Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

The Magang/Angang Pair Trade Is Preferable To The MGO

Maanshan's Offer Likely To Turn Unconditional

Quiddity Advisors

Equity Bottom-Up

Maanshan Iron & Steel H / Equity Bottom-Up

After <a href="https://www.smartkarma.com/entities/maanshan-iron-steel-h" target="_blank" data-smartkarma-citation="entities:204:1" rel="noopener">Maanshan Iron &amp; Steel H (323 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0602/ltn20190602057.pdf" target="_blank" rel="noopener">announced</a> in May of this year that Anhui SASAC intended to transfer 51% of the equity interest held by it in Magang Group to China Baowu for nil consideration, Maanshan <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0723/ltn20190723049.pdf" target="_blank" rel="noopener">announced</a> on the 22 July that the completion of the transfer would trigger a conditional Mandatory General Offer (MGO) for H shareholders at $2.97/share, a 1.37% premium to last close.
The equity transfer is subject to the CSRC waiving China Baowu's obligation to make a General Offer for Maanshan's A-shares. China Baowu sought a similar waiver from Hong Kong's SFC towards making a General Offer for Maanshan's H-shares, but was denied. Approvals from the State Administration of Market Regulation (SAMR) and NDRC are also outstanding. 
In addition, the equity transfer required approval from the German Bundeskartellamt and Korea Fair Trade Commission. Those anti-trust approvals have now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0730/ltn201907301029.pdf" target="_blank" rel="noopener">received</a>.
With reference to the A-share obligation, Maanshan has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0827/ltn20190827033.pdf" target="_blank" rel="noopener">updated the market</a> on the CSRC application by China Baowu, which was accepted on the 11 July. The CSRC subsequently requested further information, and a detailed submission to those questions has been produced in a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0827/ltn20190827035.pdf" target="_blank" rel="noopener">33-page announcement</a>.
The submission covers competition issues, related party transactions and importantly, whether a General Offer is required for the A-shares. Spoiler - there should be no obligation to make an Offer if adhering to the letter of the law.
Assuming CSRC approves the transfer - and approvals are received from SAMR and NDRC - the MGO will be triggered.
Maanshan has closed at or below terms since the 8 August with around 200mn shares changing hands. 475mn shares have traded since the MGO announcement. Arb players are active, either on a potential re-rate over the US/China trade dispute. Or simply to tender if the dispute continues. 
I doubt the number of shares currently in arb hands is sufficient for the 50% acceptance condition attached to the MGO to be met. But this deal still has a way to go - the Composite Document has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0812/ltn20190812729.pdf" target="_blank" rel="noopener">delayed</a> until the 31 October.
This is a pre-event, so it's hairy and may still fall through.

After Maanshan Iron &amp; Steel H (323 HK) announced in May of this year that Anhui SASAC intended to transfer 51% of the equity interest held by it in Magang Group to China Baowu for nil consideration, Maanshan announced on the 22 July that the completion of the transfer would trigger a conditional Mandatory General Offer (MGO) for H shareholders at $2.97/share, a 1.37% premium to last close.
The equity transfer is subject to the CSRC waiving China Baowu's obligation to make a General Offer for Maanshan's A-shares. China Baowu sought a similar waiver from Hong Kong's SFC towards making a General Offer for Maanshan's H-shares, but was denied. Approvals from the State Administration of Market Regulation (SAMR) and NDRC are also outstanding. 
In addition, the equity transfer required approval from the German Bundeskartellamt and Korea Fair Trade Commission. Those anti-trust approvals have now been received.
With reference to the A-share obligation, Maanshan has updated the market on the CSRC application by China Baowu, which was accepted on the 11 July. The CSRC subsequently requested further information, and a detailed submission to those questions has been produced in a 33-page announcement.
The submission covers competition issues, related party transactions and importantly, whether a General Offer is required for the A-shares. Spoiler - there should be no obligation to make an Offer if adhering to the letter of the law.
Assuming CSRC approves the transfer - and approvals are received from SAMR and NDRC - the MGO will be triggered.
Maanshan has closed at or below terms since the 8 August with around 200mn shares changing hands. 475mn shares have traded since the MGO announcement. Arb players are active, either on a potential re-rate over the US/China trade dispute. Or simply to tender if the dispute continues. 
I doubt the number of shares currently in arb hands is sufficient for the 50% acceptance condition attached to the MGO to be met. But this deal still has a way to go - the Composite Document has been delayed until the 31 October.
This is a pre-event, so it's hairy and may still fall through.

Maanshan Iron & Steel H

Playing The Re-Rate On Maanshan's MGO