Event-Driven Archives | Page 87 of 187 | Smartkarma

In my piece Yamauchi Family Office Buys More Toyo; Toyo Claims More Malfeasance, ISS Supports YFO I said I thought YFO would lose, but it would be close.
I thought it hinged on the shape of the register. It turns out it did. And it turns out they won, and it was close. Analysis is presented.
What next? The new board takes its seats and may entertain a new takeover offer. I could see a buyout price a fair bit higher than here.

HSCI Index Rebalance Preview and Stock Connect: The Final List for September

There could be 25 inclusions, including many new listings, to the Hang Seng Composite Index (HSCI) in September. Another 6 stocks are close adds on liquidity and market cap.
We see 19 potential deletes and 2 close deletes on market cap, 5 potential deletes on prolonged trading suspension, and 2 close deletes on liquidity.
There are 8 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.

KRX’s Official Selection Results of SSF & SSO Adds/Deletes: New Rules & Trading Ramifications

The latest update will feature the addition of 25 single stock futures, as well as five single stock options from KOSPI. Eight single stock futures will be removed.
The selection will now take place twice a year, in March and September. Also, the selection requirement includes being included in the KOSPI 200 and KOSDAQ Global.
The shortened selection cycle and the significant potential for the change range to vary based on index review results can indeed have a notable impact.

United Malt (UMG AU): Malteries Soufflet’s Binding Offer

The AFR reports that United Malt Group Ltd (UMG AU) has received a binding offer from Malteries Soufflet at A$5.00 per share, a 13.6% premium to the last close price.
The high spread reflected the risk of a no-deal or price cut due to the weak 1HFY23 results and lack of updates since the end of the 10-week due diligence.
The offer is conditional on shareholders and FIRB approval. Shareholders will be supportive and breathe a sigh of relief at receiving a binding offer with unchanged terms.

Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser

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), United Malt Group Ltd (UMG AU), Chindata Group (CD US), ENM Holdings (128 HK), Tesserent Ltd (TNT AU), Poly Culture.
Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Musgrave Minerals (MGV AU), Metro Pacific Investments Co (MPI PM), Kenedix Residential Investment (3278 JP).

CSI300 Index Rebalance Preview: Early Look at Potential Changes in December

Two thirds of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
We estimate a one-way turnover of 1.98% at the December rebalance leading to a one-way trade of CNY 5.32bn.
The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last five months, though there is some near-term underperformance.

Weekly Deals Digest (02 Jul) – JSR, Dali Foods, NWS, Poly Culture, Yitai, DDH1/Perenti, Tryt

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 – Tryt Inc (9164 JP), Amman Mineral Internasional (1416286D IJ), Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group, J&T Global Express (1936374D CH) IPOs.
Event-Driven developments – JSR Corp (4185 JP), Dali Foods Group (3799 HK), Nws Holdings (659 HK), Poly Culture Group Corp H (3636 HK), Yitai Coal, DDH1 (DDH AU).

Hong Kong CEO & Director Dealings: Red Star’s New Controlling Shareholder

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
The key stock mentioned in this regular insight is Red Star Macalline Group Corp (1528 HK).

Apollo/Applus: Somewhat Cheap Offer and First Mover Advantage

On 30 June, Apollo placed itself ahead of competitors with a €9.5/share cash offer for Applus Services SA (APPS SM), whose shares rose to €9.9, in the hope of a counter offer.
The market is capable of forcing Apollo to sweeten its proposal to reach 75% acceptances. Many risk arbitrageurs have positions in Applus and may not settle for the current premium.
This situation has been flagged for a while. If already long, it is worth holding for a possible better offer, which could come around €10/share, a 5.2% increase.

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Jul 02

Daily Brief Event-Driven: Last Week in Event SPACE: Naspers/Prosus and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling
Index Rebalance & ETF Flow Recap: KQ150, LQ45, PCOMP, HDFC/HDFCB, Delta Electronics, Redox IPO, AMFI
(Mostly) Asia-Pac Weekly Risk Arb Wrap: DDH1/Perent, NWS, Mandala Multifinance, JSR Corp, Silk Laser
The TSE’s New ‘Better’ Index: JPX Prime 150
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Chasing Stocks Higher

Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling

The Naspers (NPN SJ) / Prosus (PRX NA) circularity was too complex. Lots of people hated it. It was actually easier than most thought, but optically was difficult to reconcile.
Swire Pacific (19 HK) was a clear buy: there is no justification for assigning a similar discount for cash from the US Coke ops as you would to unlisted ops
A residual NTT (9432 JP) individual small-holder shareholding tenure reward does not get split 25:1 when the stock gets split 25:1. It doesn’t mean much, but it’s an interesting artefact.

Index Rebalance & ETF Flow Recap: KQ150, LQ45, PCOMP, HDFC/HDFCB, Delta Electronics, Redox IPO, AMFI

The review period for a bunch of indices ended last week though the announcement of the changes will take 4-6 weeks.
There are no rebalance implementations in the coming week though focus will move to the implementation of the HDFC Limited/ HDFC Bank merger and index changes the following week.
There were big inflows to China focused ETF with a lot of money going into Semiconductor and Chip focused ETFs.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: DDH1/Perent, NWS, Mandala Multifinance, JSR Corp, Silk Laser

There are 47 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Five new deals this week: DDH1 (DDH AU), NWS Holdings (659 HK), Poly Culture Group Corp H (3636 HK), Mandala Multifinance (MFIN IJ), and JSR Corp (4185 JP).
Key updates took place forSilk Laser Australia (SLA AU) and Challenger Technologies (CHLG SP).

The TSE’s New ‘Better’ Index: JPX Prime 150

In April 2022, after long prep and considerable public comment as to desires and design, the TSE launched its new market segments designed to encourage governance and foreign investment.
At the time, the TSE wanted to showcase Japan’s best blue chips. In March, JPX announced JPX Prime 150, designed to make visible
In March 2023, JPX announced JPX Prime 150, to “make visible the leading Japanese companies that are estimated to create value.” Ambitious? Yes. Fated to fail? Probably. Badly constructed? Definitely.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Chasing Stocks Higher

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

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Jul 01

Daily Brief Event-Driven: End of Mandatory Lock-Up Periods for 41 Companies in Korea in July 2023 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

End of Mandatory Lock-Up Periods for 41 Companies in Korea in July 2023
Quiddity Leaderboard JPX-Nikkei 400: Final Predictions for August 2023
Take Private Looming
Axel Johnson/Dustin Group AB: Mandatory Offer

End of Mandatory Lock-Up Periods for 41 Companies in Korea in July 2023

By Douglas Kim

We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in July 2023, among which 6 are in KOSPI and 35 are in KOSDAQ.
These 41 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
Among these 41 stocks, the top five market cap stocks include Lunit, Sungeel Hitech, KG Mobility, Enchem, and E&D Co.

Quiddity Leaderboard JPX-Nikkei 400: Final Predictions for August 2023

The JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted (capped) market-value-weighted index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to be announced in early August 2023 based on trading data as of end-June 2023.

Take Private Looming

On 28 June, after market close Fomento De Construcciones Y Co (FCC SM) announced the repurchase and redemption of 7% of its shares at €12.5/share (38% premium, €5.4 billion implied market cap).
According to my calculations, Carlos Slim will hold, directly and indirectly, c. 88.2% of the share capital post repurchase. That, to me, heralds a delisting offer further down the road.
The offer represents 7.1x EV/Fwd EBITDA, 8.9x Fwd P/E (on IBES forecasts). Median TP is €14.7. Gross spread is 5.3% (plus the €0.5 dividend). It seems a safe long.

Axel Johnson/Dustin Group AB: Mandatory Offer

On 27 June, Axel Johnson said it had crossed the 30% threshold and would launch a mandatory offer for all shares of Dustin Group AB (DUST SS) at SEK 28.5/share
Axel Johnson doesn’t seem particularly interested in completing a takeover, rather being able to increase its stake after offer completion. The offer document isn’t even available in English.
The offer represents -4.2% to 1-month VWAP, 0.31x EV/Fwd sales (vs. 0.66x average since IPO). I wouldn’t get involved unless the share price drops below SEK 28.5.

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Jun 30

Daily Brief Event-Driven: Delta Electronics (DELTA TB): Potential SET50 Index Delete in December? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?
Swire Coke Sale Special Div Impacts B/A Ratio
Preemptive Short Position Buildup on SFA Engineering for Samsung’s Next Stake Sale
AMFI Stock Reclassification Preview (June 2023): Outperformance Continues
Quiddity Leaderboard NIFTY Sep 23: Non F&O Stocks Dilemma and Replacements for HDFC
XxxLutz/Home24: Final Chance to Abandon the Boat

Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?

Delta Electronics Thai (DELTA TB) has been added to the Market Surveillance Measure List twice in the last few months. That increases the probability of index deletion in December.
Given the big turnover every time Delta Electronics is added to and deleted from the index, there could be another go at weighting the SET50 Index by free-float market cap.
Deletion from the index will have a big impact on Delta Electronics Thai (DELTA TB) and the passive selling could help narrow the gap with Delta Electronics (2308 TT).

Swire Coke Sale Special Div Impacts B/A Ratio

Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.
I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.
This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.

Preemptive Short Position Buildup on SFA Engineering for Samsung’s Next Stake Sale

Samsung Display still holds a 5.85% stake. Hankyung reported that this remaining stake would also be disposed of in the future.
Then the key lies in timing. Considering the ongoing pattern of block deals being exposed during the pre-sounding phase, we may be able to capture clues for preemptive trading.
As seen from the chart depicting SFA’s loan balance and the percentage of short-selling to daily TV, we can observe a significant increase in activity just before today’s sale event.

AMFI Stock Reclassification Preview (June 2023): Outperformance Continues

We see 7 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 10 stocks from MidCap to SmallCap.
The expected migrations from SmallCap to MidCap have outperformed the other migrations and some stocks have seen large price moves over the last couple of weeks.
Active managers would have started realigning their portfolios and that could continue for a couple of weeks. Unwind long positions into strength.

Quiddity Leaderboard NIFTY Sep 23: Non F&O Stocks Dilemma and Replacements for HDFC

In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
The NIFTY Next 50 methodology was supposed to change in June 2023 but this has been kept on hold for now. This change could still take place before September 2023.
The HDFC/HDFC Bank Merger is expected to complete in the next few weeks and that could trigger intra-review index changes.

XxxLutz/Home24: Final Chance to Abandon the Boat

Following the additional acceptance period and settlement, XXXLutz has increased its stake up to c.94.65% of Home24 (H24 GR).
The Bidders, together with XXXLutz KG, have entered into a delisting agreement with home24, at the same time they will launching a delisting offer, at the prior offer price, €7.5/share.
The offer price was fair in my view. Liquidity will become razor thin post offer and there will be no domination and P&L transfer agreement. Tender regardless of acquisition price.

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Jun 29

Daily Brief Event-Driven: NTT’s Really Big/Weird Stock Split Goes Ex- 29 June 2023. Now With D-Points! and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

NTT’s Really Big/Weird Stock Split Goes Ex- 29 June 2023. Now With D-Points!
CFD Liquidation in Korea: Posco DX, Celltrion Siblings, and Potential Next Targets
Poly Culture (3636 HK)’s Pre-Conditional Merger By Absorption
Bain Capital/SoftwareOne: Room for a Better Offer
StubWorld: Swire Sells US Coke Ops To Parent
BBL/KBANK: Hitting a Wall

NTT’s Really Big/Weird Stock Split Goes Ex- 29 June 2023. Now With D-Points!

NTT (Nippon Telegraph & Telephone) (9432 JP) is splitting its stock 25:1 on record date 30 June 2023. That means it goes ex- at the new price on 29 June.
The day before, the stock is up nearly 5% on heavy volume. This is likely punters buying before it splits so one round lot will be <¥20,000 vs ~¥420,000 yesterday.
But there is a new attraction for retail, somewhat un-noticed.

CFD Liquidation in Korea: Posco DX, Celltrion Siblings, and Potential Next Targets

Yesterday and today, there have been observed cases in Korea that are suspected to be caused by a sudden drop in stock prices due to CFD liquidation trading.
Yesterday it was Celltrion with its two siblings, and today it is Posco DX. I have found candidates that may have similar stock price movements.
These candidates experienced a notable increase in their stock prices from late March to mid-April, and they have a relatively high margin transaction ratio.

Poly Culture (3636 HK)’s Pre-Conditional Merger By Absorption

After shares were suspended on the 20 June, art and culture play Poly Culture Group Corp H (3636 HK) has announced a pre-conditional privatisation at HK$8.88 per H-share.
This Offer, from SOE Poly Group, is by way of a Merger by Absorption, which incorporates a Scheme-like vote. There is no tendering condition.
The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average.

Bain Capital/SoftwareOne: Room for a Better Offer

Bain Capital has made a CHF 18.5/share offer proposal for SoftwareONE Holding (SWON SW), 33% premium, CHF 2,933 million implied equity value, 9.8x EV/NTM EBITDA and 18.7 Fwd P/E.
The offer is supported by founding shareholders (c.29.1% aggregate), who’d co-invest alongside Bain. SoftwareOne, in the middle of a turnaround, trades cheap vs. peers and my fair-value estimate (CHF 19.92/share).
On IBES estimates, without significant cost-cutting, at CHF 20/share, Bain could achieve 18.6% IRR by year 6, thus could offer more. Gross spread is 3.7%. Considering prospects, I’d be long.

StubWorld: Swire Sells US Coke Ops To Parent

Swire Pacific (19 HK) has announced it is selling its US Coca-Cola ops to its parent for HK$30.4bn (US$3.9bn). That’s 40% of its market cap.
Preceding my comments on Swire 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%.

BBL/KBANK: Hitting a Wall

Bangkok Bank Public (BBL TB) is trading very close to its historic highs versus Kasikornbank PCL (KBANK TB) and keeps hitting a wall at that level.
The number of NVDRs issued on Bangkok Bank Public (BBL TB) has been rangebound while there has been a steady decrease for Kasikornbank PCL (KBANK TB).
At current level, the risk/reward looks favourable to a short Bangkok Bank Public (BBL TB) / long Kasikornbank PCL (KBANK TB) position for the near to medium term.

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Jun 28

Daily Brief Event-Driven: The Prosus/Naspers Ouroboros Spits Out Its Tail (Unwinds Cross-Holding to Go Back to Old Pair) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

The Prosus/Naspers Ouroboros Spits Out Its Tail (Unwinds Cross-Holding to Go Back to Old Pair)
What Arb Trading Opportunities Should We Target in SK Innovation’s Rights Offering?
NWS Holding (659 HK): Pre-Conditional VGO from the Cheng Family
Dali Foods (3799 HK): Founder’s Privatisation Offer at HK$3.75
Redox (RDX AU) IPO – Offering Details & Index Inclusion
PCOMP Index Rebalance Preview: Just the Ad Hoc Change
Poly Culture (3636 HK): HK$8.88 Per H Share Privatisation Offer
Quiddity Leaderboard TDIV Sep 23: Potential ~US$130mn Flows Caused by T100 DEL and AUM Change
Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?
Quiddity Leaderboard T50/100 Jun 23: Wisdom Marine Facing TDIV Deletion

The Prosus/Naspers Ouroboros Spits Out Its Tail (Unwinds Cross-Holding to Go Back to Old Pair)

In mid-September 2019, Naspers (NPN SJ) listed Prosus (PRX NA) on international markets, but the law required Naspers own 70+% of Prosus and it created a dual-layer NAV Discount Trade.
In summer 2021, they announced an Exchange Offer, where Naspers holders could get Prosus, and Prosus would end up owning 49% of Naspers, creating a cross-holding circularity – an Ouroboros.
In summer 2022, they launched open-ended buyback programmes, and they’ve bought back a lot. NOW they are unwinding the Ouroboros, going back to the pre-EO structure. buybacks will continue.

What Arb Trading Opportunities Should We Target in SK Innovation’s Rights Offering?

We should seize the arbitrage trading opportunities between SSF and subscription rights during the rights trading window. SK Innovation’s SSF is highly liquid, being traded at nearly 0.5x spot.
The key is to catch the timing of basis widening. SK Innovation traditionally experiences significant intraday basis fluctuations, making it a crucial factor in maximizing our profitability.
The ex-date play, betting on the tendency for prices to close above the base price on the ex-date, may not hold significant appeal. This pattern has become less pronounced recently.

NWS Holding (659 HK): Pre-Conditional VGO from the Cheng Family

Nws Holdings (659 HK) announced a pre-conditional voluntary general offer from the Cheng family at HK$9.15 or HK$9.47 per share (with a potential 2HFY2023 dividend of HK$0.32 per share).
The pre-condition related to regulatory approval from the Insurance Authority of Hong Kong and the Bermuda Monetary Authority is a formality due to the Cheng family’s current sway over NWS.
The key condition is approval by independent New World Development (17 HK) shareholders which is likely as the offer is attractive, reduces NWD’s gearing and results in a special dividend.

Dali Foods (3799 HK): Founder’s Privatisation Offer at HK$3.75

Dali Foods Group (3799 HK) disclosed a scheme privatisation offer from the founder at HK$3.75 per share, a 37.9% premium to the undisturbed price (HK$2.72 on 20 June).
Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
The price is final. While the offer price is unattractive compared to peer multiples and historical share prices, this looks like a done deal.

Redox (RDX AU) IPO – Offering Details & Index Inclusion

Redox (RDX AU), a leading chemical and ingredients distributor, is looking to raise A$402m (US$268m) in its IPO and is expected to start trading on the ASX on 3 July.
With the float expected to be over 30%, the stock is eligible for inclusion in the S&P/ASX indices but limited trading history could only mean S&P/ASX300 inclusion in March 2024.
With 70% of the shares subject to lock-up arrangements, buying from ASX300 passive trackers will be small and there will be limited inclusion in other indices too.

PCOMP Index Rebalance Preview: Just the Ad Hoc Change

With a couple of trading days to the end of the review period, we do not forecast any changes for the Philippines Stock Exchange PSEi Index (PCOMP INDEX) in August.
However, there could be an ad hoc change if Metro Pacific Investments Co (MPI PM) is delisted. The stock now trades above the tender offer price.
Bloomberry Resorts (BLOOM PM) is the highest ranked non-constituent and the stock has started to move higher again, likely driven in part by potential index inclusion.

Poly Culture (3636 HK): HK$8.88 Per H Share Privatisation Offer

Poly Culture Group Corp H (3636 HK) announced a pre-conditional privatisation offer from Poly Group at HK$8.88 per H Share, a 77.6% premium to the undisturbed price of HK$5.00.
The pre-condition of regulatory approvals is a formality as Poly Group is an SOE. The key condition is approval by at least 75% of independent H Shareholders (<10% rejection).
The offer price is final. There is no minimum acceptance condition. No independent H Shareholder holds a blocking stake. The offer is attractive, waving the way to success.

Quiddity Leaderboard TDIV Sep 23: Potential ~US$130mn Flows Caused by T100 DEL and AUM Change

In this insight, we take a look at Quiddity’s flow expectations for the September 2023 index rebalance.
Since the semi-annual rebalance events are in June and December, there will not be any “regular” changes caused by dividend-yield rankings.
However, external factors such as deletion from the selection universe and a shift in tracking AUM assumptions can still trigger US$130mn capping flows in September 2023.

Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?

By Douglas Kim

Invest Chosun recently reported that the three Celltrion Group companies including Celltrion Inc, Celltrion Healthcare, and Celltrion Pharm are close to announcing a merger in July.
Although Celltrion was not included this time as suppliers of Humira biosimilar products by OptumRX, there is still a potential for Cigna Express Scripts to include Celltrion’s product this year.
We think Celltrion Inc and Celltrion Healthcare’s share prices are oversold.

Quiddity Leaderboard T50/100 Jun 23: Wisdom Marine Facing TDIV Deletion

In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the September 2023 Rebalance.
At present, I see two changes for the T50 index and one change for the T100 index.
The T100 change is an important one as the expected DEL Wisdom Marine Lines (2637 TT) could also get deleted from the TDIV index.

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Jun 27

Daily Brief Event-Driven: JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh. and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh.
[UPDATE] Tax-Loss Selling in Australia – Time To Unwind the Basket
JSR Corporation (4185 JP): JIC’s Pre-Conditional Tender Offer at JPY4,350
LQ45 Index Rebalance Preview (July): Review Period Nearly Complete
DDH1 To Merge With Perenti
MUFG Seeks A Majority Stake In Mandala
Quiddity Leaderboard-DAX Jun 23: A SHORT Sartorius LONG Merck Trade Might Be Interesting
Silk Laser Firms Offer With Wesfarmers
Silk Laser Australia (SLA AU): Wesfarmers Binding Offer, Next Move EC Healthcare
DDH1 (DDH AU): Binding Offer from Perenti (PRN AU)

JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh.

Japan Investment Corp (JIC) has launched a Tender Offer on top photoresist maker JSR Corp (4185 JP), at ¥4,350/share.
That is a decent price, but it is not overwhelming. Furthermore, process for determining (and understanding) “fair” remains inadequate.
Significant foreign ownership, a high price, Japanese equity excitement, etc, all make this a situation where we likely see a pop (the last bit), a fade, then a re-drift better.

[UPDATE] Tax-Loss Selling in Australia – Time To Unwind the Basket

In Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket at the start of June I proposed a basket.
We are getting to the end of June. Time to unwind that short basket. The named ticker was -26%. The 70-name basket underperformed ASX200 by 4.4%.
One can now go long the basket into end-June as historically it outperforms S&P-ASX200 over two months. If one did not short, one can still go long. Basket below.

JSR Corporation (4185 JP): JIC’s Pre-Conditional Tender Offer at JPY4,350

JSR Corp (4185 JP) has recommended JIC’s pre-conditional tender offer of JPY4,350 per share, a 34.5% and 10.6% premium to the undisturbed price and last close, respectively.
The pre-conditions relate to various country approvals. China’s approval should be challenging due to Japan’s recent curbs on Chinese exports of chipmaking equipment.
The offer is long-dated and opens in late December. The offer price is attractive compared to peer multiples and just a touch below the all-time share price high.

LQ45 Index Rebalance Preview (July): Review Period Nearly Complete

The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

DDH1 To Merge With Perenti

Specialty mining driller DDH1 (DDH AU) has announced a merger, by way of a Scheme, with Perenti Global (PRN AU).
Under the proposed terms, DDH1 shareholders will receive for each DDH1 share held $0.1238 cash plus 0.7111 Perenti shares, for an implied value of A$1.01/share, or a 17.4% premium.
Directors and shareholders with a combined 38% of DDH1 shares have indicated an intention to vote in favour of the transaction. Scheme implementation is expected in early October 2023.

MUFG Seeks A Majority Stake In Mandala

Mitsubishi UFJ Financial (MUFG US) and 92.7%-held Adira Dinamika Multi Finance (ADMF IJ) have entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
MUFG and Adira appear to be paying IDR 3,297/share or IDR 7tn all-in. The SPAs are subject to regulatory approvals with completion expected in early 2024.
Upon completion, MUFG will hold 70.6% in Mandala and Adira 10% in the Indo car/motorcycle loan lender. This will trigger a Mandatory Tender Offer for the remaining 19.4%.

Quiddity Leaderboard-DAX Jun 23: A SHORT Sartorius LONG Merck Trade Might Be Interesting

In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices in the September 2023 Rebalance.
Software AG (SOW GR)‘s takeover situation could result in intra-review index changes prior to the September 2023 rebalance.
Fresenius Medical Care (FME GR) and Deutsche Lufthansa AG (LHA GR) are close to becoming DAX ADDs as they require very small price gains to trigger Fast Entry additions.

Silk Laser Firms Offer With Wesfarmers

On the 19 April, Silk Laser Australia (SLA AU), an operator of specialist clinic networks across Australia, announced a $3.15/share NBIO from Wesfarmers Ltd (WES AU)
Ahead of the expiry of Wesfarmers’ due diligence, EC Healthcare (2138 HK) snuck in a $3.35/share NBIO. Wesfarmers opted out of its matching rights. Although due diligence remained ongoing.
SLA has now announced a binding implementation agreement with Wesfarmers at A$3.35/share. No word, as yet, from EC Healthcare. Nor is one expected.

Silk Laser Australia (SLA AU): Wesfarmers Binding Offer, Next Move EC Healthcare

Silk Laser Australia (SLA AU)‘s binding offer from Wesfarmers Ltd (WES AU) is at A$3.35 per share which is in line with EC Healthcare (2138 HK)’s non-binding proposal.
While EC Healthcare is a relative minnow, it secured HK$1 billion (A$191 million) financing in May, which suggests a chance of returning with a higher offer.
If EC Healthcare deployed the HK$1.0 billion loan for the acquisition, it would imply a price of A$3.60 per share, 7.6% above Wesfarmers’ offer.

DDH1 (DDH AU): Binding Offer from Perenti (PRN AU)

DDH1 (DDH AU) has entered a SID with Perenti Global (PRN AU) at A$0.1238 cash plus 0.7111 PRN shares for each DDH share, a 17.4% premium to DDH’s 5-day VWAP.
The key conditions are shareholder scheme approval and ACCC clearance. Shareholders representing 38.0% of outstanding shares will vote in favour of the scheme.
The offer is attractive compared to peer multiples, and the net exchange ratio is fair on a 1-year basis. A critical risk is volatility risk around PRN shares.

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Jun 26

Daily Brief Event-Driven: JIC To Launch ¥1 Trillion Takeover on JSR (4185) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JIC To Launch ¥1 Trillion Takeover on JSR (4185)
Merger Arb Mondays (26 Jun) – Eoflow, ENM, Estia, InvoCare, United Malt, Arclands, Chindata
KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December

JIC To Launch ¥1 Trillion Takeover on JSR (4185)

The Nikkei followed by other media outlets revealed Saturday that the JIC (株式会社産業革新投資機構) were in talks with JSR Corp (4185 JP) to acquire the photoresist maker for ¥1 trillion.
JSR’s release (Japanese/English) noted that they are considering the matter, but no decision has been made. They note, however, a Board of Directors meeting on Monday 26 June 2023.
Articles suggest a Tender Offer “this year”, delisting next. ¥1 trillion is a 50% premium. Or 35%. I expect shares go limit up, then we will get more news post-close.

Merger Arb Mondays (26 Jun) – Eoflow, ENM, Estia, InvoCare, United Malt, Arclands, Chindata

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), Silk Laser Australia (SLA AU), United Malt Group Ltd (UMG AU), ENM Holdings (128 HK), Chindata Group (CD US), Estia Health (EHE AU).
Lowest spreads – Healius (HLS AU), Musgrave Minerals (MGV AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Mincor Resources NL (MCR AU), Lian Beng (LBG SP).

KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December

Nearly a third of the way through the review period, we see 12 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
There could be one change to the index in July/August following Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Market to the KOSPI Market.
The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance as we go through the review period.

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Jun 25

Daily Brief Event-Driven: JSR Corporation (4185 JP): JIC’s Tender Offer Looming? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JSR Corporation (4185 JP): JIC’s Tender Offer Looming?
Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Loose Lips Sinks Ships
Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Amara, SBI Shinsei Bank, Yashili, EOFlow

JSR Corporation (4185 JP): JIC’s Tender Offer Looming?

Nikkei reports that Japan Investment Corporation (JIC) is in talks to acquire JSR Corp (4185 JP) for around JPY1 trillion (US$7 billion) through a tender offer.
JSR responded, “No decision has been made at this moment, although JSR is considering this matter.” The Board will discuss the proposal on Monday.
Minorities will be supportive as the JPY1 trillion valuation implies a tender price of JPY4,850 per share, a 50% premium to the last close and an all-time share price high.

Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO

There were a couple of ad hoc rebalances in Korea last week for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) and KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY).
Coming Friday will mark the end of the review period for the next rebalance of the HSI, HSCEI, HSTECH, HSCI, LQ45, PCOMP as well as the SET50 June implementation.
With Japan indices moving higher, the largest inflows went into ETFs tracking the Nikkei 225 (NKY INDEX) and other local/global indices.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Loose Lips Sinks Ships

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

Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW

RMB dual counter started trading. Great Wall Motor (2333 HK)‘s A-shares trade at 3x the multiple. THAT is a big discount to harvest.
China Feihe (6186 HK)‘s CFO exits an indirect stake of 6.38% around Feihe’s all-time low.
EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Amara, SBI Shinsei Bank, Yashili, EOFlow

There are 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
No new deals were announced this week although the major shareholders of Amara Holdings (AMA SP) are in discussions with a third party
Key updates took place for SBI Shinsei Bank (8303 JP), Yashili International Holdings (1230 HK), and Eoflow (294090 KS)

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Jun 24

Daily Brief Event-Driven: Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics
Silver Lake/Software AG: Bain Clears the Way

Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics

According to Invest Chosun, Celltrion plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
Given that the approximate timing of the merger registration statement submission has already been exposed to the market, we can track the difference between the spot and exercise prices.
Celltrion Inc will likely attempt to minimize the appraisal rights price. We can consider capitalizing on this possibility by shorting Celltrion Inc while going long on the other two companies.

Silver Lake/Software AG: Bain Clears the Way