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

Tohto Suisan (8038 JP) - Aso Corp To Launch Tender Offer at ¥7,500/Share

Quiddity Advisors

Event-Driven

Yesterday 9 November, Aso Corp announced a Partial Tender Offer to buy 1,329,180 shares of <a href="https://www.smartkarma.com/entities/tohto-suisan-co-ltd" target="_blank" data-smartkarma-citation="entities:7524:1" rel="noopener">Tohto Suisan (8038 JP)</a> or up to 3,979,580 shares. This partial offer is slightly confusing.The premium is low at +9% or so. The document states the acquirer intends to keep the stock listed, but the "intended" share purchase quantity is 100% of the minority. And while it states there is no intention to delist the company, the document notes there is no upper bound so that if enough people tender, there is a clear explanation of what conditions might allow the Exchange to delist the company, and under those circumstances, the company would be delisted. There is a section proposing that if "in the unlikely event" it gets to that level, the Acquirer would conduct a tachiaigai bunbai or other method of offering to ensure the company meets the listing criteria. But this can always be reneged upon. There is a kind of "shareholder agreement" between the Board of Tohto Suisan and Aso Corp which appears to include setting a threshold for voting rights at either 33.4% or 50.1% but not a different level (unless "appropriate"). This LOOKS easy. It is not. And if it gets done, it will not be clear why it would remain listed. More below the fold.

Yesterday 9 November, Aso Corp announced a Partial Tender Offer to buy 1,329,180 shares of Tohto Suisan (8038 JP) or up to 3,979,580 shares. This partial offer is slightly confusing.The premium is low at +9% or so. The document states the acquirer intends to keep the stock listed, but the "intended" share purchase quantity is 100% of the minority. And while it states there is no intention to delist the company, the document notes there is no upper bound so that if enough people tender, there is a clear explanation of what conditions might allow the Exchange to delist the company, and under those circumstances, the company would be delisted. There is a section proposing that if "in the unlikely event" it gets to that level, the Acquirer would conduct a tachiaigai bunbai or other method of offering to ensure the company meets the listing criteria. But this can always be reneged upon. There is a kind of "shareholder agreement" between the Board of Tohto Suisan and Aso Corp which appears to include setting a threshold for voting rights at either 33.4% or 50.1% but not a different level (unless "appropriate"). This LOOKS easy. It is not. And if it gets done, it will not be clear why it would remain listed. More below the fold.

Tohto Suisan Partial Tender Offer - A Weird Tender Which Leads To Listed Zombie-Ism