Travis Lundy

Pan-Asia Catalysts/Events

Hard catalysts (M&As, spin-offs, demergers, index rebalances) & discount arbitrage (holdco, share-class)

Event-Driven

TOYO CONSTRUCTION CO., LTD. performs marine civil engineering works. The Company provides reclamation and ground improvement works. Toyo Construction also constructs infrastructure such as water purification systems.  The Company builds commercial and institutional buildings, operating real estate businesses.

<ul>
<li>On Friday, post-close, there was a flurry of excitement as YFO put out a press release amending the start date of the planned Tender Offer to early November.</li>
<li>Not long after, there was another release by <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> itself. </li>
<li>You have to read both for what they are. And as they say.... Get your programs here!</li>
</ul>

<ul>
<li>In March 2022, <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> agreed to be taken over by equity affiliate stake owner <a href="https://www.smartkarma.com/entities/infroneer-holdings-inc" target="_blank" data-smartkarma-citation="entities:35785:1" rel="noopener">INFRONEER Holdings (5076 JP)</a> at what was a low price.</li>
<li>Nintendo Founder Family Office "YFO" objected, and bought 25+% of the company, then offered to buy it out 30% higher. Toyo Construction objected.</li>
<li>Four months later they finally signed an NDA and then started negotiating. Early in November the target date for a Tender Offer start by YFO was pushed to early December.</li>
</ul>

<ul>
<li>Yamauchi No.10 Family Office and <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> have been going back and forth in the last few weeks, with TC trying to figure out if it accepts YFO.</li>
<li>The Infroneer Tender Offer ends today, and with that - perhaps coincidental timing and perhaps not - YFO has formally announced an intention to launch a Tender Offer.</li>
<li>That puts the ball back in Toyo Construction's court. The deal would be at ¥1,000/share and would launch in late June... <em>if</em> TC is ready and willing.</li>
</ul>

<ul>
<li>As discussed in the last insight, there was the possibility that YFO was jumping the gun. From the near 100+ pages released by <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> today, they did.</li>
<li>TC accused YFO of being "dishonest" in its attitude and actions, from the "reasons" stated in its Large Shareholder Report and market purchases to YFO's Murakami-san's previous interactions.</li>
<li>What TC doesn't yet understand is that when a company is in play, if a "market check" comes in, that's OK. Investors are not hurt by a higher bid.</li>
</ul>

<ul>
<li>Three weeks ago, Yamauchi No 10 Family Office (YFO) announced its intentions to launch a Tender Offer by end-June. <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> got upset and called YFO names.</li>
<li>TC announced a Poison Pill, they talked, TC accused YFO in the AGM Convocation of "extreme dishonesty." They have since met again, and finally signed a long standstill agreement. </li>
<li>But the Poison Pill will be put to shareholders (ISS recommends against), and shareholders have to decide from the public documents whether they believe Toyo Construction. </li>
</ul>

Toyo Construction

Toyo Cancels Poison Pill At Last Minute - Range to the Upside