In today’s briefing:
- Mayne Disagrees With Cosette On MAC
- Nikkei 225 Index Rebalance: 🚨Ibiden (4062 JP) To Replace Nidec (6594 JP) 🚨
- [Japan Special] Ibiden (4062) Replaces Nidec (6594) In Nikkei 225 on Accounting – A VERY BIG DEAL
- [Japan Activism] Mandom (4917 JP) MBO Sees Murakami Pushing Harder, Now at 16.59%
- NIFTY Bank Index: Methodology Changes to Result in Big Flows
- Another Passive Flow Trading Target Identified: Sejin Heavy in the Dec Shipbuilding ETF Rebal
- [Japan M&A] Daiwa House Buyout of Sumitomo Densetsu (1949 JP) At ¥9,760 – A Good Exit
- [Japan M&A] Fujitsu Buys Out Brainpad (3655) At Near 100% Premium
- Intel on Today’s SK Square Price Action: Rotation Flow Triggered by Hynix’s 10% Fund Cap Removal
- HEW: Cautious Committees
Mayne Disagrees With Cosette On MAC
- As widely speculated, Cosette asserted to Mayne Pharma (MYX AU) on the 17th May a Material Adverse Change (MAC) has occurred.
- Mayne disagrees, and views the pre-requisites for a MAC, as defined in the SID, have not been established.
- What now? The Scheme is not terminated. Both parties remain in consultation. If those talks are not satisfactory (say, a price reduction [my guess]), Cosette said it will walk.
Nikkei 225 Index Rebalance: 🚨Ibiden (4062 JP) To Replace Nidec (6594 JP) 🚨
- The JPX has designated Nidec Corp (6594 JP) as a ‘Security on Special Alert’ due to a disclaimer of opinion in the annual report (among other issues).
- Nikkei has announced the deletion of Nidec Corp (6594 JP) from the Nikkei 225 (NKY INDEX). Ibiden Co Ltd (4062 JP) will be added to the index.
- Nidec Corp (6594 JP) should also be deleted from the TSE Tokyo Price Index TOPIX (TPX INDEX). Both index deletions should take the stock a lot lower from here.
[Japan Special] Ibiden (4062) Replaces Nidec (6594) In Nikkei 225 on Accounting – A VERY BIG DEAL
- In June, Nidec Corp (6594 JP) announced they would delay the release of their yuho for three months because of an internal investigation into NIDEC FIR INTERNATIONAL (Italy).
- In September they launched a special committee. Shares fell 22%. Last Thursday, the company cancelled its interim dividend. Today, the JPX designated Nidec as Security on Special Alert.
- This is a VERY BIG DEAL. Nikkei225 deletes Nidec 5-Nov-2025, replaced by Ibiden Co Ltd (4062 JP) (PAF 1.0x). Designation also triggers TOPIX deletion for Nidec, likely on 30 October.
[Japan Activism] Mandom (4917 JP) MBO Sees Murakami Pushing Harder, Now at 16.59%
- Four weeks ago, CVC announced a family-led MBO of hair care and cosmetics company Mandom Corp (4917 JP) at a price which was decidedly too light, well below company plans.
- One activist wrote a letter clearly calling them out for accepting a low-ball price well below the Medium Term Management Plan target. Another bought a lot of shares.
- On 25 September, Murakami-san and affiliates reported an 8.39% position. Seven trading days later it is 16.59% and the shares are up small from my last piece + 1.
NIFTY Bank Index: Methodology Changes to Result in Big Flows
- In May, SEBI recommended changes to the minimum number of constituents for non-benchmark indices and the capping for those indices. Then came the market consultation in August.
- SEBI has now confirmed the changes along with the timeline for capping changes to the largest stocks in the index.
- The changes could commence in December and continue till March. The adds will take place in December and weight changes for the largest stocks will take place in 4 tranches.
Another Passive Flow Trading Target Identified: Sejin Heavy in the Dec Shipbuilding ETF Rebal
- HHI–Mipo merger overlaps Dec review: Mipo dropped Nov 26, desk holds cash, rebal Dec 12, new HHI shares list Dec 15 but capped at 10%.
- No ad-hoc replacement for Mipo Nov 26; Dec review will add a new name, likely Sejin Heavy (075580 KS), with no other significant flows flagged.
- Sejin Heavy’s recent post-rally volume cools; passive inflow ~1.5x DTV may trigger visible price action, with potential front-running 1–2 days ahead of Dec 12 ETF rebal.
[Japan M&A] Daiwa House Buyout of Sumitomo Densetsu (1949 JP) At ¥9,760 – A Good Exit
- Today partway through the day, Daiwa House Industry (1925 JP), Sumitomo Electric Industries (5802 JP), and Sumitomo Densetsu (1949 JP) announced Daiwa House would buy out Sumitomo Densetsu for ¥9,760/share.
- Sumitomo Electric will sell its stake to the company ¥6,877/share. Minorities get 11.9x Mar26 EBITDA. The Bidder is buying at 9.9x.
- At an ATH, and a nice premium, and 3x book, this looks like a pretty good takeout price. Daiwa House has plans for it.
[Japan M&A] Fujitsu Buys Out Brainpad (3655) At Near 100% Premium
- Today after the close, Fujitsu Ltd (6702 JP), with 110,000 employees, announced a buyout of a small “labour-intensive” AI/ML sysdev business with 200+ data scientists.
- Brainpad Inc (3655 JP) is being bought out from its co-founders and others at a near-100% premium. Not an all-time high, but not a low price.
- Somewhat heavily shorted, this will trade tight, but I expect nobody will come over the top.
Intel on Today’s SK Square Price Action: Rotation Flow Triggered by Hynix’s 10% Fund Cap Removal
- KOFIA says Hynix hit 10.89% weight in October vs 8.37% in September, lifting the 10% fund cap — now local funds can size up like Samsung Electronics.
- SK Square might have been dumped today as locals unwound proxy trades; with Hynix freed from the 10% cap, funds rotated directly into Hynix, front‑running the shift.
- Key now is rotation size; SK Square’s beta‑plus trade to Hynix is fading, and near term we should expect relative underperformance as flows migrate.
HEW: Cautious Committees
- Central bankers broadly delivered on expectations this week, while cautioning that changes will likely be less than markets assume. The BOJ and ECB were also cautious.
- Flash EA inflation slowed, as expected, but services and core stoked hawkish pressure, while money and credit data in the EA and UK show accommodation of inflation.
- Next week’s BoE decision is no longer priced as a forgone conclusion, but the case to cut is weak. Like its peers, the BoE should cautiously damp dovish expectations.
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