This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. [Japan Partial Tender] Toyota’s US$23bn Tender Buyback from TICO Is Potentially a Big Put Option
- As promised, as part of the Toyota Industries (6201 JP) takeover, Toyota Motor (7203 JP) was going to launch a Tender Offer Buyback for TICO’s stake. Today, it was announced.
- This buyback in the form of a tender offer at ¥3,067/share is for a maximum of 1,192,331,020 shares, for ¥3.657trln. That’s US$22.8bn. It’s a big buyback. A lot of accretion.
- Everyone can participate, though tendered shares are subject to a Deemed Dividend Withholding Tax. Some investors have found a way to deal with that. It’s worth figuring it out.
2. [Japan M&A/Activism] Bain Releases Presentation Emphasising MCJ (6670 JP) Bid Coercive – Game of 🐓
- Bain had to extend the MCJ Co Ltd (6670 JP) Tender Offer because they did not get enough shares to get over the hurdle. At least two activists object publicly.
- The shares had traded through since the start, fell near the end of the regular tender, and when that did not succeed, shares rose again.
- Bain today released a presentation meant to coerce shareholders into accepting the sub-par deal. And they point out how the deal was coercive in the first place.
3. [Japan Activism] An Odd Little Activism on Tokyo Steel (5423 JP)
- Tokyo Steel Mfg (5423 JP) has long been known as a largely underperforming steel manufacturer, owned by a family which doesn’t push, but the company has cash and securities.
- Last autumn, as the stock reached a two-year low, one or more Iketani family members appear to have sold 6+% of Tokyo Steel to the family asset management Co.
- Family ownership appears to have 53% of the company, making activism a tough row to hoe. But a noted activist just showed up as a 6+% shareholder for end-March.
4. [Japan Event] ARCHION (543A) HAS LANDED! Expensive, Overhang Galore; Risk Is MOOAR SQUEEZE
- Last week? ARCHION INCOMING! This week? ARCHION HAS LANDED! Hino Motors Ltd (7205 JP) closed last week at ¥387/share. The stock is up 32%. On 5x the number of shares.
- 5x? Yes. In order to make this work, Toyota did a giant debt/equity swap AND bought into Mitsubishi Fuso Truck & Bus, gave away value, and delegated management to MFTBC.
- On the third day of trading, ARCHION looks to be 8.9x pro-forma EBITDA, ~17-18x PER, and 1.8x PBR vs Isuzu at 6x, <10x, and <1.1x. And a re-IPO is coming.
5. ENN Energy (2688 HK) Is A Buy
- We’ve now cleared the one-year mark since ENN Energy (2688 HK) first announced a cash/scrip Offer from controlling shareholder ENN Natural Gas (600803 CH) (ENN NG).
- Apart from the ambiguity surrounding the value to be assigned to the scrip into newly-listed ENN-NG H-shares; CSRC, the listing watchdog, has yet to sign off. This should be forthcoming.
- By my calcs, I see at least 30% upside to ENN Energy’s shares here. The market is implying an unreasonable 67% discount for ENN NG’s Hs vs. the As.
6. Likely Setup for Hynix ADR and Square-Hynix Trade Dynamics
- Hynix’s ADR primary issuance maxes at 19.52M shares (2.745% of SO), a hard cap with no room for SK to push beyond.
- Structurally, Square is set to underperform. Hynix’s only lever is an early buyback, sizing and valuation are being calibrated, with ADR issuance now approached more flexibly than a month ago.
- Early buyback could drive Square Hynix dynamics. Local chatter on using ADR proceeds to retire shares looks like noise. Focus is on early buyback from listing to boost ADR volume.
7. MCJ (6670 JP): Bain Moves to Deflate Expectations of a Bump
- Bain notes that its JPY2,200 offer for MCJ Co Ltd (6670 JP) is final and has no intention of extending the close beyond 7 April.
- There remains a chance of a bump as these “final” statements are not binding, and Bain clearly does not have the required acceptances. However, the probability remains low.
- The likely scenario remains that Bain completes the offer by lowering the minimum, as today’s statement is likely designed to secure enough acceptances to complete the deal by doing so.
8. [Japan M&A] SOLASTO (6107 JP) Gets MBK MBO Bid (In Auction) – Decent Price (¥1119) So Likely Done
- Last December, when SOLASTO CORP. (6197 JP) was trading in the high ¥500s, a specialised media source said there were TOB talks. There were, and we got a deal 24-March-2026.
- The deal is at ¥1,119 for minorities (¥776 for Daito Trust). This is a decent price resulting from a competitive bid. It’s just under majority of minority but it’s OK.
- I expect this is done. Daito, employees, insiders, and crossholders hold over 50%. It’s a good price. Clean deal.
9. Webjet (WJL AU): CEO’s Surprise Exit May Kickstart Takeover Discussions
- After some competitive jostling late last year, Helloworld Ltd (HLO AU) and BGH Capital tabled all-cash NBIOs for digital travel agent Webjet Group (WJL AU) at A$0.90/share and A$0.91/share respectively.
- Following protracted due diligence, neither suitor firmed proposals worthy of putting to shareholders, and Webjet subsequently ceased discussion on the 13th February. The share price promptly cratered.
- Katrina Barry has now resigned as chief executive – less than two years into her new role – and just five weeks after the departure of her boss, David Galt.
10. Taiyo Holdings (4626 JP): KKR’s Takeunder Offer a Done Deal
- Taiyo Holdings (4626 JP) announced a preconditional tender offer from KKR at JPY4,750 per share, a 4.7% discount to the last close but an 81.6% premium to the undisturbed price.
- The offer, which resulted from an auction, is above the high end of the IFA DCF valuation range. The offer is attractive compared to long-term historical trading ranges.
- While Oasis and Kowa’s irrevocables have a competing proposal clause, a competing bid is unlikely. This is a done deal, with the tender expected to commence in early October.
