Event-Driven Archives | Page 115 of 187 | Smartkarma

Raysum Co Ltd (8890 JP) has been in a weird kind of limbo for well over a year. The Chairman/Founder resigned late last year for health reasons.
The company needed to take action to stay listed on TSE Standard. There was a plan to transfer 60+% of the shares to a foundation, through an odd arrangement.
Then a hedge fund stepped up and said “I’ll have 64% of the company at a near life-time high.” So now we have an interesting deal. And interesting potential future.

Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel Situation Could Cause Index Changes

By Janaghan Jeyakumar, CFA

The FTSE Straits Times Index (STI) (STI INDEX) has a quarterly rebalancing cycle with index reviews performed in March, June, September, and December every year.
The March and September reviews are complete index reviews while the June and December reviews are only for new listings.
In this insight, we take a look at the potential index changes that can take place between now and the end of the March 2023 index review.

Fengxiang’s Judicial Auction Set for 10 October, Potential MGO

On 16 September, the administrator published the details for the auction of Shandong Fengxiang Co Ltd-H (9977 HK) controlling shareholder’s 70.92% stake in Alibaba Judicial Auction.
If the auction is successful and results in any person and a group of persons acting in concert holding 30%+ of the voting rights, it will result in an MGO.
The base bid implies an MGO price of HK$1.563 per H Share, a 103.0% premium to the last close. The auction will be held from 10 October to 11 October.

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Sep 20

Daily Brief Event-Driven: Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely
OZ Minerals May Be Narrowing the Price Gap to a BHP Deal
Toshiba – Japan Industrial Partners The Only Real Bid?
Link’s On Again-Off Again Scheme Is All but Off
Trading Angles of Hyundai Green Food Demerger, with Potential Tender & Hive-Off

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely

Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
If no deal, there’s downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
I don’t see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.

OZ Minerals May Be Narrowing the Price Gap to a BHP Deal

Six+ weeks ago, BHP Group Ltd (BHP AU) approached OZ Minerals Ltd (OZL AU) with a bid of A$25/share. Oz very quickly rejected it and said it was worth more.
The back and forth immediately post-rejection was not conciliatory. My expectation was that if they came back quickly, they’d have to pay A$30. But coming back quickly was tough.
There are hints now that may be the price. But it may not be. It will take time.

Toshiba – Japan Industrial Partners The Only Real Bid?

By Mio Kato

Since the second of Jun Toshiba is down 14.7% while TOPIX is up 0.7%.
This underperformance against TOPIX and industry peers suggests that some of the implied acquisition premium has dissipated.
With reasonable potential for some form of bid coming through we consider the news about Japan Industrial Partners growing its consortium.

Link’s On Again-Off Again Scheme Is All but Off

Dye & Durham/DND has proposed a revised Link Administration (LNK AU) offer to address any FCA redress payments. Around A$1.00 per share will hang on the outcome of the FCA investigation.
The Link Board has said it cannot recommend the revised proposal based on value, structure and alternatives available to Link. We agree with the Board’s view.
The scheme is all but dead. The shares are now a back-end play and remain attractive for value investors.

Trading Angles of Hyundai Green Food Demerger, with Potential Tender & Hive-Off

The value accretion that will occur by unlocking treasury shares will be more significant than Hyundai Dept. The treasury shares account for 10.64%, compared with 6.61% for Hyundai Dept.
Neither Holdco nor Opco will likely remain in the KOSPI 200 after relisting. So we cannot expect PASSIVE inflow at the time of relisting.
A tender will likely follow. However, neither is available for shorting. So, we should use Opco’s overheated price adjustment as an exit timing for our positions aimed at value accretion.

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Sep 19

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: STAR50 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: STAR50, PCOMP, SET50, AMFI, ALX
Merger Arb Mondays (19 Sep) – Link Admin, Ramsay, Alliance, Genex, Moya, Singapore Medical, VNET
FTSE Straits Times Index (STI): Quiddity Primer
3Q Dividend Estimates of Those with SSF for Cash & Carry Arb in Korea
OZ Minerals Could Get an Improved Offer from BHP
That’s It Then As Link Admin Rejects D&D’s Revised Terms

Index Rebalance & ETF Flow Recap: STAR50, PCOMP, SET50, AMFI, ALX

It was a busy week with a bunch of index rebalances being implemented at the close of trading on Friday.
We list out potential changes to the STAR50 INDEX, Philippines Stock Exchange PSEi Index (PCOMP INDEX) and SET50 INDEX at the upcoming rebalances.
There was a large outflow from the iShares MSCI ACWI ETF (ACWI US) for yet another week.

Merger Arb Mondays (19 Sep) – Link Admin, Ramsay, Alliance, Genex, Moya, Singapore Medical, VNET

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
Highest spreads – Link Administration (LNK AU), Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Ramsay Health Care (RHC AU), Infomedia Ltd (IFM AU), Genex Power Ltd (GNX AU).
Lowest spreads – Nitro Software Ltd (NTO AU), Tyro Payments (TYR AU), Nearmap Ltd (NEA AU), MACA Ltd (MLD AU), Xiamen International Port H (3378 HK), Link Net (LINK IJ).

FTSE Straits Times Index (STI): Quiddity Primer

By Janaghan Jeyakumar, CFA

FTSE Straits Times Index (STI) (STI INDEX) consists of the 30 largest companies listed in the Singapore Stock Exchange (SGX).
This is one of the well-known national blue-chip indices in the Asia-Pacific region.
In this insight, we will have a look at the selection criteria and the historical price performance of past Rebalance Events.

3Q Dividend Estimates of Those with SSF for Cash & Carry Arb in Korea

Juice for cash & carry arbitrage doesn’t seem like much. Several names in contango, but the basis widening isn’t at a sufficiently arb-tradable level.
Reverse cash & carry isn’t all that attractive either, but it certainly does offer more juice, even with borrow fees. Ssangyong C&E, SKT, Shinhan, and KB deserve our attention.
A bit uncertain is whether the pattern of “LONG Spot until ex-dividend and Conversion to Short” through cash & carry will repeat itself this time.

OZ Minerals Could Get an Improved Offer from BHP

Bloomberg reported that BHP Group Ltd (BHP AU) has been considering raising its bid for OZ Minerals Ltd (OZL AU). OZ is pushing BHP to increase its offer to A$30.
The OZ Board has a strong justification for a higher offer as BHP’s acquisition of OZ would tick the boxes of future-facing commodities and potential operational synergies.
Rio Tinto Ltd (RIO AU) recently increased its bid to minority shareholders of Turquoise Hill Resources (TRQ CN). This increases the probability that BHP will return with a sweetened offer.

That’s It Then As Link Admin Rejects D&D’s Revised Terms

After 23 months of negotiations, various bids from various parties, culminating in a protracted on-again, off-again, negotiation with Dye & Durham, Link Administration (LNK AU) has called it a day.
D&D arguably did the right thing and tabled a revised proposal to account for any enforcement process after the UK’s FCA raised redress payments. Link has rejected the revised terms.
Link will now pursue an in-specie distribution of a minimum of 80% of Link’s shareholding in PEXA Group (PXA AU).

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Sep 18

Daily Brief Event-Driven: A Walkthrough of Hyundai Department Store Demerger Event and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

A Walkthrough of Hyundai Department Store Demerger Event
Last Week in Event SPACE: NTT, Frasers Hospitality, Genting/Macau, United Tractor, Arb Shockers
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Moya, Singapore Medical, Link Admin, Giordano,111 Inc, VNET
Hyundai Department Store & Hyundai Greenfood To Conduct Equity Spin-Offs to Create Holdcos & Opcos

A Walkthrough of Hyundai Department Store Demerger Event

This is an equity spinoff where the existing shareholders receive shares in the spun-off company. But this creates two LISTED companies. In such a case, there won’t be appraisal rights.
PASSIVE’s selling flow towards the trade suspension tends to be offset by ACTIVE’s buying flow aiming for value accretion. So, developing a timely entry/exit between these opposing flows is critical.
Holdco’s 30% rule dynamic generally, in relative terms, leads to an increase in the value of Opco’s stake and a decline in the value of Holdco’s stake.

Last Week in Event SPACE: NTT, Frasers Hospitality, Genting/Macau, United Tractor, Arb Shockers

NTT (9432 JP) results were better than Softbank Corp’s and KDDI’s. The good “drift trade” may still be to be long NTT vs a basket of KDDI and Softbank Corp.
The Frasers Hospitality (FHT SP) Scheme failed. The non-vocal minority simply didn’t show up. Maybe apathy. Maybe a holiday season. Maybe lack of premium paid encouraged people to not vote.
In a surprise move, Genting Bhd (GENT MK)– or Genting Malaysia (GENM MK) – has joined the six incumbents in bidding for new casino licences in Macau.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Moya, Singapore Medical, Link Admin, Giordano,111 Inc, VNET

There are 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals were discussed this week: Anthoni Salim’s Exit Offer for Moya Holdings Asia (MHAL SP); 111 Inc (YI US)‘s MBO, and Singapore Medical (SMG SP)‘s MBO.
Key updates took place for Frasers Hospitality Trust (FHT SP),Link Administration (LNK AU), Giordano International (709 HK), Shidax Corp (4837 JP), and VNET (VNET US).

Hyundai Department Store & Hyundai Greenfood To Conduct Equity Spin-Offs to Create Holdcos & Opcos

By Douglas Kim

On 16 September, Hyundai Dept Store and Hyundai Greenfood announced that they will complete equity spin-offs to create holding companies structures.
It appears that the real reason these companies are trying to set up these structures maybe to raise the control by the major shareholders including Ji-Seon Chung and Kyo-Seon Chung.
The spin-off ratio between the two companies is 23.24% for Hyundai Department Store Holdings and 76.76% for Hyundai Department Store.

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Sep 17

Daily Brief Event-Driven: Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction
Hitachi Metals (5486) Gets SAMR Clearance, Finally. So Now We Can Sell.
Shanghai/Shenzhen Southbound Connect: Weekly Moves (15 September 2022)
IStyle’s @Cosme Gets a Boost from Amazon Investment
Liquid Universe of European Ordinary and Preferred Shares: September ‘22 Report
Shanghai/Shenzhen Northbound Connect: Weekly Moves (15 September 2022)

Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction

In August, Janaghan Jeyakumar, CFA published his leaderboard and flow estimates for the FTSE Taiwan Dividend+ Rebalance which starts today and runs through next Thursday.
Late in August, I recommended a basket trade. Since then, the BUY basket has outperformed the SELL basket by 7.6%. Set & Forget it is up 7.2%.
I provided timing in the basket trade. Now it is time to swing the other way.

Hitachi Metals (5486) Gets SAMR Clearance, Finally. So Now We Can Sell.

Today before the open, China’s State Administration for Market Regulation (SAMR) finally announced the approval of the takeover of Hitachi Metals (5486 JP). This was what delayed things.
The approval had actually been issued on 7 September, and the collected approvals in the week to the 12th were announced today. Some media outlets had the info yesterday.
I expect it is likely that the Bain Tender Offer to buy Hitachi Metals will be announced today after the close, or at latest, early next week.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (15 September 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, the net inflow over the past week was ~US$0.33bn, split (+US$0.16bn) for Shanghai and (+US$0.17bn) for Shenzhen.
The largest inflows were into Tencent (700 HK) and China Mobile (941 HK). The largest outflows were in Hang Seng H Share Index ETF (2828 HK) and Geely (175 HK).

IStyle’s @Cosme Gets a Boost from Amazon Investment

By Michael Causton

Japan’s cosmetics market is the focus of attention from many large international businesses thanks to strong sales and new growth businesses.
The latest is Amazon, which is to become the biggest shareholder in Istyle Inc (3660 JP), providing a major boost to the @Cosme operator.
IStyle, meanwhile, plans to offer cosmetics brands the chance to open popup stores within its retail chain for fixed monthly fees.

Liquid Universe of European Ordinary and Preferred Shares: September ‘22 Report

Since mid-August, spreads have shown a mixed performance across our liquid universe with a slight bias towards tightening (with the exception of German shares, which have generally widened).
Trade recommendations long ords / short prefs: Fuchs Petrolub, SSAB Svenska Stal.
Recommendations Long prefs / short ords: Sixt, VW, MFE-Media for Europe, Grifols, Atlas Copco.

Shanghai/Shenzhen Northbound Connect: Weekly Moves (15 September 2022)

Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net inflow over the past week was ~US$1.9bn, split between Shanghai (+US$1.1bn) and Shenzhen (+US$0.8bn).
The largest inflows were into Kweichow Moutai (600519 CH) and S.F. Holding (002352 CH). The largest outflows were in China Merchants Bank A (600036 CH) and CATL (A) (300750 CH).

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Sep 16

Daily Brief Event-Driven: SBI (8473) Buys Back Into ARUHI (7198) In Partial Tender Offer and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

SBI (8473) Buys Back Into ARUHI (7198) In Partial Tender Offer
Genting Fancies A Flutter In Macau
SAIC’s Unconditional Offer For Dongzheng Now Open
KOSDAQ 150 Early Entry Candidates for December Rebalancing
S.M.Entertainment – Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)
Dongzheng’s Unconditional MGO at HK$1.2430 Opens
EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX
TIGER Battery ETF (WISE) Rebalancing in October

SBI (8473) Buys Back Into ARUHI (7198) In Partial Tender Offer

Yesterday, SBI Holdings (8473 JP) announced it would launch a tender offer to buy 33.4-51% of Aruhi Corp (7198 JP) at ¥1,500/share – a 48.5% premium to the close.
ARUHI – Japan’s largest “mortgage bank” – was listed in late 2017. Long ago, its predecessor was named SBI Mortgage. This is SBI buying back in.
Inside we look at valuations, shareholder structure, pro-ration. There are opportunities here.

Genting Fancies A Flutter In Macau

In a surprise move, Genting Bhd (GENT MK) – or Genting Malaysia (GENM MK) – has joined the six incumbents in bidding for new casino licences in Macau.
The bidding process follows Macau’s record low monthly gaming revenue in July after casinos were closed for 12 days in response to a Covid outbreak.
Casinos have re-opened, yet there is little to cheer about as business remains muted. The six winners are expected to be announced by the end of November or early December.

SAIC’s Unconditional Offer For Dongzheng Now Open

Back on the 19 May, SAIC (600104 CH) acquired China Zhengtong Auto Services (1728 HK)‘s 71.04% stake in Dongzheng Automotive Finance (2718 HK) at a judicial auction. This triggered the mandatory Offer.
SAIC confirmed a possible unconditional mandatory cash Offer for Dongzheng on the 26 May.
The Composite Doc has now been dispatched. The Offer is open for tendering and closes on the 16 October

KOSDAQ 150 Early Entry Candidates for December Rebalancing

HPSP (403870 KS) and Sungeel Hitech (365340 KS) are the candidates for Early Entry in the December rebalancing as they sit comfortably within the Early Entry zone.
Rsupport (131370 KS) and Kona I (052400 KS) are safe deletion bets. If they are not deleted through the rebalancing process, they will most likely be excluded by Early Entry.
HPSP and SungEel should see an inflow equivalent to 0.9x and 0.8x ADTVs, respectively. Rsupport and Kona I will likely suffer an outflow of 3.4x and 3.8x ADTVs, respectively.

S.M.Entertainment – Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)

By Douglas Kim

After the market close today, S.M.Entertainment announced that its Chairman Lee Soo Man will end the contract with Like Planning, a contents producing company owned by Lee Soo Man.
We estimate that S.M.Entertainment has paid more than 160 billion won to Like Planning in the past 10 years.
By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in the coming weeks.

Dongzheng’s Unconditional MGO at HK$1.2430 Opens

Dongzheng Automotive Finance (2718 HK)‘s composite document is out with the offer open from 15 September to 6 October. The IFA considers the offer to be fair and reasonable.
SAIC Motor (600104 CH), which acquired a 71.04% stake, has launched an unconditional MGO at HK$1.2430 per H Share. SAIC intends to maintain Dongzheng’s listing status.
At the last close and the 17 October payment, the gross and annualised spread to the MGO price is 1.1% and 13.3%, respectively.

EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX

By Simon Harris

HSI INDEX is trading back down to recent lows and support levels. It looks oversold and there are potential catalysts for a bounce
Implied vols are low and options offer a great way to play a tactical long
We highlight a relative value vol trade vs the SPX

TIGER Battery ETF (WISE) Rebalancing in October

The rebalancing trading will be at the close on October 13. The AUM currently amounts to ₩1.32T with 28 constituents, implying that the passive impacts wouldn’t be insignificant.
It will likely show a similar pattern to the last rebalancing. With no constituent change, weight adjustment by 10% cap of top stocks leads to weight adjustment of the rest.
An important variable here is the entry of newly listed stocks. SungEel Hitech and Sebitchem, the two larger cap stocks, appear to have a reasonably high inclusion probability.

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Sep 15

Daily Brief Event-Driven: Atlas Arteria Placement – How to Lose Friends and Alienate Your Largest Shareholder and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Atlas Arteria Placement – How to Lose Friends and Alienate Your Largest Shareholder
SET50 Index Rebalance Preview: Three Potential Changes in December
Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion
Ramsay’s Bait-And-Switch KKR Offer Heads for the Exit
VNET: Management’s Low-Balled Non-Binding Proposal
Moya Holding’s S$0.092 Delisting Offer
Moya Holdings: Anthoni Salim’s Exit Offer
Australia: S&P/ASX, FTSE, REMX, GDXJ Flows This Friday
NTT (9432) Buyback Has Come – But NTT Is Gonna Grind Out Better EPS So I’d Keep It
EQD | Volkswagen (VOW3 GY): Porsche IPO Could Unlock Value-We Look at the Best Derivative Trades

Atlas Arteria Placement – How to Lose Friends and Alienate Your Largest Shareholder

By Sumeet Singh

Atlas Arteria (ALX) aims to raise around US$2bn (A$3bn) via a non-renounceable entitlement offer to fund the purchase of its majority interest in Chicago Skyway.
Over the past few months, ALX has garnered interest from IFM which has increased its stake to 19.99%. IFM had publicly opposed this acquisition.
In this note, we will talk about the deal dynamic and run the deal through our ECM framework.

SET50 Index Rebalance Preview: Three Potential Changes in December

The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) started on 1 September and will end 30 November.
We currently see one high probability change and two lower probability changes to the index at the upcoming rebalance.
There are a couple of lower probability adds/deletes that will have between 3-5 days of ADV to trade from passive funds and could be interesting from a trading angle.

Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion

Atlas Arteria (ALX AU) is acquiring 66.67% in Skyway Concession Company LLC, the concessionaire of the Chicago Skyway for an equity value of US$2.013bn (A$3.098bn).
The acquisition will be funded by a fully underwritten 1:1.95 ANREO to raise A$3.098bn. The offer price of A$6.3/share is a 13.7% discount to TERP and 19.3% discount to last.
The increase in market cap could result in Atlas Arteria (ALX AU) being added to the S&P/ASX 50 Index at the December rebalance.

Ramsay’s Bait-And-Switch KKR Offer Heads for the Exit

KKR cannot improve the terms of its offer but left the door open by stating that a deal can be quickly closed if the Board is willing to reset expectations.
The transaction is stuck in an impasse as Ramsay Health Care (RHC AU) will not recommend KKR’s offer until it is improved, and KKR says it cannot improve terms.
The peers’ shares have been, on average, flat since the undisturbed date. The shares are trading slightly below the undisturbed price and are attractive on fundamentals.

VNET: Management’s Low-Balled Non-Binding Proposal

Back on the 11 April, Chinese internet data center services provider VNET (VNET US) announced a non-binding proposal from Hina Group and Shanghai’s Industrial Bank at an utterly underwhelming US$8.00/ADS.
Then crickets. A reported tilt from MBK Partners failed to materialise.
VNET has now announced a preliminary non-binding proposal from founder Josh Sheng Chen, at a similarly underwhelming price of US$8.20/ADS.

Moya Holding’s S$0.092 Delisting Offer

Moya Holdings Asia (MHAL SP) received a delisting proposal from Tamaris Infrastructure (a 72.84% shareholder) at S$0.092 per share, a 41.5% premium to the undisturbed price (8 September).
The key condition is shareholder approval. Gateway Partners, which holds a blocking stake, will likely use the offer as an opportunity to exit an underperforming investment.
The offer price is attractive. At the last close price, the gross and annualised spread for a year-end effective date is 3.4% and 11.5%, respectively.

Moya Holdings: Anthoni Salim’s Exit Offer

Indonesian water treatment play Moya Holdings Asia (MHAL SP) has announced an Exit Offer from Tamaris Infrastructure, an Anthoni Salim-controlled entity.
The Offer price is S$0.092/share, a 41.5% premium to last close. The Offer price will not be increased.
The Offer requires approval from 75% of disinterested shareholders. Tamaris and its concert parties hold 72.84%.

Australia: S&P/ASX, FTSE, REMX, GDXJ Flows This Friday

Changes to the S&P/ASX indices, FTSE All-World/All-Cap, VanEck Vectors Rare Earth/Strategic Metals (REMX US) and VanEck Vectors Junior Gold Miners (GDXJ US) will be implemented at the close on Friday.
There are quite a few stocks that have over 5 days of ADV to trade from passive trackers. Pre-positions will be built up on a lot of names.
Short interest has increased on a lot of additions/upweights and decreased on the deletions/downweights.

NTT (9432) Buyback Has Come – But NTT Is Gonna Grind Out Better EPS So I’d Keep It

NTT announced a buyback in May as discussed in NTT (9432) – Salutary Earnings Salutary Buyback, More to Go, via ToSTNeT-3 to buy a chunk of the govt’s stake.
That will be executed by ToSTNeT-3 buyback pre-open tomorrow, with a bid of 103.1725mm shares at ¥3,877. A separate report suggests the Ministry of Finance will sell 92mm shares.
It is like a mini tender offer so if you want to sell a large chunk of shares, you can. But I wouldn’t.

EQD | Volkswagen (VOW3 GY): Porsche IPO Could Unlock Value-We Look at the Best Derivative Trades

By Simon Harris

Volkswagen are planning to IPO Porsche in order to address company valuation and to raise funds to further expand into the EV market.
The stock looks attractive on a valuation basis and the company has the potential to transform and future proof the business and gain a more favourable P/E ratio.
We look at the Derivatives Market for the best risk reward strategies.

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Sep 14

Daily Brief Event-Driven: Link Admin/D&D Deal Appears Toast As The Woodford Shoe Drops and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Link Admin/D&D Deal Appears Toast As The Woodford Shoe Drops
Frasers Hospitality Trust Scheme Vote Fail – Minority Apathy Meets Vocal Minority. Units Drop Hard.
Giordano’s VGO Lapses
PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes
VNET’s Opportunistic US$8.20 Bid from the Founder
Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program
Link’s Scheme on Life Support as the FCA Lands a Heavy Blow
Arb Carnage As Giordano’s Offer Also Fails
111 Inc’s Low-Balled Homecoming Is A Done Deal
Teniralc/Cary Group: Final Offer

Link Admin/D&D Deal Appears Toast As The Woodford Shoe Drops

The UK Financial Conduct Authority will approve Dye & Durham’s Offer for Link Administration (LNK AU) provided it backstops restitution and/or redress payments that the FCA may levy on …
… Link Fund Solutions Limited (LFSL) in relation to its management of the Woodford Fund. The amount? Up to a maximum ~A$523mn.
The FCA decision is not final. LFSL does not agree with its view. If D&D does not accept this commitment then a condition under the Scheme may not be satisfied.

Frasers Hospitality Trust Scheme Vote Fail – Minority Apathy Meets Vocal Minority. Units Drop Hard.

In a somewhat extraordinary turn of events, the Scheme Meeting for the Frasers Hospitality Trust (FHT SP) takeover did not garner enough votes to get to YES.
About 3% of units (about 8% of minorities) came out against. But only 18.8% of minorities actually voted. The deal has failed. The bidders can’t come back for a while.
The units are trading down nearly 25% today as a result. This is cheap against both hospitality and major S-REIT peers. Inside, I discuss Overhang and Divs.

Giordano’s VGO Lapses

The offeror and acceptances reached 46.04%, just short of the 50% minimum acceptance condition. The offeror has decided to let the Giordano International (709 HK) offer lapse.
The offer fell short of the 50% threshold as the Cheng family mistakenly assumed that shareholders behind Halycon’s stake were friendly shares, which would support the offer.
The downside will be muted as the shares are trading in line with the 1-year average forward P/E, minorities thought the offer was low, and David Webb is a buyer.

PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes

From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
This could result in three deletions from the index which will result in three stocks being added to the index. Passive trackers selling the deletes will push the stocks lower.
The three current constituents could remain in the index if they sell stock to increase the free float. That would in turn put downward pressure on the stocks.

VNET’s Opportunistic US$8.20 Bid from the Founder

21Vianet Group (VNET US) disclosed a privatisation proposal from the founder at US$8.20 per ADS, a 2.5% premium to The Hina Group/Industrial Bank’s offer of US$8.00 (disclosed on 11 April).
The data centre industry continues to be a hotbed for M&A. Bloomberg reported on 27 July that MBK Partners is mulling an offer for VNET.
The offer is unattractive, and Mr Cheng, with 28.79% of voting rights, will need the support of other substantial shareholders. This latest offer underlines the current mispricing of the shares

Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program

Canon Inc (7751 JP) has announced two buyback programs this year of ¥50bn each. Ricoh Company Ltd (7752 JP) announced one in May for ¥30bn.
The result is 2.9% bought back vs 4.4%. The accretion nod goes to Ricoh. But so does the overhang nod going forward. Effissimo+Crossholders is 40% for Ricoh. Mid20s for Canon.
Buyback impact-related trade timing has worked for Canon. Ricoh’s buyback ends imminently. There may be a trade to do here.

Link’s Scheme on Life Support as the FCA Lands a Heavy Blow

FCA approval, a condition precedent, will be granted subject to a condition that Link Administration (LNK AU) makes funds available to cover any redress payments related to the Woodford matters.
The FCA’s maximum redress payment is £306 million. The timeline and amount of the final FCA fine remain unknown. Dye&Durham/DND and Link will struggle to find a resolution.
With a 30 September end date, the deal is teetering on collapse. The share price may prove attractive for long-term value investors as it reflects a sizeable FCA fine.

Arb Carnage As Giordano’s Offer Also Fails

Utter carnage in arb-world this week, as Frasers Hospitality Trust (FHT SP) fails, Link Administration (LNK AU) and Ramsay Health (RHC AU) are potentially next, and now Giordano (709 HK).
46.04%. That’s the only number that matters, which represents the total shares owned by the Cheng family plus shares tendered.
The Chengs are restricted from launching another Offer for 12 months. Giordano will be sold off today, however, this is a buy if it retraces to around the undisturbed levels.

111 Inc’s Low-Balled Homecoming Is A Done Deal

111 Inc (YI US), an online healthcare platform operator in China, announced an unsolicited preliminary non-binding proposal from Gang Yu and Junling Liu – both co-founders and co-chairmans.
Yu and Liu are offering US$3.66/ADS, a 20% premium to the undisturbed price.
Yu and Liu control 92.1% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.

Teniralc/Cary Group: Final Offer

In light of low acceptances and a cold statement from the independent bid committee, Teniralc increased the offer by 7.7% to SEK 70/share (same as IPO, 17.2x EV/EBITDA).
The increased offer is final, represents a 72% premium and has been unanimously recommended. The acceptance period now runs until 22 September.
As of 12 September closing share price, gross spread is 4.2%, an interesting level, in my view, considering settlement will take place “on or about 30 September”. Reiterate Long CARY SS.

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Sep 13

Daily Brief Event-Driven: Frasers Hospitality Trust’s Scheme Votes Unexpectedly Falls Short and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Frasers Hospitality Trust’s Scheme Votes Unexpectedly Falls Short
India: AMFI Stock Reclassification Preview (Dec 2022)
SHiDAX Board-Oisix-Shida Family Scrap
STAR50 Index Rebalance Preview: Four or Five Changes in December
Tencent : A Long but Use Options to Mitigate Any Broader Market Risks
MVIS Vietnam Index Rebalance: One Add, Two Deletes
KODEX Battery ETF Rebalancing: Target Weight & Qty in CU of Each Constituent
Tullow/Capricorn: Unsuitable on Current Terms
United Tractors (UNTR IJ) Buyback – One Month To Go
PropertyGuru SPAC Lock-Up – Two PE’s with a US$450m Stake Are Stuck with a Liquidity Conundrum

Frasers Hospitality Trust’s Scheme Votes Unexpectedly Falls Short

Frasers Hospitality Trust (FHT SP)’s scheme just fell shy of clearing the value test as 74.88% of the total votes cast approved the scheme resolution vs the 75% requirement.
The shares were trading tight to terms as Frasers Property Ltd (FPL SP)’s offer of S$0.714 comprising of S$0.70 cash per share + permitted distributions (estimated 1.356 cents) was attractive.
We estimate that the surprising deal break will likely lead to a 15-20% share price fall. The last close price is around 24% higher than the undisturbed price (S$0.57).

India: AMFI Stock Reclassification Preview (Dec 2022)

Less than halfway through the review period, we see 6 stocks moving from MidCap to LargeCap and vice versa, and 7 stocks moving from SmallCap to MidCap and vice versa.
There are a bunch of stocks that are close to the cutoff ranks and there will be more change as we move deeper into the review period.
Over the last 6months, stocks expected to migrate upward have outperformed stocks that are expected to migrate downward. Given the large divergence, there will be a pullback at some point.

SHiDAX Board-Oisix-Shida Family Scrap

Shidax Corp (4837 JP) is under offer for a partial tender by Oisix ra daichi (3182 JP). Unison Capital is expected to tender their shares.
Unison may not want to go against the board but a direct transfer (i.e. not tender offer) is still possible.
Some Independent Board Members have suggested the company buy Unison’s shares back. This might work BUT the end game is still the same.

STAR50 Index Rebalance Preview: Four or Five Changes in December

Nearly 90% of the way through the review period, we see 4 changes using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.
There are overlaps in the inclusions using 6/12 month minimum listing history, so there is less risk if the index committee switches from 6 to 12 months at the review.
Using a 6 month minimum listing history, one-way turnover is estimated at 5.07% and will result in a one-way trade of CNY 2,795m.

Tencent : A Long but Use Options to Mitigate Any Broader Market Risks

By Simon Harris

Derivative trade ideas to maintain upside/protect downside in Tencent. Stock is cheap but risks remain
Take advantage of a retracement in implied vols and depressed skew levels to improve payoffs and protect against broader market risk
We look at 3 alternative trades depending on your position and outlook

MVIS Vietnam Index Rebalance: One Add, Two Deletes

Hagl Jsc (HAG VN) is an inclusion while An Phat Holdings (APH VN) and CEO Group (CEO VN) are deletes from the MVIS Vietnam Index at the September rebalance.
There are a lot of float and capping changes that will result in one-way turnover of 12% and a one-way trade of US$45m.
There are a lot of stocks that have over 1 day of ADV to trade and there could be opportunities to enter/exit positions on a move in the stocks.

KODEX Battery ETF Rebalancing: Target Weight & Qty in CU of Each Constituent

KODEX Battery ETF rebalancing began on September 8 and runs until this Tuesday, the 14th. Its AUM is 1.3 trillion won, and the number of constituents is only 25.
The quantity change in one CU for the 13th was confirmed. Tomorrow’s are estimates based on equal daily weights. With still two-thirds to go, the flow/price impact looks still juicy.
SK Innovation, L&F, LG Energy, and Ecopro will show a significant size in weight change and passive flow, so they are safe names for a LONG SHORT basket trading.

Tullow/Capricorn: Unsuitable on Current Terms

On 9 September, Capricorn’s closing share price was at a c. 29% premium vs. merger terms (186.46p); scheme approval seems tricky. Capricorn has signaled it is open to explore other transactions.
To rebalance the exchange equation, Tullow should offer at least 4.904043 TLW LN x 1 CNE LN, which would change the balance of power (Capricorn 51.8%, Tullow 48.2%).
Cash makes up to 72% of Capricorn’s shares, whose latest price movements could either anticipate some statement from Tullow or other “potential outcomes”. I’d be long Capricorn, rather than the spread.

United Tractors (UNTR IJ) Buyback – One Month To Go

In mid-July, United Tractors (UNTR IJ) announced a buyback of up to 5 trillion rupiah, buying back “up to 20% of shares out.”
In United Tractors (UNTR IJ) Buyback – Sure to Be Impactful I said the buyback would be smaller than the headlines, but still likely quite impactful.
On Day 1, shares rose 5% to IDR 28,275. Since then the stock is up an additional 22%. Now we have a month left. There may be more juice still.

PropertyGuru SPAC Lock-Up – Two PE’s with a US$450m Stake Are Stuck with a Liquidity Conundrum

By Sumeet Singh

PropertyGuru (PG) tried to raise around US$300m when it undertook a merger with Bridgetown 2 SPAC in Mar 2022.
The transaction valued PropertyGuru at an EV of US$1.35bn and equity value of US$1.78bn. It is now trading at less than half that valuation and with very limited liquidity.
In this note, we will talk about the lock-up dynamics and updates since our last note.

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Sep 12

Daily Brief Event-Driven: 111’s Opportunistic US$3.66 Bid from the Co-Founders and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

111’s Opportunistic US$3.66 Bid from the Co-Founders
Backtesting Implications: Korea Sector ETFs Rebalancing on the 8th
Merger Arb Mondays (12 Sep) – DTAC/True, Link Admin, Ramsay, Genex, Tyro, EVOC, Giordano, 111
Repsol: Sale of 25% of E&P Division

111’s Opportunistic US$3.66 Bid from the Co-Founders

111 Inc (YI US), the largest virtual pharmacy network in China, disclosed a privatisation proposal from a co-founder-led consortium at US$3.66 per ADS, a 20.0% premium to the undisturbed price.
For privatisation to succeed, shareholders representing two-thirds of shares present and voting need to approve the deal. The co-founders represent 92.04% of the total voting power.
The offer price is unattractive but this is a done deal. At the last close, the gross and annualised spread for a January 2023 completion is 11.6% and 33.4%, respectively.

Backtesting Implications: Korea Sector ETFs Rebalancing on the 8th

Compared to the tightly crowded KOSPI 200, the sector ETFs’ rebalancing flow trading appears relatively less crowded, which led to a significantly higher flow/price correlation on the rebalancing day.
The KRX now delivers the rebalancing results of the KRX Sector & K-New Deal Indexes only to paying customers. This can increase the profit effect of acquiring prior information.
So, safe play, which builds up a position from the time this information is acquired, rather than an aggressive preemptive position build-up, can still obtain a sufficient level of juice.

Merger Arb Mondays (12 Sep) – DTAC/True, Link Admin, Ramsay, Genex, Tyro, EVOC, Giordano, 111

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Genex Power Ltd (GNX AU), Infomedia Ltd (IFM AU), 111 Inc (YI US).
Lowest spreads – Tyro Payments (TYR AU), Nitro Software Ltd (NTO AU), Nearmap Ltd (NEA AU), Dongzheng Automotive Finance (2718 HK), MyDeal.com.au Ltd (MYD AU), MACA Ltd (MLD AU).

Repsol: Sale of 25% of E&P Division