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. Aequitas: SK Hynix ADR Listing – Filings Updates, Micron Results, Valuations
- SK Hynix (000660 KS) (SKH), a leading global memory producer, aims to raise up to US$30bn via an ADR listing.
- We have looked at the past performance and other deal dynamics in our previous notes.
- In this note, we talk about updates from its filings, Micron’s results and provide further thoughts on valuations.
2. [Japan M&A] Likely Bain/LY Overbid for Kakaku.com – STILL Not a Done Deal
- On 12 May, EQT launched an LBO for Kakaku.com Inc (2371 JP) with the agreement of two large holders. With 38% in the bag, EQT wanted another 17.5% at ¥3,000.
- Digital Garage (4819 JP) (20.5%) and KDDI (~17.55%) agreed to sell later (¥2,439). The bidder figured passive funds would vote with management post-deal. DG would reinvest in the back end.
- Bain and LY Corp announced a possible overbid at ¥3,232 without due dili. Then they got due dili. Media articles suggest Bain/LY have put forth a legally binding bid.
3. [Japan M&A] Nikkei Reports Dentsu To Lead Buyout of System Integrator Sub Dentsu Soken (4812)
- After the close today, the Nikkei reported (Japanese, English) that Dentsu Inc (4324 JP) had finalised plans to take its system integrator subsidiary Info Services Intl Dentsu (4812 JP).
- Articles are still updating but the idea is Dentsu will keep its 61.8% stake. Fujitsu and Unnamed Trading Houses will buy the rest for “around ¥200bn” implying +13.1% to ¥2,675/share.
- Dentsu responded with a TDNet filing. It’s less smokey than many other releases are. BUT… we take a look anyway at the parameters.
4. [Japan Event] Digital Garage (4819) Is The Wrong Price
- Digital Garage (4819 JP) got very exciting when an activist got involved. The less so when that activist sold its shares to Resona Holdings (8308 JP) at a fat premium.
- DG lost its driver. Perhaps Resona is a longer-term catalyst but it’s unclear. Given they are down 60% so far, they may be looking for new blood. Hayashi-san is 66.
- Now Digital Garage’s big equity affiliate stake asset will turn into cash. This is real value. It has been but this deal will double (or more than double) BVPS.
5. Luxshare Precision (2475 HK): Index Inclusion Timeline for US$3.6bn Offering; Tighter H/A Discount
- Luxshare Precision Industry (002475 CH) could raise up to HK$27.9bn (US$3.6bn) in its H-share offering if the Overallotment Option is exercised.
- The cornerstone investor allocation will be around 42% of the maximum offering size and those shares will be locked up for 6 months. Fast entry index inclusion probability is small.
- The H-shares are priced at a 17.2% discount to the A-shares last close and that is tighter than other large issues. Stock Connect from the open on 6 August.
6. [Japan M&A] Bain/LY Show Their Cards on Kakaku.com (They’re Good Cards Brent)
- Late night 1 July, LY (4689 JP) released a document showing their hand on the Kakaku.com Inc (2371 JP) TOB they proposed. It is astutely structured, in price and context.
- It’s complicated because it expects different possibilities with two headline numbers – ¥3,384/share if KDDI doesn’t sign up, and ¥3,500/share if they do. That’s a bit misleading.
- They expect a Kakaku response within 4 weeks and a deal launch by end-Sep. The big question here is if EQT+DG stump up to match, or if they play hardball.
7. Merger Arb Mondays (29 Jun) – Con Aero, Skyworth, Changhong Jiahua, Shinko Shoji, Nippon Dry, Qoria
- I summarise the latest spreads and newsflow for the merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, the Philippines, Thailand, and Chinese ADRs.
- Highest spreads: Skyworth (751 HK), Qoria (QOR AU), Changhong Jiahua (3991 HK), European Lithium (EUR AU), Cygnus Metals (CY5 AU), Continental Aerospace Technologies (232 HK).
- Lowest spreads: Accent Group (AX1 AU), Taiyo Holdings (4626 JP), Kakaku.com Inc (2371 JP), Clearview Wealth (CVW AU), Paltac Corporation (8283 JP), Kodensha Co (1948 JP).
8. Dentsu Soken (4812 JP): Dentsu’s Potential Privatisation Offer
- On 2 July, Nikkei reported that Dentsu Inc (4324 JP) plans to take Dentsu Soken (4812 JP) private by partnering with Fujitsu and other general trading companies.
- The rumoured JPY200 billion valuation for the 38.12% stake not owned by Dentsu suggests an offer of JPY2,688 per share, a 26.0% premium to the undisturbed price.
- Due to Dentsu’s large stake, a generous offer is unnecessary. Nevertheless, the rumoured offer is attractive compared to precedent transactions and peer multiples.
9. Kakaku.com (2371 JP): Bain/LY’s Binding Offer May Get the Job Done
- Bain/LY (4689 JP)’s preconditional binding offer for Kakaku.com Inc (2371 JP) is at JPY3,384, a 12.8% premium to EQT’s JPY3,000 offer. If KDDI provides an irrevocable, it is JPY3,500.
- Bain/LY expect the Board to decide whether to recommend the proposal around mid-to-late July. The Bain/LY offer will automatically trigger a 10-day extension of the EQT offer.
- The probability of a bidding war is low, as the Bain/LY offer represents an all-time high and EQT lacks a strong partner to support one.
10. Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (May & June 2026)
- In this insight, I discuss the alpha generation through companies that announced share buybacks in the Korean stock market in May and June 2026.
- I provide a list of 59 companies in the Korean stock market that have announced share buyback programs in the past two months.
- There were eight companies with more than 300 billion won in market cap that announced share buybacks in the past two months with at least 1% of outstanding shares.
