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 M&A] ¥4,870/Sh Blackstone TOB for Technopro (6028 JP) – Watch the Parameters and Modalities
- This was signaled in May, somewhat confirmed in July, now done. Blackstone buys Technopro at ¥4,870/share which is ~14x EV/EBITDA for next year.
- PE Firms have been scouring the Japanese market to buy companies. The METI Corporate Takeover Guidelines are super-helpful in that regard. This will squeeze the market over time.
- This takeover price is not quite as full as it could have been, and there are some parameters and modalities to this which are worth looking at. Parameters and Modalities.
2. [Japan M&A] Fujitec (6406) PE Bid Not Super High But May Be Tough To Beat
- On 30 July, Fujitec Co Ltd (6406 JP) and Swedish PE Firm EQT announced a deal to acquire the company with the Uchiyama family. Two activists signed tender agreements.
- The deal is not expensive IF you underwrite strong profitability growth and assume the large net receivables position can be better addressed.
- But the stock is trading tight to terms and there are 6+ months until you get your money.
3. [Japan M&A] 99Soft MBO at 52% Premium Is Too Light But A Bump May Be Tough
- Soft99 Corp (4464 JP) is the owner/operator of a set of ubiquitous brands in aftermarket autocare. Anything to do with washing, cleaning, etc.
- The company was founded 70 years ago, and the CEO is 54yrs old. Smells like succession planning.
- This deal is a nice premium, but it is too light. The operating assets with consistent growth and 20% OPMs are being sold at <0.9x book. That’s bad.
4. Merger Arb Mondays (04 Aug) – Santos, Joy City, HKBN, Krosaki Harima, Fujitec, Smart Share
- I 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: Mayne Pharma (MYX AU), ENN Energy (2688 HK), Krosaki Harima (5352 JP), Joy City Property (207 HK), Santos Ltd (STO AU), Smart Share Global (EM US).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), ZEEKR (ZK US), New World Resources (NWC AU), Ainsworth Game Technology (AGI AU), Nippon Concept (9386 JP).
5. [Japan M&A] Furukawa Battery (6937 JP) Take Private – Ugly Then, Ugly Still, But Now It’s On…
- 54 weeks ago Advantage Partners and Furukawa Electric announced a deal to take Furukawa Electric (5801 JP) sub Furukawa Battery (6937 JP) private. The acquisition price was LOW.
- Minorities got more – more than book. But the deal included a payment delay allowing BVPS to rise 8.8% from the announcement date. No synergies.
- Furukawa Electric gets to buy back in at a price below book. And because there are cash and securities and lots of net receivables, the operating assets are well below.
6. [Japan M&A] Krosaki Harima (5352) Takeout by Parent Nippon Steel – Cheapish But Done
- On Friday 1 August, Nippon Steel Corporation (5401 JP) and subsidiary Krosaki Harima (5352 JP) announced the parent would buy out the sub at ¥4,200/share.
- This seems light given the structure of the balance sheet (lots of net receivables – a bunch against the buyer) but it would be awfully tough to see this broken.
- As it is a long-dated deal, I expect it trades too tight early on, then may flatten or fade.
7. [Japan M&A] Nikkei Says Blackstone to Buy TechnoPro Holdings (6028) For “Roughly ¥500bn”
- There was an article in mid-May saying Technopro Holdings (6028 JP) might be privatised. It is an appropriate candidate. The stock popped 20% immediately, and has since risen another 20%.
- Today’s article follows one which came out ~2 weeks ago with non-sourced editorial content suggesting the price might be 20x EBITDA (i.e. a lot higher).
- Today, an article says Blackstone will buy the firm for “Roughly ¥500bn” which would be 3% down from yesterday. Beware the Nikkei. Beware expectations.
8. A Hidden Trading Angle from Dividend Tax Reform: Tax Timing Creates Dividend Trap Risks
- With new tax rules kicking in from FY2026, firms may hold back FY2025 dividends to front-load later, creating potential downside surprise purely from tax-driven deferral, not fundamentals.
- If FY2025 payouts fall short, dividend names could go ex-div on inflated expectations, then trade heavy — setting up mispricing risk around year-end dividend capture trades.
- This may weaken post-ex-div price rebounds, creating dividend trap risks and short-term mispricing that traders can exploit via shorts, dip buys, or dividend swap long-short strategies.
9. A/H Premium Tracker (To 1 Aug 2025): HUGE SOUTHBOUND Buying Helps Beautiful Skew but Premia Up
- AH premia up, erasing the previous week’s gains for Hs. “Beautiful Skew” continues in negative overall performance.
- Last week I said “This is the most significant 60-day AH pair average H outperformance in five years, maybe ever. Remarkable.” This week it unwound some.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
10. Korea’s Next Policy Momentum Play: Rapid Unfolding of the National Growth Fund
- From a trading view, no confirmed new ETFs under the National Growth Fund yet; market expects existing ETFs to be the main liquidity and sector play tools instead.
- Out of the KRW 150tn, ETF flows likely come from the 100tn private pool—conservative case: ~3% (KRW 4.5tn), base case: 5–7%, aggressive: up to 10% (KRW 15tn).
- Even conservatively, about KRW 3 trillion could flow into sector ETFs, a signficant AUM boost, mainly concentrated in AI, defense, aerospace, and biotech—driving notable inflow impact.
