Event-Driven Archives | Page 75 of 173 | Smartkarma

Today after the close, Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) announced a three-way merger for Nov 1.
Kenedix Office REIT (KDO) will be the surviving entity, and what is now three REITs of ¥150-250bn in size will become one diversified REIT of ¥630-650bn.
That will trigger a size uplift and should also trigger index inclusion.

Potential Delisting of 5 Preferred Stocks in Korea at End of June

In this insight, we discuss the increasing likelihood of delisting of five preferred stocks in Korea at end of June.
These five preferred stocks are as follows: Samsung Heavy Industries Pref, SK Networks Pref, DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B.
Because the combined market cap of these five preferred shares is 37 billion won, it will have only a minor, positive impact on their common counterparts.

Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names

The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week’s seminar served as a proactive way to inform the market about it.
The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies’ treasury stock holdings.
Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.

KOSDAQ150 Ad Hoc Index Rebalance: HFR (230240) To Replace BH (090460)

Following Bh Co Ltd (090460 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with HFR Inc (230240 KS).
The change will be implemented at the close on 19 June and passive trackers will need to trade over 1x ADV on both stocks.
We had HFR Inc (230240 KS) as a potential replacement candidate and there could be pre-positions built up on the stock.

Kenedix Merger: Office, Residential, Retail & Index Implications

Kenedix Office Investment Co, Kenedix Residential Investment and Kenedix Retail REIT have announced a three-way absorption merger to create Kenedix Realty Investment Corporation.
The increased size and liquidity of the merged entity will put the stock on the radar of active investors and there could be a re-rating higher.
There will be some passive flows into the merged entity at the time of merger implementation and this will help the stock outperform its peers.

Tesserent (TNT AU)’s Offer From Thales

Cybersecurity firm Tesserent Ltd (TNT AU) has announced it has entered into a Scheme with France’s Thales SA (HO FP).
Thales is offering A$0.13/share, a whopping 165% premium to last close. Although, TNT is down 87% from its January 2021 high.
The Offer is conditional on TNT shareholder approval and FIRB/OIO approvals. Those regulatory approvals will not be straightforward.

HSTECH Index Rebalance Preview (Sep): One Change or Two?

We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

Hailan (2278 HK): Yeung Bets On Shareholder Apathy

Back on the 8 May, small-cap PRC property play Hailan Holdings (2278 HK) announced a voluntary Offer from Yueng Man, Hailan’s controlling shareholder.
The Offer Price is HK$3.38/share, a miserly 5% premium to last close, and a 60% discount to the RNAV. The Composite Doc is now out.
The key condition is Yueng getting 90% of disinterested shareholders to tender. That looks a stretch, yet minorities are disengaged. Not one has turned up at the last three AGMs.

Kenedix Office Investment (8972 JP): Merger with Kenedix Residential and Kenedix Retail REIT

The merger ratio is 0.67 Kenedix Office Investment Co (8972 JP)/KDO units per Kenedix Residential Investment (3278 JP)/KDR unit and 0.84 KDO units per Kenedix Retail REIT (3453 JP)/KRR unit.
The merger is sensible due to scale (the merged entity will be the third-largest J REIT by asset size), expansion opportunities and improved capital recycling.
The merger requires approval from all three sets of unitholders. We think this is likely as the deal metrics are fair for all three sets of unitholders.

Tesserent (TNT AU): Thales’s A$0.13 Offer

Tesserent Ltd (TNT AU) has entered into a scheme implementation deed with Thales SA (HO FP) at A$0.13 per share, a juicy 165.3% premium to the undisturbed price (9 June).
The offer is subject to several conditions such as shareholder, FIRB and OIO approval. FIRB approval is likely due to Australia and France being part of the Nine Eyes alliance.
Despite the substantial premium, shareholders’ acceptance of the offer could be a risk due to their higher buy-in prices. At the last close, the gross spread is 8.3%.

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Jun 13

Daily Brief Event-Driven: MVIS Australia Equal Weight Index Rebalance: Two Deletions & Other Changes and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MVIS Australia Equal Weight Index Rebalance: Two Deletions & Other Changes
Conscious De-Stapling With Uplift – The Abacus Property (ABP) Storage Spinoff
Lutronic (085370 KS): Hahn & Co Tender Offer
Keisei Electric: Distorted Valuation Unveils Opportunity for Activist Investors
Seino (9076) – More Seino, Seino More. Know What I Mean? Eh Eh? Seino Goes Big on Capital Policy
HSCEI Index Rebalance Preview: Two Changes Likely in September
MVIS Australia A-REITs Index Rebalance: Float & Capping Changes
Hailan Holdings (2278 HK): Conditional Offer Open but Success Is Daunting
Brookfield to Buy Network International

MVIS Australia Equal Weight Index Rebalance: Two Deletions & Other Changes

Ansell Ltd (ANN AU) and Challenger Ltd (CGF AU) will be deleted from the MVIS Australia Equal Weight Index at the close of trading on 16 June.
One way turnover is 5.9% resulting in a one-way trade of A$107m. Only the two deletions have more than 1 day of ADV to sell from passive trackers.
With the passive selling between 33-50% of short interest on the deletions, there could be short covering at the close on Friday.

Conscious De-Stapling With Uplift – The Abacus Property (ABP) Storage Spinoff

Back in February with the H1 results announcement, Abacus Property (ABP AU) announced an intention to spin off an ASX-Listed Self Storage REIT with A$3bn in total assets.
The stock popped 7.4% to A$3.06 but is -16% since. In April they dropped their equity holding in National Storage REIT (NSR AU), in May they updated again.
Last week they had a big new Investor Presentation saying they would go ahead. There’s a trade in here.

Lutronic (085370 KS): Hahn & Co Tender Offer

On 9 June, skin and cosmetic treatment play Lutronic Corp (085370 KS) announced a Tender Offer from Korean PE outfit Hahn & Company.
After acquiring 19.41% from Lutronic’s CEO at ₩ 36,700, Hahn will launch an Offer for all remaining shares at the same price.
This Offer Price is a lifetime high. There is no minimum tendering condition.

Keisei Electric: Distorted Valuation Unveils Opportunity for Activist Investors

By Oshadhi Kumarasiri

Surpassing the pre-COVID average of 49%, the NAV discount currently stands at 61%, implying potential 12% market-neutral returns in the short-term through the recovery of the core transportation business.
Activist investor influence in distributing Keisei Electric’s ¥1,980bn Oriental Land (4661 JP) stake to existing shareholders could unleash over 150% potential upside, surpassing the earlier mentioned 12% gain.
Thus, there is high likelihood of Keisei Electric Railway Co (9009 JP)‘s continued outperformance over Oriental Land in the medium term.

Seino (9076) – More Seino, Seino More. Know What I Mean? Eh Eh? Seino Goes Big on Capital Policy

Three years ago, Seino Holdings (9076 JP) delivered a lot of its cash back to shareholders in a big buyback. They bought back almost 15mm shares (7.5%).
Since then, they’ve bought another 2.5%. In February, they changed their Dividend Policy to max(2.4% DOE, 30% payout ratio). Then they set a cap and floor on the dividend.
Four months later they have a new MTMP, and a new Dividend Policy. Simple. 4.0%+ DOE. Div +70% vs last year. Oh… and there’s an 11% buyback.

HSCEI Index Rebalance Preview: Two Changes Likely in September

Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK).

MVIS Australia A-REITs Index Rebalance: Float & Capping Changes

The upcoming rebalance of the MVIS Australia A-REIT Index will be implemented at the close on 16 June. There are no constituent changes, but there are float and capping changes.
Estimated one-way turnover at the rebalance is 2.7% resulting in a one-way trade of A$16.6m. There is limited impact on the index constituents.
The largest inflows are on Scentre Group, HomeCo Daily Needs REIT and Region Re, while the largest outflows are on Stockland, Mirvac Group, Dexus Property and Goodman Group.

Hailan Holdings (2278 HK): Conditional Offer Open but Success Is Daunting

Hailan Holdings (2278 HK)‘s voluntary conditional offer from its controlling shareholder at HK$3.36 per share is open. The IFA opines that the offer is fair and reasonable.
The offer is subject to a 90% minimum acceptance condition – the offeror holds at least 90% of the offer shares and the disinterested shares.
The acceptance condition is daunting due to the high hurdle rate and the lack of a bump. The current gross spread of 5.0% equals the premium to the undisturbed price.

Brookfield to Buy Network International

By Jesus Rodriguez Aguilar

Network International Holdings (NETW LN) and a Brookfield Asset Management Lt (BAM US)-led consortium agreed on a 400p/share cash offer (64% premium, 12.9x EV/Fwd EBITDA) to be implemented via a scheme of arrangement.
Network is no longer grossly undervalued. The 9 June closing share price of 383p represents an 89% chance of completing the deal (based on the 245p close price).
Synergies have not been quantified, but may explain why Brookfield’s consortium has been able to trump CVC. Spread is 4.25%/8.92% (gross/annualised, assuming settlement by 15 December). Long.

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Jun 12

Daily Brief Event-Driven: MVIS Global Rare Earth/Strategic Metals Index Rebalance: Three Adds; Float & Capping Changes and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Three Adds; Float & Capping Changes
MVIS US Listed Semiconductor 25 Index Rebalance: Chipping Away
Quiddity HSTECH Sep 23 Flow Expectations: Two ADDs/DELs Possible
Weekly Deals Digest (11 Jun) – Toshiba, Chindata, Yitai Coal, Eoflow, Estia, Origin, Amman Mineral
Quiddity HSCEI Sep 23 Flow Expectations: Two Changes Likely, US$276mn One-Way
Mason Group (273 HK): Privatisation Bid at HK$0.0338 Per Share
Merger Arb Mondays (12 Jun) – Chindata, Mason, Yitai, Toshiba, Estia, Origin, Musgrave, Toyo
Mason (273 HK): Red Emerald’s Scheme

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Three Adds; Float & Capping Changes

There are 3 inclusions for the MVIS Global Rare Earth/Strategic Metals Index at the June rebalance. Plus there are free float and capping changes.
One way turnover is estimated at 10.6% and will result in a one-way trade of US$66m. There are a few stocks with over 0.5 days of ADV to trade.
Yunnan Chihong Zinc&Germanium Co, Ltd. (600497 CH) was not added to the index while ioneer Ltd (INR AU) has avoided deletion in June.

MVIS US Listed Semiconductor 25 Index Rebalance: Chipping Away

The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 16 June. There are no constituent changes, but there are float and capping changes.
The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$9.26bn.
Estimated one-way turnover is 3.9% resulting in a one-way trade of US$358m. The stocks are extremely liquid, the impact on the stock in terms of ADV to trade is small.

Quiddity HSTECH Sep 23 Flow Expectations: Two ADDs/DELs Possible

In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in September 2023.
Based on the latest available data, I see two ADDs and two DELs.
For the September 2023 rebalance, I expect one-way capping flows to be around US$234mn.

Weekly Deals Digest (11 Jun) – Toshiba, Chindata, Yitai Coal, Eoflow, Estia, Origin, Amman Mineral

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Amman Mineral Internasional (1416286D IJ), Tata Technologies (TATATECH IN), JD Industrials (2231713D CH) IPOs.
Event-Driven developments – Toshiba Corp (6502 JP), Chindata Group (CD US), Eoflow (294090 KS), Inner Mongolia Yitai Coal Company Ltd (3948 HK), Estia Health (EHE AU), Origin Energy (ORG AU).

Quiddity HSCEI Sep 23 Flow Expectations: Two Changes Likely, US$276mn One-Way

In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in September 2023.
Based on the latest available data, I expect two ADDs and two DELs for HSCEI in the September 2023 Rebalance.
I estimate one-way flow to be US$276mn. Only the two ADDs and two DELs involved in the index changes are likely to have more than one day to trade.

Mason Group (273 HK): Privatisation Bid at HK$0.0338 Per Share

Mason Group Holdings (273 HK) announced a privatisation offer from Red Emerald Capital at HK$0.0338 per share, a 20.7% premium to the undisturbed price of HK$0.0280 per share (30 May).
The key conditions are SFC approval and the scheme being approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The offer price has not been declared final.
Four shareholders hold a blocking stake – three have provided irrevocables while the other will accept due to the attractive ROI. Therefore, there is a clear pathway to completion.

Merger Arb Mondays (12 Jun) – Chindata, Mason, Yitai, Toshiba, Estia, Origin, Musgrave, Toyo

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads 111 Inc (YI US), Mason Group Holdings (273 HK), United Malt Group Ltd (UMG AU), HKBN Ltd (1310 HK), Silk Laser Australia (SLA AU), Chindata Group (CD US).
Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Musgrave Minerals (MGV AU), Lian Beng (LBG SP), Toyo Construction (1890 JP), Mincor Resources NL (MCR AU).

Mason (273 HK): Red Emerald’s Scheme

After broker Mason Group (273 HK) was suspended pursuant to Hong Kong’s Takeovers Code on the 31 May, it has now announced a privatisation by way of Scheme at HK$0.0338/share.
The Offer price is only a 20.7% premium to last close, and a 12.7% premium to the three-month average closing price. It has not been declared final.
The Offeror is Red Emerald. Shareholders with 47.55% of shares out have given irrevocables in support of the Scheme.

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Jun 11

Daily Brief Event-Driven: MVIS Global Junior Gold Miners Index Rebalance: Big Float & Capping Changes and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MVIS Global Junior Gold Miners Index Rebalance: Big Float & Capping Changes
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- China Bouncing Back
Index Rebalance & ETF Flow Recap: HSCI, GDXJ, KRX New Deal, AMFI, Amman Mineral, Infratil
Last Week in Event SPACE: Toshiba, China Resources Power, Chindata, Tian An China
Early Preview of KOSDAQ 150 Ad-Hoc Change in July: Hydro Lithium Will Replace NICE IS
(Mostly) Asia-Pac Weekly Risk Arb Wrap: ENM, Estia Health, Yitai Coal, and Challenger Technologies

MVIS Global Junior Gold Miners Index Rebalance: Big Float & Capping Changes

The changes to the MVIS Global Junior Gold Miners Index (MVGDXJ) were announced on 9 June and will be implemented at the close on 16 June.
Though there are no constituent changes, changes to free floats and capping factors will result in an estimated one-way turnover of 6.26% and in a one-way trade of US$251m.
The largest passive inflows will be in Alamos Gold (AGI US), Kinross Gold Corp (KGC US), Endeavour Mining (EDV CN), B2Gold Corp (BTG US) and Centerra Gold (CG CN).

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- China Bouncing Back

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

Index Rebalance & ETF Flow Recap: HSCI, GDXJ, KRX New Deal, AMFI, Amman Mineral, Infratil

The changes for the KOSPI2 INDEX, KOSDAQ150 Index, CSI300 Index, STAR50 INDEX and a bunch of other onshore China indices were implemented last week.
The coming week has a lot of rebalance implementations on Friday with the S&P/ASX family and the MVIS family, among others.
AUM for the Yuanta/P-shares Taiwan Top 50 ETF (0050 TT) has continued to increase with big inflows in the last week.

Last Week in Event SPACE: Toshiba, China Resources Power, Chindata, Tian An China

Toshiba Corp (6502 JP)‘s Board has a Revised Opinion. It has recommended the Offer for reasons which smack of resignation rather than appropriate deliberation. Investors beware.
Given CR Power (836 HK)‘s clean energy unit’s profitably, a listing should be a significant event, attracting a wide audience, and probably a premium to other listed green energy plays.
Chindata Group (CD US) is unquestionably cheap. But Bain’s indicative Offer is not the answer to long-suffering shareholders.

Early Preview of KOSDAQ 150 Ad-Hoc Change in July: Hydro Lithium Will Replace NICE IS

Hydro Lithium (formerly Korea Se Corp) is the top reserved issue in INDUSTRIALS and will get to replace NICE IS as a result of the KOSPI transfer listing.
The most significant price movements occur when the index corporate action announcement is made. However, some investors hunt for this pattern, as observed in the case of Youlchon Chemical.
Hence, it’s worth considering an earlier entry timing. To minimize uncertainty, it’s vital to keep an eye on the preemptive price increase of Hydro Lithium before KRX’s approval.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: ENM, Estia Health, Yitai Coal, and Challenger Technologies

There are 38 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed on Smartkarma this week: Chinachem’s Offer Enm Holdings (128 HK); Bain’s non-binding Offer for Chindata Group (CD US).
Key updates took place for Estia Health (EHE AU), Inner Mongolia Yitai Coal Company Ltd (3948 HK), and Challenger Technologies (CHLG SP).

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Jun 10

Daily Brief Event-Driven: KWEB Index Rebalance: Few Changes at the Close Today and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

KWEB Index Rebalance: Few Changes at the Close Today
Trading Plays for the Unexpected Tender Offer to Lutronic Corp Shareholders
StubWorld: Tian An In AGL’s Crosshairs
Details of the Lutronic Tender Offer M&A by Hahn & Company
Concordia/Rothschild: Simplified Offer Filing
Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

KWEB Index Rebalance: Few Changes at the Close Today

The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading today.
There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.
The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.

Trading Plays for the Unexpected Tender Offer to Lutronic Corp Shareholders

Retail investors hold the majority of shares at 60%, and they may be interested in participating in the second tender offer based on their accumulated learning effect.
Based on the observed behavior of Hahn & Co, it’s unlikely that they will walk away from the delisting plan.
We need to consider going long on the potential upward adjustment of the second tendering price. This play can be viewed as a call option with a floor at ₩36,700.

StubWorld: Tian An In AGL’s Crosshairs

Allied (373 HK) took Allied Properties (H.K.) (56 HK) private in 2020, followed by SHK Hong Kong Industries (666 HK) in 2021. Now it’s Tian An China (28 HK)‘s turn.
Preceding my comments on Tian An and AGL are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Details of the Lutronic Tender Offer M&A by Hahn & Company

In this insight, we provide details of the Lutronic tender offer M&A by Hahn & Company.
We believe that Hahn & Co is likely to successfully complete this M&A tender offer of Lutronic.
In our view, most of the shareholders of Lutronic are likely to tender their shares, given the sharp share price appreciation and reasonable tender offer premium.

Concordia/Rothschild: Simplified Offer Filing

By Jesus Rodriguez Aguilar

Concordia has filed the draft offer memorandum and started acquiring Rothschild & Co (ROTH FP) shares in the market (limit c.8.2 million) to ensure success. All regulatory approvals have been obtained.
The adjusted offer price is €46.6/share, or €38.6/share (ex-extraordinary distribution, 7.6x NTM Fwd P/E, rather cheap, in my view), which will enable the concert to partly finance the offer.
For comparison, Greenhill is being taken at 18.5x Fwd P/E. Nevertheless, I believe the offer will be accepted. Spread is 0.75%/2.78% (gross/annualised).

Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

By Victor Galliano

The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos
This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management
BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell

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Jun 09

Daily Brief Event-Driven: Toshiba – Tendering Now Recommended and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Toshiba – Tendering Now Recommended
Toshiba (6502 JP): Risk/Reward as Board Unconvincingly Recommends JIP’s Offer
Toshiba’s Board Buckles Under – As Things Stand, Board Supports and Recommends JIP Offer
Amman Mineral IPO: Offering Details & Index Inclusion
Tian An China Investments (28 HK): Trading Halt, Privatisation by Allied Group?
Merger of PGA Tour, DP World Tour, & LIV Golf – Impact on Fila Holdings and Acushnet
Liberty/Telenet: Opening of Acceptance Period

Toshiba – Tendering Now Recommended

By Mio Kato

Toshiba announced today that its board had shifted stance on JIP’s upcoming tender and would recommend shareholders tender.
The special committee will review its opinion on the tender offer and based on that the company will offer another opinion when the tender commences.
Despite peers rising 13-30% since April an offer price increase still looks unlikely.

Toshiba (6502 JP): Risk/Reward as Board Unconvincingly Recommends JIP’s Offer

Toshiba Corp (6502 JP) Board now recommends shareholders accept Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share. The Board also effectively rules out a bump.
The Board unconvincingly recommends the offer in part on the premise that the IFA’s DCF valuation is unrealistic due to punchy forecasts and positive feedback from stakeholders.
The Board fails to consider that the peers have materially re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers’ multiples.

Toshiba’s Board Buckles Under – As Things Stand, Board Supports and Recommends JIP Offer

In March, when the JIP Offer for Toshiba Corp (6502 JP) was announced, the Toshiba Board supported the Offer but declined, at the time, to recommend it to shareholders.
“[The price] has clearly not reached the level at which it is possible to recommend to general shareholders that they tender their shares at this time.” That was then.
10 weeks later and the Board has a Revised Opinion. It has recommended the Offer for reasons which smack of resignation rather than appropriate deliberation. Investors beware.

Amman Mineral IPO: Offering Details & Index Inclusion

Amman Mineral Internasional (1416286D IJ) is offering 7.288bn shares in its IPO at a price range of IDR 1650-1775/share to raise between US$808-870m and valuing the company between US$8.08-8.7bn.
The stock will not get fast entry to global indices or local Indonesia indices (IDX30 Index/ LQ45 Index/ IDX80 Index).
With listing planned for 5 July, the earliest index inclusion will be in December and there are no near-term passive flows expected for the stock.

Tian An China Investments (28 HK): Trading Halt, Privatisation by Allied Group?

Tian An China Investment (28 HK) and Allied (373 HK) entered a trading halt “pursuant to The Hong Kong Code on Takeovers and Mergers.” Allied owns 55.72% of Tian An.
It is likely that Allied Group is seeking to privatise its subsidiary Tian An. Tian An’s other substantial shareholders have a history of sell-downs which facilitate an offer.
Allied Properties (H.K.) (56 HK)/APL’s partial offer for Tian An in 2011 and Allied’s privatisation of APL in 2020 point to a 20.8%-34.3% premium or HK$5.01-5.57 per share offer.

Merger of PGA Tour, DP World Tour, & LIV Golf – Impact on Fila Holdings and Acushnet

In the past several days, one of the biggest news in the global sports industry has been the merger of PGA Tour, DP World Tour, and LIV Golf.
We believe that this merger is likely to have a positive impact on the global golf industry, including on Fila Holdings (081660 KS) and Acushnet Holdings (GOLF US).
If this merger successfully completed this year, there is a good possibility of a pick-up in golf related equipment sales and profits for Acushnet and Fila Holdings starting 2024.

Liberty/Telenet: Opening of Acceptance Period

By Jesus Rodriguez Aguilar

Telenet has announced the publication of the prospectus. The Board of Directors of Telenet has prepared a response memorandum in which it sets out its recommendation of the Offer.
The offer is opportunistic and optically generous, with neither interloper risk nor sweetening to be expected. I believe most investors will cash out. Liberty could eventually drop the acceptance threshold.
Given the ambiguity surrounding both the company and the sector in Belgium, I still think Liberty might acquire Telenet for almost a bargain. Spread is 2.38%/19.8% (gross/annualised).

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Jun 08

Daily Brief Event-Driven: Chindata (CD US): Bain Capital’s Low-Balled Privatisation Offer and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Chindata (CD US): Bain Capital’s Low-Balled Privatisation Offer
AMFI Stock Reclassification Preview (June 2023): Significant Outperformance
Estia Health (EHE AU): Bain Capital’s Revised A$3.20 Offer
Estia Health: Bain Capital Ups Its NBIO
KRX New Deal Index Rebalance Preview: A Change for Each Index
Is Bain Permitted To Take Over Chindata?

Chindata (CD US): Bain Capital’s Low-Balled Privatisation Offer

Chindata Group (CD US) disclosed a preliminary non-binding proposal from Bain Capital at US$8.00 per ADS, a 27.4% premium to the undisturbed price of US$6.28 per ADS.
For privatisation to succeed, shareholders representing two-thirds of the shares present and voting need to approve the deal. The offeror represents 87.39% of the total voting power.
While the offer is unattractive, Bain Capital’s voting rights ensure that the vote will pass. The key risks are regulatory approvals and timing.

AMFI Stock Reclassification Preview (June 2023): Significant Outperformance

We see 8 stocks moving from MidCap to LargeCap, 9 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 10 stocks from MidCap to SmallCap.
Following a strong listing, Mankind Pharma (6596876Z IN) should be added to the Large Cap segment of the market in July.
The expected migrations from SmallCap to MidCap have outperformed the other migrations by a huge margin over the last couple of months and there could be profit taking ahead.

Estia Health (EHE AU): Bain Capital’s Revised A$3.20 Offer

Estia Health (EHE AU) has received a revised non-binding indicative proposal from Bain Capital at A$3.20 per share, a 6.7% premium to the previously rejected offer of A$3.00 per share.
The revised offer is attractive in comparison to historical share prices and multiples. The offer is also attractive in comparison to the Japara Healthcare (JHC AU) precedent transaction.
Bain has been granted exclusive due diligence. Bain’s reengagement suggests a committed bidder. Expect a binding offer. At the last close, the gross spread is 10.3%.

Estia Health: Bain Capital Ups Its NBIO

On the 23 March, aged care provider Estia Health (EHE AU) announced Bain Capital’s $3.00/share non-binding proposal. 12 days later, Estia rejected this indicative Offer.
Bain has returned with a A$3.20/share proposal, inclusive of a fully franked dividend up to A$0.12/share. A process deed has been entered into, and exclusive due diligence has been granted.
Trading at a gross spread of 10.7% with an indicative completion in early 4Q23.

KRX New Deal Index Rebalance Preview: A Change for Each Index

The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
There is one change currently for each of the Secondary Battery, Bio, Internet and Game indices. Large stock price moves mean no changes for the BBIG Index currently.
Douzone Bizon (012510 KS) has flipped from a passive sell to a passive buy over the last month and the stock could move higher from here.

Is Bain Permitted To Take Over Chindata?

Chinese data centre outfit Chindata (CD US) has no end of alleged suitors, rumoured to include SOE-backed China Merchants, GDS (GDS US), PE outfit PAG, and EQT (EQT SS)-backed EdgeConneX.
Now Bain Capital, Chindata’s largest shareholder with 42.17% (and 87.39% of the voting power) has made a non-binding proposal of $8/share per ADS, a 33% premium to last close.
Chindata’s board has made no decision on the proposal. It’s hardly a knockout Offer. But the key question is whether Bain will get regular approval to take Chindata private.

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Jun 07

Daily Brief Event-Driven: No Foreigner ID/Trade Report Obligation Starting Dec 14: Impact on Event Trading in Korea and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

No Foreigner ID/Trade Report Obligation Starting Dec 14: Impact on Event Trading in Korea
Alibaba Potential IPOs – The Final Part – Quick Look at Investees and Eventual Holdco
Infratil (IFT NZ): NZ$850m Placement & Index Implications
CR Power (836 HK): Upside From Clean Energy Spin-Off
Lifedrink Company (2585 JP) Ascends to TSE Prime and TOPIX But An Offering Produces Overhang
Higher Private Market Valuation of SK On: Positive Impact on SK Innovation
Challenger Technologies (CHLG SP): Unconditional and Final Offer at S$0.60
Quiddity Flow Expectations for DAX Jun 23 Rebal: Evotec Is the Main Surprise
Challenger Tech: Offer Bumped & Declared Final
Tencent Investee Selldown – JD.com Done, Meituan Done, Two More Still Left

No Foreigner ID/Trade Report Obligation Starting Dec 14: Impact on Event Trading in Korea

The abolition of the foreign investor registration system was approved in a Cabinet meeting. They will be promulgated on June 13th and implemented starting December 14th of this year.
This change is not just about reducing administrative tasks, as it also eliminates the reporting obligations of foreign investors, thereby reducing their position exposure risk.
This could improve event outcome and price prediction accuracy. Therefore, it is crucial to keep a close eye on event trading when this measure takes effect in December.

Alibaba Potential IPOs – The Final Part – Quick Look at Investees and Eventual Holdco

By Sumeet Singh

On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
In this note, we will talk about some of the company’s investments and how the overall Holdco would look post restructuring.

Infratil (IFT NZ): NZ$850m Placement & Index Implications

Infratil Ltd (IFT NZ) is acquiring Brookfield Asset Management Lt (BAM US)‘s 49.95% stake in One NZ for NZ$1.8bn. This will be partly funded through a NZ$850m placement.
There will be a NZ$750m underwritten placement at NZ$9.2/share (an 8.9% discount to the last close) and a retail offering of NZ$100m.
There will be passive buying from index trackers post the completion of the placement and the settlement of the shares and that will remove some of the overhang.

CR Power (836 HK): Upside From Clean Energy Spin-Off

Late March, SOE-backed power play China Resources Power Holdings Co Ltd. (836 HK) announced it intends to spin off its energy unit via an A-share listing.
Shares gained 4.9% on the news – gains which were promptly given back over the ensuing fortnight.
Renewable energy profits have been the driving force behind CRP’s bottom line strength the last two years. But how best to assign a value to the remaining loss-making thermal ops?

Lifedrink Company (2585 JP) Ascends to TSE Prime and TOPIX But An Offering Produces Overhang

On 1 June, Lifedrink (2585 JP), which listed in early 2022, announced it would move to TSE Prime in late June, leading to a TOPIX inclusion in late July.
The offset to that was an announcement of an offering, whereby the PE Fund which brought the company to market would sell up to 3.87mm shares, effectively doubling float.
The offering is larger than the TOPIX inclusion. The stock fell the next day, rebounded, then rebounded 11% Monday. Now it’s up more and hit a lifetime closing high.

Higher Private Market Valuation of SK On: Positive Impact on SK Innovation

It has been reported that SK On received 1.2 trillion won investment from a consortium led by MBK Partners and SNB Capital, valuing SK On at about 25 trillion won.
Our SoTP valuation of SK Innovation suggests a target price of 274,738 won per share, which represents a 38% higher levels than current price.
SK Innovation’s 96.5% stake in SK On (24.1 trillion won in value) is 130% higher than SK Innovation’s current market cap.

Challenger Technologies (CHLG SP): Unconditional and Final Offer at S$0.60

Challenger Technologies (CHLG SP) has disclosed a final voluntary unconditional offer from Dymon Asia and the Loo Family at S$0.60 per share, a 7.1% premium to the previous S$0.56 offer.
As predicted, the offer followed the recent SGX unconditional offer playbook – a lowball offer followed by declaring the offer final after a cursory bump.
The modest offer premium will still leave minorities aggrieved. Hitting the 90% compulsory threshold implies a minority acceptance rate of 31.3%. At the last close, the gross spread is 3.4%.

Quiddity Flow Expectations for DAX Jun 23 Rebal: Evotec Is the Main Surprise

The June 2023 index changes for the DAX index family were confirmed after the close yesterday.
As expected, there were no changes announced for the DAX index.
There will be four changes for MDAX, one change for SDAX, and one change for TecDAX.

Challenger Tech: Offer Bumped & Declared Final

After consumer electronics retailer Challenger Technologies (CHLG SP) announced a voluntary unconditional cash offer of S$0.56/share on the 30 May, it has closed through terms every day.
At a 3.1% and 4.3% to undisturbed and one-month VWAP, the Offer was low-balled. The Offeror (Dymon Asia and Challenger’s CEO Loo Leong Thye) have now bumped to S$0.60/share.
The price has been declared final. It is still only a 9.1% premium to undisturbed. But it is a lifetime high.

Tencent Investee Selldown – JD.com Done, Meituan Done, Two More Still Left

By Sumeet Singh

Tencent has been busy distributing shares in some of its investments over the past two years, with JD.com’s distribution announced in 2021 and Meituan’s in 2022.
In our earlier note in 2022, Tencent Investee Selldown – The US$120bn Global Overhang, we had looked at its overall investment portfolio.
With two of its large investments spun-out, we now re-look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.

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Jun 06

Daily Brief Event-Driven: ENM (128 HK): Chinachem Takeover and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ENM (128 HK): Chinachem Takeover
TOPIX Inclusions: Who Is Ready (Jun 2023)
Yitai Coal (3948 HK): Offer Open with H Share Class Meeting on 30 June
EOFLOW/Medtronic Tender: Risk/Reward Profile
Nikkei 225 Sep 2023 Review – Still Fastie, Nitori, Zozo, and Lasertec as Interesting Names
Austal (ASB AU): Privatisation on the Cards?
Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June

ENM (128 HK): Chinachem Takeover

Fashion wear retailer ENM Holdings (128 HK) has received a delisting Offer from major shareholder, Chinachem.
The Scheme consideration of HK$0.58 is a 24.7% premium to last close, although shares popped 24% prior to suspension.
The Offer price is final. There is probably enough here for the Offer to get up. But there is potentially significant value to be unlocked from recent land rezoning.

TOPIX Inclusions: Who Is Ready (Jun 2023)

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Zuiko Corp (6279 JP), Anycolor (5032 JP), and Lifedrink (2585 JP) will have TOPIX Inclusion events at the end of June (Zuiko) or July 2023 (the other two).
One of our pre-event TOPIX Inclusion candidates CELSYS (3663 JP) has experienced sharp price moves over the last few weeks.

Yitai Coal (3948 HK): Offer Open with H Share Class Meeting on 30 June

Inner Mongolia Yitai Coal Company Ltd (3948 HK)‘s H Share buyback offer at HK$17.50 per H Share is open. The H class meeting is on 30 June.
The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is a 90% minimum acceptance condition.
The de-rating of the peers, likely supportive substantial H Shareholders and no major retail opposition should help hit the 90% threshold. At the last close, the gross/annualised spread is 4.7%/23.9%.

EOFLOW/Medtronic Tender: Risk/Reward Profile

Medtronic Plc (MDT US) aims to acquire Eoflow (294090 KS) through share purchase agreements (SPA), a share subscription agreement (SSA) and a public tender offer at KRW30,000.
The shares are trading wide to terms due to key risks – regulatory approvals and the minimum acceptance condition (Medtronic owns 53.02% of the post-SSA outstanding shares).
The regulatory approvals should be forthcoming due to minimum competition issues. The minimum acceptance condition requires a minority acceptance rate of 15.7%, which is achievable due to an attractive offer.

Nikkei 225 Sep 2023 Review – Still Fastie, Nitori, Zozo, and Lasertec as Interesting Names

The Nikkei 225 Sep 2023 review has 2 months left of data collection. That means the rankings are quasi-fixed. So then the question is what to do with them.
There is a consultation in progress. You still have one week to respond, but that doesn’t change the names.
The top inclusion is the big one in dollar terms but low in liquidity. The next two are likely to be consumer names, and much more impactful.

Austal (ASB AU): Privatisation on the Cards?

Media reports indicate that Austal Ltd (ASB AU) is in the crosshairs of investors looking to take the company private.
In an announcement, Austal Ltd (ASB AU) said it is regularly involved in discussion with strategic parties to create value for shareholders.
The recent large contract from the US Navy, potentially more contracts in the pipeline and a weak AUD could result in investors paying up to take the company private.

Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June

Back on the 9 May, Inner Mongolia Yitai Coal Company Ltd (3948 HK) announced an H-share buyback at HK$17.50/share.
With no pre-conditions attached to this hybrid Scheme/Tender Offer, my expectation was this could be wrapped up by mid-August.
The dispatch of the Offer Document yesterday evening indicates even this timeline was conservative, with payment potentially occurring in the third week of July.

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Jun 05

Daily Brief Event-Driven: HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September
Quiddity TDIV/50/100 Jun 23 Rebal: 15/18 as Expected; Some Surprises, US$1.1bn+ One Way
Nexon Founder Family Hands Over 4.7 Trillion Won Worth of NXC to Korean Government
ENM Holdings (128 HK): Privatisation Bid at HK$0.58 Per Share
Merger Arb Mondays (05 Jun) – Golden Eagle Retail, ENM, AAG, Yashili, Golden Energy, Challenger Tech
Weekly Deals Digest (04 Jun) – Golden Energy, Challenger, ENM, Golden Eagle Retail, Amman Mineral

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September

Fenbi Ltd (2469 HK) was added to the Hang Seng Composite Index (HSCI) at the close Friday and will be added to Southbound Stock Connect from open of trading today.
We see 22 potential adds, 19 potential deletes, couple of close deletes, 5 deletes on prolonged suspension and 4 close liquidity deletes for the HSCI in September.
There are 11 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.

Quiddity TDIV/50/100 Jun 23 Rebal: 15/18 as Expected; Some Surprises, US$1.1bn+ One Way

In this insight, we take a look at the final ADDs/DELs for the TDIV, T50, and T100 Indices for the June 2023 Rebalance.
Across these three indices there will be 18 changes and 15 of them were in line with expectations.
Our updated flow expectations show that there could be US$1.1bn one-way flow in the June 2023 rebalance.

Nexon Founder Family Hands Over 4.7 Trillion Won Worth of NXC to Korean Government

The late Nexon founder Kim Jung-Ju’s family recently paid nearly 4.7 trillion won worth of inheritance taxes to the Korean government by handing over 29.3% stake (paid-in-kind) in NXC Corp.
We view this handing over the 29.3% stake to the Korean government to be positive overall on Nexon in the near term.
However, we do not expect this could bring about change in controlling ownership of the Nexon Group in the near term to result in re-rating of the Nexon Group shares.

ENM Holdings (128 HK): Privatisation Bid at HK$0.58 Per Share