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

Japan: Moving Average Outliers - Playing the Extremes

Japan: Moving Average Outliers - Results Driven

Japan: Relative Price Score Update - Overbought and Oversold Companies

Hitachi to Sell Clarion? Alpine Investors Take Note!

Quiddity Advisors

Event-Driven

<p>After the close today, <a href="https://www.smartkarma.com/entities/7797" target="_blank" data-smartkarma-citation="entities:7797:1">Hitachi Ltd (6501 JP)</a><a href="https://www.hitachi.com/New/cnews/month/2018/10/f_181026a.pdf" target="_blank">announced</a> (English) that it would sell its shares in <a href="https://www.smartkarma.com/entities/7888" target="_blank" data-smartkarma-citation="entities:7888:1">Clarion Co Ltd (6796 JP)</a> to <a href="https://www.smartkarma.com/entities/21451" target="_blank" data-smartkarma-citation="entities:21451:1">Faurecia (EO FP)</a> in a tender offer whereby Faurecia would launch an offer to buy 100% of Clarion at ¥2500/Share, which is a 10.5% premium to yesterday's close.</p>
<table class="table table-striped">
<tbody>
<tr>
<td colspan="3">
<h2>List of Documents</h2>
</td>
</tr>
<tr>
<td><strong>Announcement</strong></td>
<td><strong>Language</strong></td>
<td style="text-align: center;"><strong>Link</strong></td>
</tr>
<tr>
<td>Announcement from Hitachi on the Sale</td>
<td>English</td>
<td style="text-align: center;">
<h2>🤖</h2>
</td>
</tr>
<tr>
<td>Announcement on TDNet by Faurecia (temporary link)</td>
<td>Japanese</td>
<td style="text-align: center;">
<h2><a href="https://www.release.tdnet.info/inbs/140120181026423548.pdf" target="_blank">🤖</a></h2>
</td>
</tr>
<tr>
<td>Press Release from Faurecia</td>
<td>English</td>
<td style="text-align: center;">
<h2><a href="http://www.faurecia.com/sites/groupe/files/investisseurs/Faurecia%20Press%20Release.pdf" target="_blank">🤖</a></h2>
</td>
</tr>
<tr>
<td>Presentation by Faurecia</td>
<td>English</td>
<td style="text-align: center;">
<h2><a href="http://www.faurecia.com/sites/groupe/files/investisseurs/Investors%20presentation%20final%20final.pdf" target="_blank">🤖</a></h2>
</td>
</tr>
<tr>
<td>Faurecia Webcast Link</td>
<td>English/French</td>
<td style="text-align: center;">
<h2><a href="https://edge.media-server.com/m6/p/jscd7g7k" target="_blank">🤖</a></h2>
</td>
</tr>
</tbody>
</table>
<p>The presentation by Faurecia CEO Patrick Koller Friday morning Paris time talks a great deal about how synergistic this transaction is and how good a fit it is. The Faurecia management team sees the integration bringing Clarion to 8% EBIT margins by 2020 or 2021. Faurecia sees this transaction as being EPS accretive by 2020 on expected cost synergies on the Clarion side of €50mm/year (€90mm/year including 'revenue synergies' by 2022), with the statement that on March 2018 numbers, including the €50mm/year synergies, the purchase price equates to an EV/EBITDA multiple of 5.7x. </p>
<p>That "<em>seems</em>" reasonable.</p>
<div class="content-highlight">
<p>But as noted this morning in <a href="https://www.smartkarma.com/insights/hitachi-to-sell-clarion-alpine-investors-take-note" target="_blank" data-smartkarma-citation="insights:25372">Hitachi to Sell Clarion? Alpine Investors Take Note!</a>, Alpine investors really should take note.  </p>
</div>
<p>This deal is highly likely to be successful: 10yr high price, due diligence already complete, easy anti-trust given it is a highly disparate market, an eager buyer, and the buyer only needs to get 8% of minorities to agree.</p>
<p>More below.</p>

After the close today, Hitachi Ltd (6501 JP)announced (English) that it would sell its shares in Clarion Co Ltd (6796 JP) to Faurecia (EO FP) in a tender offer whereby Faurecia would launch an offer to buy 100% of Clarion at ¥2500/Share, which is a 10.5% premium to yesterday's close.




List of Documents



Announcement
Language
Link


Announcement from Hitachi on the Sale
English

🤖



Announcement on TDNet by Faurecia (temporary link)
Japanese

🤖



Press Release from Faurecia
English

🤖



Presentation by Faurecia
English

🤖



Faurecia Webcast Link
English/French

🤖




The presentation by Faurecia CEO Patrick Koller Friday morning Paris time talks a great deal about how synergistic this transaction is and how good a fit it is. The Faurecia management team sees the integration bringing Clarion to 8% EBIT margins by 2020 or 2021. Faurecia sees this transaction as being EPS accretive by 2020 on expected cost synergies on the Clarion side of €50mm/year (€90mm/year including 'revenue synergies' by 2022), with the statement that on March 2018 numbers, including the €50mm/year synergies, the purchase price equates to an EV/EBITDA multiple of 5.7x. 
That "seems" reasonable.

But as noted this morning in Hitachi to Sell Clarion? Alpine Investors Take Note!, Alpine investors really should take note.  

This deal is highly likely to be successful: 10yr high price, due diligence already complete, easy anti-trust given it is a highly disparate market, an eager buyer, and the buyer only needs to get 8% of minorities to agree.
More below.

フォルシア、クラリオンを1株2500円で買収へ