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. Dongfeng (489 HK)’s Privatisation And EV Backdoor Listing
- Dongfeng Motor (489 HK) has announced a privatisation; together with a concurrent listing of its EV arm.
- The same day as the dual proposals, Dongfeng announced an interim loss (1H25). Evidently, the way forward – from an investor standpoint – is electric, not internal combustion engines.
- The cash terms + scrip (into the EV listing) under the proposals are attractive. Even after this morning’s move (+53.6%) in Dongfeng’s share price.
2. Merger Arb Mondays (25 Aug) – Dongfeng, ENN Energy, Shibaura, Santos, Lynch, 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: Dongfeng Motor (489 HK), Mayne Pharma (MYX AU), Smart Share Global (EM US), ENN Energy (2688 HK), Santos Ltd (STO AU), Shibaura Electronics (6957 JP).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Ainsworth Game Technology (AGI AU), Ashimori Industry (3526 JP), PointsBet Holdings (PBH AU).
3. [Japan M&A] YAGEO Says It Expects FDI Clearance on Shibaura – Minebea Likely To Fold
- Last weekend then post-close Monday, Yageo Corporation (2327 TT) raised its TOB Price for Shibaura Electronics (6957 JP) to ¥7,130 – a full 15% through Minebea’s proposed ¥6,200/share terms.
- Minebea was playing chicken with the result, closing its tender on 28 August, before Japan’s Foreign Direct Investment approval (FEFTA approval) was cleared, expected 1 Sep or later.
- Today post-close, YAGEO announced it had concluded discussions with METI, would make all required regulatory submissions today, and expects to obtain approval “no later than 10 September”
4. PointsBet (PBH AU): Betr’s Dyslexic Bump. Mixi’s Now Holding 42.38%
- Betr Entertainment (BBT AU) has bumped scrip terms to 4.375 betr shares per PointsBet Holdings (PBH AU) share, equivalent to A$1.31/share, based on betr’s last traded price.
- True to form with betr, there’s a typo in its latest announcement stating a 4.735 ratio. betr just issued a Bidder’s Statement with the correct info.
- Apologies: in my last note I mentioned Mixi Inc (2121 JP) had bumped to A$1.30/share. However, that was predicated on Mixi securing 90%, which won’t happen if betr doesn’t tender.
5. A Merger Between HD Hyundai Heavy Industries and HD Hyundai Mipo
- It was announced today that HD Hyundai Heavy Industries will merge with HD Hyundai Mipo. The merger ratio between HD Hyundai Heavy Industries and HD Hyundai Mipo is 1:0.4059146.
- HD Korea Shipbuilding & Offshore Engineering (009540 KS) will own a 66.29% stake in the merged entity.
- HD KSOE is proceeding with this merger of its two major subsidiaries ahead of the full-scale launch of the MASGA (“Make America Shipbuilding Great Again”) project.
6. Near-Term Flows to Watch on Mandatory Treasury Share Cancellation in Korea
- Dems likely to push 3rd package in Q4; near-term flows chasing treasury stock cancellation theme, with locals screening >₩1tn mkt cap, >10% treasury shares of float.
- Little pushback on mandatory treasury cancellations; debate focused on timeline — grace period vs. immediate rollout — highlighting how much leeway government may grant differing governance structures.
- Too early for governance plays; near-term momentum flows likely in names with highest treasury stock relative to float, where cancellation is expected to hit flows hardest.
7. [Japan M&A] CareNet (2150 JP) – Opaque LBO/MBO Garners New Attention from Existing Shareholder
- When EQT launched its deal for Carenet Inc (2150 JP) two weeks ago, I thought it opaque, and light, and strangely lacking in information which should be there.
- It has not gotten clearer, though three days ago, the largest foreign shareholder as of the announcement reported they had lowered their position by 3.77% (4.22% of votes).
- Then yesterday, someone else reported they had gone above 5%. The data implied in that filing suggests this may have legs. I’d buy through terms.
8. ENN Energy (2688 HK): Chipping Away at the Precondition
- ENN Natural Gas (600803 CH) has made steady progress in satisfying the precondition for its ENN Energy (2688 HK) offer. On 22 August, NDRC approval was obtained.
- The appraised offer HK$80.00 value is the key debating point. Based on several methodologies, I estimate a realistic offer value of HK$74.44 (range of HK$67.84 to HK$83.64).
- The protest votes for director re-elections at the 23 May AGM are a risk. On balance, the scheme vote should pass as the offer is reasonable and strategically sensible.
9. HHI–Mipo Merger Swap: Deal Mechanics & Spread Play Opportunities
- HHI–Mipo merger spread looks minimal, but today’s MASGA-driven pop signals momentum flows—likely to mean-revert toward appraisal rights once the theme dissipates.
- Froth lifted prices past fundamentals—once it unwinds, HHI–Mipo could diverge from swap ratio, creating the spread window where traders can get paid.
- This isn’t classic merger arb—it’s about fading a policy-fueled pop, riding the snapback toward appraisal baseline, with flow-driven swings creating short-term tactical arb setups.
10. Shibaura Electronics (6957 JP): Method in the Madness as Yageo Bumps Twice in Two Days
- On 21 August, Yageo Corporation (2327 TT) increased its Shibaura Electronics (6957 JP) offer by 7.0% to JPY6,635. On 23 August, Yageo further increased its offer by 7.5% to JPY7,130.
- The offer is partially in reaction to Minebea’s recent comments around Yageo securing FEFTA approval. Crucially, Yageo finally provided an update suggesting that only a few issues remained.
- Yageo’s JPY7,130 offer is not over-the-top, as Minebea’s 10x EV/EBIT pricing guideline outlined on 18 August potentially justified a JPY7,300 offer. The likelihood of Minebea walking has increased.
