Event-Driven Archives | Page 83 of 187 | Smartkarma

Following the two tender offers, Han & Co now holds more than 90% of the common shares in Lutronic Corp (085370 KS) and is looking to buy the remaining shares.
Lutronic Corp (085370 KS) is a member of the KOSDAQ 150 Index and delisting would mean an index replacement. Value Added Technologies (043150 KS) is a potential inclusion.
Value Added Technologies (043150 KS) has underperformed its peers and trades cheaper on nearly all valuation parameters.

Smartkarma Webinar | Top Trade Ideas in European Event-Driven

By Smartkarma Research

In the next installment of our Webinar series, we go live with Smartkarma Insight Provider Jesus Rodriguez Aguilar.
He will be sharing with us his top trade ideas and insights in the European event-driven space.
From current opportunities, to what we can expect next in the region, join us as we get the full picture from Jesus.

The webinar will be hosted on Wednesday, 23 August 2023, 17:00 SGT/HKT.

Register for the Webinar here

Jesus Rodriguez Aguilar is an Event-Driven Analyst looking across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations.

StubWorld: AviChina Is Coming Up “Cheap”

As a PRC aviation/defense play, AviChina Industry & Technology H (2357 HK)‘s fundamentals are undemanding.
Preceding my comments on AviChina 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%.

Liquid Universe of European Ordinary and Preferred Shares: August‘23 Report

By Jesus Rodriguez Aguilar

Since mid-July, spreads have not followed a clear pattern across the European liquid universe of ordinary and preferred shares (9 have tightened, 9 widened, 1 at same level).
Spreads could further widen in the short-term. Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, Schindler, SSAB Svenska Stal.
Recommended trades long preferred / short ordinary shares: Carlsberg, Media-for-Europe, Sixt, VW, Grifols, Atlas Copco.

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Aug 15

Daily Brief Event-Driven: Japan Post Bank (7182) – The October TOPIX FFW Adjustment and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Japan Post Bank (7182) – The October TOPIX FFW Adjustment
Japan Post Holdings (6178) Starts Its Bigly Buyback With a Sale from the MOF-Boffins
Brilliance China (1114 HK): Driving Back Into Passive Portfolios
[Update] Tax-Loss Selling In Australia – Closing the Circle on the Rebound Trade
UnitedHealth/EMIS: Provisional Clearance, Estimated Timeline
EQD | SPX MONTHLY Proxy Supports for APAC Markets

Japan Post Bank (7182) – The October TOPIX FFW Adjustment

Japan Post Bank (7182 JP) was effectively re-IPOed in March when Japan Post Holdings (6178 JP) offered more than a BILLION shares against the 400mm shares then in float.
It was a huge offering. A huge increase in float. Lots of immediate liquidity. A PERFECT opportunity for the TSE to do an ad hoc FFW change. But they didn’t.
Then in June they lowered the FFW (on a technicality). That leaves a big upweight in October. In this insight we measure the opportunity.

Japan Post Holdings (6178) Starts Its Bigly Buyback With a Sale from the MOF-Boffins

In March 2023, Japan Post Holdings (6178 JP) sold ¥1.1trln of shares in Japan Post Bank (7182 JP), lowering its stake considerably, raising float. There will be a TOPIX upweight.
In May, with earnings, they announced their intention to buy back ¥300bn of shares or up to 10% of shares out. Today, they announced the details. ¥300bn through March end.
In a ¥300bn ToSTNeT-3 tomorrow, the govt will sell back ¥105.7bn. That leaves a residual worth examining. So we examine.

Brilliance China (1114 HK): Driving Back Into Passive Portfolios

Brilliance China Automotive (1114 HK) was deleted from local and global indices following its prolonged trading suspension from April 2021 to September 2022.
Following the resumption of trading, Brilliance China Automotive (1114 HK) was added to the HSCI in March and subsequently to Southbound Stock Connect.
The stock should be bought by global passive trackers over the next few months and there should be substantial passive inflows.

[Update] Tax-Loss Selling In Australia – Closing the Circle on the Rebound Trade

Originally, this was an analysis of tax-loss selling baskets over the years, and seasonal performance of baskets of stocks with certain attributes. On average, they fell vs index.
Of course, on average, they also rose vs index after the selling was done.
This insight puts a cap on the 2023 edition with results across the four baskets. The sell made 4.2% vs ASX200 in May, then is up

UnitedHealth/EMIS: Provisional Clearance, Estimated Timeline

By Jesus Rodriguez Aguilar

The CMA provisionally found that the acquisition of EMIS Group PLC (EMIS LN) may not result in a substantial lessening of competition. Final decision to be published on 5 October.
The Court sanctioning could take place on 16 October. The scheme would become effective on 17 October. Assuming settlement by 31 October, spread is 0.99%/4.81% (gross/annualised).
Assuming a break of 1,292p, the market is pricing a 97% probability of deal completion (vs. 6% by 15 June).

EQD | SPX MONTHLY Proxy Supports for APAC Markets

By Nico Rosti

The 2023 multi-month rally in APAC markets started roughly in autumn 2022, in sync with the US market rally, then stalled when the US market began to pull back.
We propose an analysis of the S&P500 MONTHLY, to find support levels to be used as a proxy for predicting APAC bloc’s markets supports.
Main forecast: August/September could be down, but the current MRM pattern reading is bullish – the correction (currently at Q2 supports) should not last beyond end of September.

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Aug 14

Daily Brief Event-Driven: The Brand Spanking New Extra Spiffy 🦄H/A-Share Discount/Premium Weekly (As of 11 Aug 2023) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

The Brand Spanking New Extra Spiffy 🦄H/A-Share Discount/Premium Weekly (As of 11 Aug 2023)
L’Occitane (973 HK): Board Updates on the Potential Offer Structure and Price
Itochu Takeout of Daiken (7905) – Too Low at ¥3,000/Share But May Be Tough To Oppose
Where & How to Check CFD Trading Data Starting Sept 1st
MVIS Australia Equal Weight Index Rebalance Preview: Deletes, Close Deletes, Capping Changes
Weekly Deals Digest (13 Aug) – Toshiba, Kyoden, Eoflow, Chindata, Estia, InvoCare, OreCorp, Origin
MVIS Australia A-REITs Index Rebalance Preview: One Delete, One Close Delete & Capping
Daiken Corporation (7905 JP): Itochu’s JPY3,000 Tender Offer
Merger Arb Mondays (14 Aug) – Eoflow, Chindata, OreCorp, Origin, Estia, InvoCare, Daiken, Kyoden
EQD | Nikkei 225 (NKY) WEEKLY Resistance Targets

The Brand Spanking New Extra Spiffy 🦄H/A-Share Discount/Premium Weekly (As of 11 Aug 2023)

This is the Brand Spanking New and Extra Spiffy H/A-Share Discount/Premium Weekly designed to help investors see the relationships easily. We used to do it.
We decided to bring it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 19 Trade Recommendations.
We hope this new version serves readers even better. Feedback is actively solicited to see if we can improve it from here.

L’Occitane (973 HK): Board Updates on the Potential Offer Structure and Price

In response to media speculation, L’Occitane (973 HK) has clarified that Reinold Geiger, the Chairman and the largest shareholder, is contemplating a possible transaction through a voluntary general offer.
However, the rumoured offer of HK$35 per share is false. Mr Geiger has confirmed that the potential offer price would be no less than HK$26.00 per share.
The floor price of HK$26 is light and needs a bump (towards HK$30), particularly if Mr Geiger wants 95% of voting rights to exercise the right of compulsory acquisition (squeeze-out).

Itochu Takeout of Daiken (7905) – Too Low at ¥3,000/Share But May Be Tough To Oppose

Itochu owns 36.3% of building materials and engineering firm Daiken Corp (7905 JP). They have launched a tender with gimmicky Majority-of-Minority to buy the rest at ¥3,000/share, 4.7x FY2024e EBITDA.
That’s low-ish, but given securities holdings, inventory, and net receivables at 4+x EBITDA it’s probably too cheap, but it gets quite close to the minimum threshold just with cross-holders.
This deal price doesn’t include synergies (according to the valuations and the SC) but a bump would need an agitator. Hope alone won’t get it.

Where & How to Check CFD Trading Data Starting Sept 1st

By Sanghyun Park

The CFD balance information (both overall and individual stock) will be provided by KOFIA and KOSCOM, starting from September 1st.
September 1st also marks the day when local brokerages that temporarily suspended CFD trading services will resume them.
With the disclosure of individual stock CFD balances starting from September 1st, there’s a high probability of another volatility turning point.

MVIS Australia Equal Weight Index Rebalance Preview: Deletes, Close Deletes, Capping Changes

There could be two deletes for the index in September. There are two other stocks that are close to the deletion threshold.
Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of around 2.7% and a one-way trade of A$51m.
Short interest has been increasing on Charter Hall (CHC AU) and JB Hi-Fi Ltd (JBH AU) and could be partially driven by potential index deletions.

Weekly Deals Digest (13 Aug) – Toshiba, Kyoden, Eoflow, Chindata, Estia, InvoCare, OreCorp, Origin

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 – Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK) and Lianlian DigiTech (2104619D CH) IPOs.
Event-Driven developments – Eoflow (294090 KS), Kyoden Co Ltd (6881 JP), Toshiba Corp (6502 JP), Metro Pacific Investments Co (MPI PM), Estia Health (EHE AU), Origin Energy (ORG AU).

MVIS Australia A-REITs Index Rebalance Preview: One Delete, One Close Delete & Capping

There should be one deletion from the index in September. And there could be another deletion. And there will be capping changes for a few stocks.
The index changes will lead to a one-way turnover of 2.12% resulting in a one-way trade of A$13m. There is only one stock with over A$5m to trade.
Following the spinoff, Abacus Group (ABG AU) and Abacus Storage King (ASK AU) will be the lowest ranked index constituents and at risk of deletion from the index.

Daiken Corporation (7905 JP): Itochu’s JPY3,000 Tender Offer

Daiken Corp (7905 JP) has recommended Itochu Corp (8001 JP)’s tender offer of JPY3,000 per share, a 28.8% premium to the undisturbed price (10 August).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 31.83% ownership ratio.
The minimum acceptance condition (lower limit) requires a 50.0% minority acceptance rate (majority of minority condition). The tender offer is light vs historical multiples but represents a 5-year high price.

Merger Arb Mondays (14 Aug) – Eoflow, Chindata, OreCorp, Origin, Estia, InvoCare, Daiken, Kyoden

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads Daiken Corp (7905 JP), 111 Inc (YI US), Eoflow (294090 KS), Kyoden Co Ltd (6881 JP), Orecorp Ltd (ORR AU), Symbio Holdings (SYM AU), ENM Holdings (128 HK).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Yaizu Suisankagaku Industry (2812 JP), Allkem Ltd (AKE AU), Itochu Techno Solutions (4739 JP), Penguin International (PBS SP).

EQD | Nikkei 225 (NKY) WEEKLY Resistance Targets

By Nico Rosti

The Nikkei 225 index closed up last week and it has a good probability to rise further this week: the MRM tool has identified the current pattern as “bullish”.
Resistance targets are located past 33500, the index could reach that target this week.
If the index rises for 3 weeks or more, it could breakout from the previous resistance range around 33700, and reach targets past 34000.

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Aug 13

Daily Brief Event-Driven: Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS
Sep 2023 Nikkei 225 Review – Not An Easy Rebal 🤨
Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning – India, Japan, Korea
Last Week in Event SPACE: Toshiba, Hongkong Land, Inpex, L’Occitane
(Mostly) Asia-Pac Weekly Risk Arb Wrap: EOFlow, Invocare, Estia, Metro Pacific, Orecorp, Kyoden

Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS

Chindata Group (CD US) has entered a definite agreement with Bain Capital at US$8.60 per ADS, 7.5% higher than its previous offer of US$8.00 per ADS.
Completion is conditional on shareholder approval, dissenting shareholders representing less than 12% of outstanding shares and any applicable regulatory approvals. The completion conditions should be met.
CMC’s offer, while higher, does not meet the “superior proposal” criterion. At the last close price and December-end completion, the gross and annualised spread is 6.0% and 16.6%, respectively.

Sep 2023 Nikkei 225 Review – Not An Easy Rebal 🤨

The data for the Nikkei 225 Rebalance is cemented as of 31 July 2023. Lasertec Corp (6920 JP) looks like a shoo-in. The DELETEs are obvious too.
Fast Retailing (9983 JP) doesn’t get a cap (yet). But the other ADDs are a real question. It is a matter of interpreting the methodology and qualitative aspects. And FLOAT.
One way, Socionext (6526) and Mercari (4385) are ADDs. Another way, it looks like Nitori Holdings (9843) and ZOZO Inc (3092) or Ryohin Keikaku (7453). FLOAT IS A PROBLEM ANYWAY.

Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning – India, Japan, Korea

The review period for the September rebalance of the S&P/ASX family of indices ends on Friday. There will be a lot of changes across the family.
Hang Seng Indices will announce the changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index and the HSCI after market close on Friday.
There were HUGE inflows to onshore China focused ETFs during the week with CSI 300 Index, CSI 500 Index and SSE50 Index ETFs taking in the largest amounts.

Last Week in Event SPACE: Toshiba, Hongkong Land, Inpex, L’Occitane

The JIP TOB for Toshiba (6502 JP) is here. Finally. It’s still too low. Since the announcement, when it was too low, peers are up a lot, and memory looks healthier.
Hongkong Land (HKL SP) selling Three Exchange Square sounds purely speculative. At best. But it would have a bigly impact on Hong Kong Office sentiment if true.
Inpex (1605 JP) reported 1H results, a change in forecasts, and a bigly buyback. The mechanics are the same. The impact is a bit different, but it’s worth looking at.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: EOFlow, Invocare, Estia, Metro Pacific, Orecorp, Kyoden

I tally 45 – 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 this week: Silvercorp Metals (SVM CN) scrip Offer for Orecorp Ltd (ORR AU); and Kyoden Co Ltd (6881 JP)‘s Tender Offer.
Key updates took place for Invocare Ltd (IVC AU), Estia Health (EHE AU), Toshiba Corp (6502 JP), Metro Pacific Investments Co (MPI PM), and Eoflow (294090 KS).

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Aug 12

Daily Brief Event-Driven: Metro Pacific’s Tender Offer Kicks Off and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Metro Pacific’s Tender Offer Kicks Off

Metro Pacific’s Tender Offer Kicks Off

Back on the 26 April, First Pacific (142 HK) and three other entities, proposed delisting Metro Pacific Investments (MPI PM) at PHP 4.63/share. This was subsequently bumped to PHP 5.20.
A Special Stockholders’ Meeting was held on August 8, and MPI stakeholders approved all the resolutions. An SGM for independent First Pac shareholders will be held on the 24 August.
The Tender Offer is now open and closes on the 7 September, with (expected) settlement on 19 September – provided the Tender Offer delisting conditions are met.

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Aug 11

Daily Brief Event-Driven: Hongkong Land: Exchange Square Sale Would Be BIG News. (If True) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)
StubWorld: Japex/Inpex, Amorepacific, Wynn, Shimao, Takara, Silicon Integrated/United Micro
Two Noteworthy Issues in Korea’s SSF/SSO Selection in September Round
Metro Pacific Investments (MPI PM): Risk/Reward as Uncertainty Hangs on the Delisting Threshold
Quiddity Leaderboard ASX Sep 23: Potential Surprises and Final Thoughts
Beenos: Ramps Up Buybacks

Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)

According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire Hongkong Land (HKL SP)‘s 33-storey Three Exchange Square.
This “news” is straight out of left field. For its part, HKL said the market rumour is pure speculation.
HKL’s P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid.

StubWorld: Japex/Inpex, Amorepacific, Wynn, Shimao, Takara, Silicon Integrated/United Micro

For a change of pace, this insight briefly canvasses a clutch of Holdco’s trading at extreme levels.
Preceding the chart-heavy insight 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%.

Two Noteworthy Issues in Korea’s SSF/SSO Selection in September Round

By Sanghyun Park

Recent information leaked through local media reveals that KRX has ultimately opted not to list Ecopro Co’s SSF in the upcoming September round.
Given the unusually high trading volume of at-the-money (ATM) options in the local SSO market, the market’s interest in covered calls for dividend-yielding stocks can be substantial.
So, we should pay attention to stocks whose SSO is already listed or will be newly listed in September among those that have shifted their ex-dividend dates to post-dividend confirmation.

Metro Pacific Investments (MPI PM): Risk/Reward as Uncertainty Hangs on the Delisting Threshold

Metro Pacific Investments Co (MPI PM)‘s voluntary delisting tender offer from a consortium at PHP5.20 (net price of PHP5.1677 per share) will run from 9 August to 7 September.
The delisting proposal was approved on 8 August. Excluding the consortium’s votes, only 37.4% of minorities (representing 13.73% of outstanding shares) voted YES for the delisting proposal.
A key risk is satisfying the 95% delisting threshold, which would require a minorities acceptance rate of 86.4%. The risk/reward is unattractive at the current spread of 4.4% (net 3.8%).

Quiddity Leaderboard ASX Sep 23: Potential Surprises and Final Thoughts

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the September 2023 Rebalance.
I expect one change for ASX 100 and 3 ADDs and 4 DELs for ASX 200. There could be 11 ADDs and 9 DELs for ASX 300.
ASX 300 member Leo Lithium (LLL AU) is currently suspended from trading and that could have interesting implications for the stock’s ASX 300 membership.

Beenos: Ramps Up Buybacks

By Oshadhi Kumarasiri

Beenos revealed a ¥300m buyback plan in 2QFY23 and recently declared a ¥500m buyback in 3QFY23. This incremental buybacks is likely to continue due to disposal of incubator investments.
The cash balance of 34% of total assets and over 49% of market cap, supports the ongoing buyback trend even if incubator divestments take longer than expected.
Hence, we expect Beenos Inc (3328 JP)’s Holdco discount to move closer to the 20% mark, potentially resulting in a 75% upside in the short term.

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Aug 10

Daily Brief Event-Driven: Insulet Accuses EOFlow Of Stealing Trade Secrets and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Insulet Accuses EOFlow Of Stealing Trade Secrets
Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow
L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?
Amari Ni Mo… NTT (9432)
Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
Kyoden (6881 JP) MBO – An Small, Easy, Illiquid, Light But Not Horribly Unfair Done Deal at ¥600
L’Occitane (973 HK): Ripe for a Makeover?
India – Positioning on Some Interesting Names
InvoCare Agrees To TPG’s Lower Offer
Quiddity Primer for STAR 50 Index Rebalance Events

Insulet Accuses EOFlow Of Stealing Trade Secrets

From the outset, EOFlow (294090 KS) has traded wide (~7% of average) to Medtronic Plc (MDT US)‘s Offer. An apparent delay in filing with Korean regulators formed one argument.
Now there’s a compelling reason. Key insulin pump competitor Insulet (PODD US) has filed a lawsuit accusing EOFlow of the misappropriation of trade secrets, patent infringement, and trademark dilution.
Singapore-Based Flex (FLEX US) and three ex-employees of Insulet are also defendants. This does not bode well for the transaction.

Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow

By Sanghyun Park

This signifies the official commencement of a lawsuit against Eoflow in the United States, which has been considered one of the most significant risks for Eoflow.
Eoflow is externally saying that the aspect of patents claimed by Insulet is actually based on previously expired patents. Hence, Eoflow believes they can win this patent lawsuit.
This lawsuit emerged before the acquisition decision by Medtronic suggesting a need to consider trading the current spread based on the inference that the tender offer is still valid.

L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?

According to Bloomberg, L’Occitane (973 HK) is set to receive a HK$35 per share privatisation offer from Reinold Geiger, the Chairman and the largest shareholder.
The rumoured price is attractive and represents an all-time high share price. Therefore, Acatis KVG, the shareholder with a blocking stake, would be supportive.
The rumoured price implies multiples at a discount to peer multiples, which explains Mr Geiger’s ambitions for a possible European listing to secure higher valuation multiples.

Amari Ni Mo… NTT (9432)

NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn’t. Good. Not great.
But NTT announced a ¥200bn buyback. Again good. Not great.
And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.

Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”

By Douglas Kim

Insulet Corp (PODD US)’s lawsuit against Eoflow (294090 KS) caused a sharp decline in Eoflow’s share price today (down 10.7% to 24,950 won).
Insulet is accusing Eoflow of hiring several senior personnel that have helped Eoflow to develop a product that could take away market share from Insulet.
The most important factor may be Eoflow’s “special sauce” which is some kind of technology/mechanism that allows this 17% greater efficiency/convenience for the wearable EOPatch insulin device.

Kyoden (6881 JP) MBO – An Small, Easy, Illiquid, Light But Not Horribly Unfair Done Deal at ¥600

Today, the personal holding company of Kyoden Co Ltd (6881 JP) founder Hashimoto-san announced a Tender Offer to take the company private.
Together with his company, he owns 64.75%. He only needs 1.93% to tender. The combination of Shokochukin, SMBC, and Yokohama Bank get him over the line.
This is small, illiquid, and will trade tight, but it’s a done deal.

L’Occitane (973 HK): Ripe for a Makeover?

In late 2018, there were reports that French beauty retailer L’Occitane (973 HK) had drawn interest from Advent International. That rumour came to naught.
Similarly, late last month, L’Occitane clarified media reports that it had not received any Offer or proposal.
After going into a trading halt this morning, reportedly (Reuters) Chairman Reinold Geiger has been discussing a possible offer of ~HK$35 for each L’Occitane share he doesn’t already own.

India – Positioning on Some Interesting Names

Power Finance, Astral, IDFC First Bank, Cummins India, HDFC Asset Management, Ashok Leyland, Polycab India and Supreme Industries have all run up over the recent past and have investor attention.
The increase in market cap has put the stocks on active manager radars and could also result in the stocks being added to global indices in the near future.
We take a look at the positioning on the stocks and recommend pair trades to reduce market risk while trying to capture alpha.

InvoCare Agrees To TPG’s Lower Offer

After pitching a A$13/share NBIO on the 15 May, TPG has now inked a Scheme Implementation agreement with InvoCare (IVC AU) at A$12.70/share, inclusive of a A$0.60/share fully franked dividend.
This compares to PE-outfit TPG’s A$12.65/share NBIO on the 7 March – which Australia’s leading funeral services provider InvoCare promptly rejected.
A comparatively benign flu season, and an expected ~10% decline in 1H23 EBITDA, largely account for InvoCare’s change of heart.

Quiddity Primer for STAR 50 Index Rebalance Events

By Janaghan Jeyakumar, CFA

STAR 50 Index represents the performance of the top 50 securities by market capitalization and liquidity listed on the Science and Technology Innovation (STAR) Board of the Shanghai Stock Exchange.
This is one of the most significant indices in Mainland China when considering the average passive AUM per stock as a percentage of float.
In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of STAR 50 index rebalance baskets.

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Aug 09

Daily Brief Event-Driven: 2023 JPX Nikkei 400 Rebal – 38 IN and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

2023 JPX Nikkei 400 Rebal – 38 IN, 36 OUT, 4.2% One Way Flow
Kenedix Merger: Big Passive Inflows on the Cards
Toshiba (6502) Tender Offer – Kioxia Optionality
Zomato Lock-Up – A US$650m+ Worth Acquisition Linked Lockup Release
EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks
KKR/OHB: Agreed Take-Private Offer
What Is KDB’s Plan B for Asiana Airlines?
InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share

2023 JPX Nikkei 400 Rebal – 38 IN, 36 OUT, 4.2% One Way Flow

The Tenth Annual JPX Nikkei 400 Index Review was announced on Monday 7 August. There are 38 Inclusions, 36 Deletions. They are mostly in line with Janaghan Jeyakumar, CFA‘s predictions.
The BIG SELL is T&D Holdings (8795 JP), which surprised me. The top BUY is ROHM Co Ltd (6963 JP) which was not on the Quiddity Leaderboard.
Otherwise, the ADDs and DELETEs are 1.8-2.0 days of ADV, there are several NEW CAPs and some RECAPS among LARGE CAPS

Kenedix Merger: Big Passive Inflows on the Cards

The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.

Toshiba (6502) Tender Offer – Kioxia Optionality

Yesterday, JIP finally announced its Tender Offer for Toshiba Corp (6502 JP) as discussed in JIP Tender Offer for Toshiba (6502) Finally Here
I got a few questions this morning on the earnings call comments from Chairman Watanabe regarding what might happen if a Kioxia Transaction were announced mid-JIP Tender.
My assumption before, during, and after, is that the Board wants this deal done. And doesn’t really want to take any responsibility for pushing any more.

Zomato Lock-Up – A US$650m+ Worth Acquisition Linked Lockup Release

By Sumeet Singh

In Aug 2022, Zomato completed the acquisition of Blinkit’s outstanding shares via issuing its own shares. These issued shares will come up for lockup release on 10th Aug 2023.
Zomato is one of two leading food delivery app operators in India. Its acquisition of Blinkit marked its foray into the instant grocery segment.
In this note, we will talk about the lock-up dynamics and recent updates.

EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks

Insulet Corp (PODD US) filed with the United States District Court a complaint for patent infringement against Eoflow (294090 KS), Flex (FLEX US), Luis Malave, Steven DiIanni, and Ian Welsford.
Insulet’s primary allegation is that Eoflow’s EOPatch device is built using Insulet’s proprietary trade secrets and infringes three Insulet US patents (‘741, ’883 and ‘950 patents).
The most likely scenarios are that Medtronic Plc (MDT US) and Insulet sign a licensing agreement (resulting in a possible tender offer price cut) or Medtronic walks.

KKR/OHB: Agreed Take-Private Offer

By Jesus Rodriguez Aguilar

KKR’s launching a cash offer for space tech firm OHB SE (OHB GR) at €44/share, 37% premium, 8.1x EV/Fwd NTM EBITDA, 16.1x Fwd P/E for an implied equity value of c.€769 million.
The Fuchs family will retain its majority shareholding. OHB’s strong balance sheet might be leveraged to further consolidate the industry. The offer price seems slightly cheap but not outrageous.
I believe a price hike is unlikely. Gross spread is 3.75%. Considering a break of €32.2, the market is pricing an 86% probability of success. I’d be long the shares.

What Is KDB’s Plan B for Asiana Airlines?

By Douglas Kim

There have been increasing local news flows about KDB’s potential “Plan B” for Asiana Airlines in case the merger between Asiana Airlines and Korean Air Lines is finally cancelled.
The final decisions by the European and US regulators on whether to pass/block this merger are likely to take place in 4Q 2023.
The higher probability scenarios are for one or both of these regulators to block this deal. As such, KDB will need to come up with Plan B.

InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share

Invocare has entered into a scheme implementation deed with TPG at A$12.7/share. This is higher than the initial offer of A$12.65/share but lower than the revised offer of A$13/share.
There is an extra A$0.26/share in franking credits for Invocare Ltd (IVC AU) shareholders that can use them.
Passives will need to sell nearly 11m shares of Invocare Ltd (IVC AU) on the last trading day and there will be an adhoc inclusion to the S&P/ASX 200 Index.

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Aug 08

Daily Brief Event-Driven: JIP Tender Offer for Toshiba (6502) Finally Here and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JIP Tender Offer for Toshiba (6502) Finally Here
JPX Nikkei 400 Index Rebalance: Some Big Impact Names
Bank of Kyoto (8369) – Too Far Too Fast
Toshiba – The Tender Arrives
Samsung Electronics: Prefs Need to Catch Up
Estia & Bain Enter Into Scheme Agreement
Toshiba (6502 JP): Tender Offer Launches, 1Q Results Increase Deal Risks
TOPIX Inclusions: Who Is Ready (Aug 2023)
Estia Health (EHE AU): Bain Capital’s Binding Proposal
OreCorp Inks Deal With Silvercorp. Perseus In The Wings?

JIP Tender Offer for Toshiba (6502) Finally Here

The JIP TOB for Toshiba is here. Finally. It is still too low. Since the announcement, when it was too low, peers are up a lot, and memory looks healthier.
But it is not clear that activists who pushed this for years want to push any more. There appears to be Toshiba Fatigue, as I warned in March.
That makes this deal look “safe” but there are technical aspects which make it less “comfortable” than normal large and long-awaited deals.

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.

Bank of Kyoto (8369) – Too Far Too Fast

Bank of Kyoto (8369 JP) has been on a relative tear recently. This is a bit surprising. On a static equity-portfolio discount measure, it has outperformed regional banks.
On a static regional bank PBR basis, it has outperformed its equity portfolio and the discount to the After Tax Equity Portfolio Value (ATEPV) is the smallest in eight years.
Is there a sea change? There is a possibility, however remote, that domestic investor disappointment rears its voting head. That’s the dream scenario. But I don’t see it coming soon.

Toshiba – The Tender Arrives

By Mio Kato

At long last the end to the Toshiba saga appears at hand with JIP’s belated tender offer being formally announced today at the previously quoted price of ¥4,620.
With a minimum target of 66.7% this does not seem guaranteed to pass but we nevertheless believe that odds are good.
The question is whether there is any room for a small hike in the price as alluded to by the Chairman.

Samsung Electronics: Prefs Need to Catch Up

Over the last year, the discount of Samsung Electronics Pref Shares (005935 KS) to Samsung Electronics (005930 KS) has increased from 5% to 17%.
The preferred shares have adequate liquidity, a large issue market cap, and now trade at a much higher dividend yield. A special dividend will further increase the dividend yield differential.
Breaking from history, the preferred shares discount has continued to increase as the stock has moved higher. With the preferred shares trading near its widest discount, that could change.

Estia & Bain Enter Into Scheme Agreement

After its initial bid of $3.00/share was rejected by Estia Health (EHE AU), Bain returned on the 7 June with a $3.20/share non-binding proposal and was granted exclusive due diligence.
Estia and Bain Capital have now entered into a Scheme Implementation Agreement at A$3.20/share, a 50% premium to undisturbed.
A shareholder meeting is expected to be held in November with implementation expected prior to the end of 2023.

Toshiba (6502 JP): Tender Offer Launches, 1Q Results Increase Deal Risks

Japan Industrial Partners (JIP) will launch the Toshiba Corp (6502 JP) tender offer of JPY4,620 per share from 8 August to 20 September.
The Board has reaffirmed its recommendation to accept the offer. JIP’s inability to raise its bid is used as an excuse to ignore the material peer rerating and unattractive terms.
The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior alternative, increasing deal risks.

TOPIX Inclusions: Who Is Ready (Aug 2023)

By Janaghan Jeyakumar, CFA

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.
Plus Alpha Consulting (4071 JP) will be included in TOPIX at the end of August 2023 and so far the stock has performed negatively as expected (see link).
Our long-term TOPIX pre-event name CELSYS (3663 JP) has seen its share price decline sharply in the last few weeks which raises some important questions.

Estia Health (EHE AU): Bain Capital’s Binding Proposal

Estia Health (EHE AU) has entered a SID with Bain Capital at A$3.20 per share, a 49.5% premium to the undisturbed price (21 March).
The 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.
The MAC clause, particularly around material regulatory events, could be risky. At the last close and for an end-of-December payment, the gross and annualised spread is 3.7% and 9.5%, respectively.

OreCorp Inks Deal With Silvercorp. Perseus In The Wings?

Western Australian-based miner OreCorp Ltd (ORR AU) has signed a Scheme Implementation Deed with Canada’s Silvercorp Metals (SVM CN).
Assuming the Scheme is successful, OreCorp shareholders will receive A$0.15 in cash and 0.0967 new Silvercorp shares – or an implied value of A$0.60 – for each OreCorp share held.
A shareholder meeting is expected to be held in mid-November with implementation expected end-Nov, early-Dec. Separately, Perseus (PRU AU) is understood to be kicking OreCorp’s tyres.

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Aug 07

Daily Brief Event-Driven: Korea – Positioning in Ecopro and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Korea – Positioning in Ecopro, Kumyang, JYP Entertainment, Hanwha Ocean, Hanmi Semi, Posco DX
Japan – Increase in Shorts on Some Interesting Stocks
Merger Arb Mondays (07 Aug) – JSR, ITOCHU, Allkem, Origin, Symbio, Pacific Current, United Malt, MPI
Weekly Deals Digest (06 Aug) – Toshiba, E-Guardian, ITOCHU, Allkem, Symbio, Pacific Current, MPI
Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer
EQD | Hang Seng Index (HSI) WEEKLY LONG: Support Levels and Probability

Korea – Positioning in Ecopro, Kumyang, JYP Entertainment, Hanwha Ocean, Hanmi Semi, Posco DX

Ecopro Co Ltd, Kum Yang, Jyp Entertainment, Hanwha Ocean, Hanmi Semiconductor and Posco DX have all rallied recently and could find their way into global passive portfolios.
There could be liquidity events in some of the stocks as early as the end of the month and there is pre-positioning on a lot of the stocks.
Retail investors have been big buyers in Ecopro Co and Kum Yang while foreign investors have been buyers in Jyp Entertainment, Hanwha Ocean, Hanmi Semiconductor and Posco DX.

Japan – Increase in Shorts on Some Interesting Stocks

Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.

Merger Arb Mondays (07 Aug) – JSR, ITOCHU, Allkem, Origin, Symbio, Pacific Current, United Malt, MPI

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 111 Inc (YI US), Chindata Group (CD US), Estia Health (EHE AU), Invocare Ltd (IVC AU), ENM Holdings (128 HK), Eoflow (294090 KS), JSR Corp (4185 JP).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Penguin International (PBS SP), Itochu Techno Solutions (4739 JP), Oishi Group PCL (OISHI TB), Kenedix Retail REIT (3453 JP).

Weekly Deals Digest (06 Aug) – Toshiba, E-Guardian, ITOCHU, Allkem, Symbio, Pacific Current, MPI

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 – Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK) and Lianlian DigiTech (2104619D CH) IPOs.
Event-Driven developments – E Guardian Inc (6050 JP), Itochu Techno Solutions (4739 JP), Toshiba Corp (6502 JP), Symbio Holdings (SYM AU), Metro Pacific Investments Co (MPI PM).

Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer