata Manufacturing (6981 JP) to raise JPY 143.8bn (US$916m). That is 3.3% of shares outstanding.
- The shares are being offered at a price range of JPY 2296-2345.5/share, a discount of 5-7% to the last close of the stock.
- With the offering less than 5% of shares outstanding and less than US$1bn in size, there is no immediate passive buying and there could be further weakness in the stock.
Foshan Haitian Flavouring & Food (603288 CH): Index Inclusion Post H-Share Listing
- Foshan Haitian Flavouring & Food (603288 CH) has filed for a listing on the HKEX (388 HK) and reports indicate that the raise will be at least US$1.5bn.
- In line with the Midea Group (300 HK) and S.F. Holding (6936 HK) H-share listings, the discount on the H-shares could be in the 20-25% range.
- The stock will not get Fast Entry to any indices but there should be inclusions at subsequent rebalances, especially once the cornerstone investor lock-up expires.
Murata Mfg (6981) Accelerated Overseas Offer – Minimal Index But Low Vol Vs Peers
- Today after the close, Murata Manufacturing (6981 JP) announced an equity offering worth roughly US$870mm if the stock prices 10% below last.
- Unlike “regular” secondary offerings, this is available only to overseas investors, and bookbuilding is very quick. This “increases the size” relative to its headline (no retail uptake).
- At 11 days of ADV and 3.3% of shares out, it has a certain size, but the stock is well-owned by foreigners, and not terribly volatile vs Peers.
Henlius (2696 HK): Musings on the Deal Break Price
- Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is heading for a deal break. LVC has not changed its shareholding since amassing a blocking stake.
- In the absence of a last-ditch effort by Shanghai Fosun Pharmaceutical (Group) (2196 HK) to rescue the deal, the key question is the potential deal break price.
- Based on four methods, the potential deal break price is HK$17.28, 12% below the last close price of HK$19.58.
Murata Manufacturing Placement – Recent Momentum Isn’t Particularly Strong
- A group of shareholders aim to raise around US$900m via selling around 3% of Murata Manufacturing (6981 JP), in another cross-shareholding selldown.
- The company’s shares haven’t done much over the past few years and recent share price performance as well hasn’t been the best
- In this note, we will talk about the placement and run the deal through our ECM framework.
AVJennings (AVJ AU): Ho Bee Emerges with a Competing Offer
- Avjennings Ltd (AVJ AU) disclosed a competing non-binding proposal from Ho Bee Land Ltd (HOBEE SP) at A$0.70, a 4.5% premium to AVID’s A$0.67 offer.
- The potential for a Ho Bee competing offer was discussed in AVJennings (AVJ AU): Competing Offer Brewing.
- Despite the hefty premium to the undisturbed price, the Ho Bee offer is below NTA. Therefore, there is headroom for a bidding war as an offer at NTA implies A$0.81.
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