Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Second ams Deal for Osram - Concessions And "Elbow Calculus"

Ams Offer Does Not Win Osram. Back To Square 2.

Ams Deal for Osram On the Table: Trading Wide

ams AG Finds a Loophole: Ups the Osram Bid to €41 but Does Not Extend

Quiddity Advisors

Event-Driven

A week ago on 18 October <a href="https://www.smartkarma.com/entities/ams-ag" target="_blank" data-smartkarma-citation="entities:22278:1" rel="noopener">ams AG (AMS SW)</a> announced that it intended to launch a new Offer for <a href="https://www.smartkarma.com/entities/osram-licht-ag" target="_blank" data-smartkarma-citation="entities:21689:1" rel="noopener">OSRAM Licht AG (OSR GR)</a> at the same price as the last Offer which did not meet the minimum acceptance threshold of 62.5% (which had been lowered from 70%) including shares owned by ams after on-market purchases of 19.9%. 
At the end of that Offer, ams had played it coy. On 27 September - only 4 days before the end of the Offer, ams purchased 100 shares and booked it on the London exchange, then used that as an excuse to lift the price to be paid to all shareholders who accepted and did so without changing the Offer Prospectus, which would have required a two-week extension. The goal, at the time, was likely to oblige shareholders to choose hard cash on the barrelhead then - €41/share - vs the possibility that Private Equity firms Bain and Advent would come up with an Offer which was "meaningful improvement" over the €38.50/share which ams had been offering to that point. 
ams got to 51.6%. And the world awaited what might come next.
<ul>
<li>ams would have the possibility of asking BaFin for an exception (to the rule requiring them to wait) to be able to launch another Offer in the near future (the "exception" is possible because it would legally be a different company making the new bid), and... </li>
<li>Bain and Advent might come out with an Offer even higher, which might be supported by Osram management. </li>
</ul>
A few days later ams was adamant it still wanted to get a deal done. Bain and Advent were doing due diligence. 
Finally, on 18 October, Bain and Advent let Osram know that they were not going to proceed with an Offer at the time, and ams moved forward. A few days later, Osram supervisory board member and IG Metall trade union representative Klaus Abel said, “The reasons for our clear opposition to a takeover by AMS remain unchanged... The already elevated financial risks have even been exacerbated by the new approach.” Osram’s trade union still rejects ams' plans, fearing the deal may lead to at least a partial breakup of the company (ams has made no bones about wanting to sell Osram's digital business) and a loss of jobs (ams CEO Everke has said no jobs would be lost in Germany, but has suggested there would be some overlap in Malaysia, particularly at the opto-semiconductors unit, which built an LED chip production site in Kulim, Malaysia, in 2016).
This week ams CEO Alexander Everke said on an investor call that ams was seeking a cooperation agreement with Osram before launching a new Offer, hoping to garner a better level of support from the supervisory board, and might lead to CEO Olaf Berlien agreeing to tender his shares, which he did not do the first time, which might lead some investors on the fence to tender theirs.
The hints being given out to the media the last several days suggest the new Offer could be launched by end-October dependent on BaFin approval. 
The market clearly embraced the concept of the new Offer, jumping from the low €38s a share to €40 on the news, where it has settled as of noon on Friday. That is a better price than the one at which Osram's shares settled immediately after ams upped its price the first time.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/103/234/original/Screenshot%202019-10-25%20at%206.39.45%20PM.png?1572000050" class="editor-image img-responsive" data-smartkarma-image-id="103234"></figure>
<div style="text-align: left;" class="content-caption">source: tradingview.com, Quiddity</div>
What next?
Read on below.
<hr>
<table class="table table-striped">
<tbody>
<tr>
<td colspan="2" style="width: 111.818px;">
<h2>Insights To Date on the ams/Osram Situation</h2>
</td>
</tr>
<tr>
<td style="width: 111.818px;">Date</td>
<td style="width: 590.909px;">Title</td>
</tr>
<tr>
<td style="width: 111.818px;">6-Oct-2019</td>
<td style="width: 590.909px;"><a href="https://www.smartkarma.com/insights/ams-offer-does-not-win-osram-back-to-square-2" target="_blank" data-smartkarma-citation="insights:32907" rel="noopener">Ams Offer Does Not Win Osram. Back To Square 2.</a> </td>
</tr>
<tr>
<td style="width: 111.818px;">27-Sep-2019</td>
<td style="width: 590.909px;"><a href="https://www.smartkarma.com/insights/ams-ag-finds-a-loophole-ups-the-osram-bid-to-41-but-does-not-extend" target="_blank" data-smartkarma-citation="insights:32763" rel="noopener">ams AG Finds a Loophole: Ups the Osram Bid to €41 but Does Not Extend</a> </td>
</tr>
<tr>
<td style="width: 111.818px;">26-Sep-2019</td>
<td style="width: 590.909px;"><a href="https://www.smartkarma.com/insights/a-better-bain-bid-for-osram" target="_blank" data-smartkarma-citation="insights:32710" rel="noopener">A Better Bain Bid for Osram?</a> </td>
</tr>
<tr>
<td style="width: 111.818px;">16-Aug-2019</td>
<td style="width: 590.909px;"><a href="https://www.smartkarma.com/insights/ams-deal-for-osram-on-the-table-trading-wide" target="_blank" data-smartkarma-citation="insights:31714" rel="noopener">Ams Deal for Osram On the Table: Trading Wide</a> </td>
</tr>
</tbody>
</table>

A week ago on 18 October ams AG (AMS SW) announced that it intended to launch a new Offer for OSRAM Licht AG (OSR GR) at the same price as the last Offer which did not meet the minimum acceptance threshold of 62.5% (which had been lowered from 70%) including shares owned by ams after on-market purchases of 19.9%. 
At the end of that Offer, ams had played it coy. On 27 September - only 4 days before the end of the Offer, ams purchased 100 shares and booked it on the London exchange, then used that as an excuse to lift the price to be paid to all shareholders who accepted and did so without changing the Offer Prospectus, which would have required a two-week extension. The goal, at the time, was likely to oblige shareholders to choose hard cash on the barrelhead then - €41/share - vs the possibility that Private Equity firms Bain and Advent would come up with an Offer which was "meaningful improvement" over the €38.50/share which ams had been offering to that point. 
ams got to 51.6%. And the world awaited what might come next.

ams would have the possibility of asking BaFin for an exception (to the rule requiring them to wait) to be able to launch another Offer in the near future (the "exception" is possible because it would legally be a different company making the new bid), and... 
Bain and Advent might come out with an Offer even higher, which might be supported by Osram management. 

A few days later ams was adamant it still wanted to get a deal done. Bain and Advent were doing due diligence. 
Finally, on 18 October, Bain and Advent let Osram know that they were not going to proceed with an Offer at the time, and ams moved forward. A few days later, Osram supervisory board member and IG Metall trade union representative Klaus Abel said, “The reasons for our clear opposition to a takeover by AMS remain unchanged... The already elevated financial risks have even been exacerbated by the new approach.” Osram’s trade union still rejects ams' plans, fearing the deal may lead to at least a partial breakup of the company (ams has made no bones about wanting to sell Osram's digital business) and a loss of jobs (ams CEO Everke has said no jobs would be lost in Germany, but has suggested there would be some overlap in Malaysia, particularly at the opto-semiconductors unit, which built an LED chip production site in Kulim, Malaysia, in 2016).
This week ams CEO Alexander Everke said on an investor call that ams was seeking a cooperation agreement with Osram before launching a new Offer, hoping to garner a better level of support from the supervisory board, and might lead to CEO Olaf Berlien agreeing to tender his shares, which he did not do the first time, which might lead some investors on the fence to tender theirs.
The hints being given out to the media the last several days suggest the new Offer could be launched by end-October dependent on BaFin approval. 
The market clearly embraced the concept of the new Offer, jumping from the low €38s a share to €40 on the news, where it has settled as of noon on Friday. That is a better price than the one at which Osram's shares settled immediately after ams upped its price the first time.

source: tradingview.com, Quiddity
What next?
Read on below.





Insights To Date on the ams/Osram Situation



Date
Title


6-Oct-2019
Ams Offer Does Not Win Osram. Back To Square 2. 


27-Sep-2019
ams AG Finds a Loophole: Ups the Osram Bid to €41 but Does Not Extend 


26-Sep-2019
A Better Bain Bid for Osram? 


16-Aug-2019
Ams Deal for Osram On the Table: Trading Wide 




New ams Deal for Osram In Store - It's Doable