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

UNIZO Officially Opposes The HIS Tender; Elliott Goes Substantial

Fortress Group Fund Bids for UNIZO (3258):  An Interesting TOB

UNIZO: At ¥4300+, RiskArb Odds Are NOT Ever In Your Favor

HIS Hostile Tender for Unizo - Fun Ahead!

Quiddity Advisors

Event-Driven

Today after the close, <a href="https://www.smartkarma.com/entities/unizo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5209:1" rel="noopener">Unizo Holdings (3258 JP)</a>'s board has released its <a href="https://www.unizo-hd.co.jp/en/news/file/EN_20190723.pdf" target="_blank" rel="noopener">Position Statement</a> on the Tender Offer by <a href="https://www.smartkarma.com/entities/h-i-s-co-ltd" target="_blank" data-smartkarma-citation="entities:19311:1" rel="noopener">H I S Co Ltd (9603 JP)</a> as discussed in <a href="https://www.smartkarma.com/insights/his-hostile-tender-for-unizo-fun-ahead" target="_blank" data-smartkarma-citation="insights:31017" rel="noopener">HIS Hostile Tender for Unizo - Fun Ahead!</a> about 11 days ago. It says, simply, "Unizo announces that at present it withholds expressing its position regarding the tender offer launched by H.I.S. Co., Ltd. on July 11, 2019."This is a woefully inadequate response. 10+ calendar days after the launch of the Tender Offer, the Board meets to decide that there is not enough information in HIS' document to make a judgment so resolves to ask questions of the Offeror.<blockquote>
When the tender offer was announced, with the aim of forming a position on the tender offer, the Company immediately began to gather information on the tender offer and Tender Offeror, and also began proceeding with careful evaluation and examination of the tender offer, including the content of the Tender Offer Notice.
However, based solely on information that the Company has gathered until now, including the content of the Tender Office Notice, the details are unclear for many matters considered important when conducting an evaluation and examination of whether or not to recommend the tender offer and its conditions, such as the purpose of the tender offer; details of business tie-ups, including capital tie-ups, that the Tender Offeror plans with the Company after the tender offer, and if synergies can be expected as a result of these tie-ups; and the basis for the offered price of the tender offer.
</blockquote>The Special Committee of Independent Board Directors and external specialists has not reached a decision therefore the Company cannot. So it will ask questions of HIS.Under Article 27-10 (11) of the Financial Instruments and Exchange Act, as well as Article 13-2 (2) of the Enforcement Order of the Act (1965 Cabinet Order No. 321, including revisions made afterward), if a Target Company issues a Position Statement with questions, the Tender Offeror should submit a Tender Offeror’s Response as stipulated in Article 27-10 (11) of the Act in response to the questions, which are included in the <a href="https://www.unizo-hd.co.jp/en/news/file/EN_20190723.pdf" target="_blank" rel="noopener">attachment</a> starting on page 5. The Questions are more than three pages of relatively small print. It will largely be boilerplate to HIS and will result in their lawyers producing a boilerplate response with some editing required for this particular situation. The response will be due on the 30th of July and I expect it will be a long one.That will then trigger another Board response. The internals of the questions being asked suggests they are not going about this lightly. UNIZO may have some "internal options" in addition to the market hope and/or expectation that either a white knight will present itself or H.I.S. will be obliged to raise its offer price. <div class="content-highlight">
Today marked the day when enough shares had traded post-announcement so that if all shares traded were to tender, they would complete the H.I.S. tender. One should assume there has been substantial internal turnover, but 40% of the shares have traded. It is to note, however, that the cumulative VWAP since the deal came over the wires is over ¥3,120/share and since the first full day of non-limit-up trading, the average VWAP is ¥3,184/share. 
It is to note that since the close of the first full day of trading post-announcement, 
<ul>
<li>the shares have not traded below the Tender Offer Price once, </li>
<li>60% of the post-announcement volume has traded above the Tender Offer Price,</li>
<li>and 36% of the shares have traded at on the first day at a VWAP of ~¥3,050 (i.e. higher than one would expect for a partial tender at a 50+% premium to undisturbed.</li>
</ul>
The market clearly expects some kind of a bump and has put its money where its mouth is.
</div><hr>For information on Japan M&amp;A rules and practices, including hostile tender offers, please refer to the <a href="https://www.smartkarma.com/insights/quiddity-japan-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:28911" rel="noopener">Quiddity Japan M&amp;A Guide 2019</a> (other guides in the series are <a href="https://www.smartkarma.com/search?q=Quiddity%20M%26A%20Guide" target="_blank" rel="noopener">here</a>).

Today after the close, Unizo Holdings (3258 JP)'s board has released its Position Statement on the Tender Offer by H I S Co Ltd (9603 JP) as discussed in HIS Hostile Tender for Unizo - Fun Ahead! about 11 days ago. It says, simply, "Unizo announces that at present it withholds expressing its position regarding the tender offer launched by H.I.S. Co., Ltd. on July 11, 2019."This is a woefully inadequate response. 10+ calendar days after the launch of the Tender Offer, the Board meets to decide that there is not enough information in HIS' document to make a judgment so resolves to ask questions of the Offeror.
When the tender offer was announced, with the aim of forming a position on the tender offer, the Company immediately began to gather information on the tender offer and Tender Offeror, and also began proceeding with careful evaluation and examination of the tender offer, including the content of the Tender Offer Notice.
However, based solely on information that the Company has gathered until now, including the content of the Tender Office Notice, the details are unclear for many matters considered important when conducting an evaluation and examination of whether or not to recommend the tender offer and its conditions, such as the purpose of the tender offer; details of business tie-ups, including capital tie-ups, that the Tender Offeror plans with the Company after the tender offer, and if synergies can be expected as a result of these tie-ups; and the basis for the offered price of the tender offer.
The Special Committee of Independent Board Directors and external specialists has not reached a decision therefore the Company cannot. So it will ask questions of HIS.Under Article 27-10 (11) of the Financial Instruments and Exchange Act, as well as Article 13-2 (2) of the Enforcement Order of the Act (1965 Cabinet Order No. 321, including revisions made afterward), if a Target Company issues a Position Statement with questions, the Tender Offeror should submit a Tender Offeror’s Response as stipulated in Article 27-10 (11) of the Act in response to the questions, which are included in the attachment starting on page 5. The Questions are more than three pages of relatively small print. It will largely be boilerplate to HIS and will result in their lawyers producing a boilerplate response with some editing required for this particular situation. The response will be due on the 30th of July and I expect it will be a long one.That will then trigger another Board response. The internals of the questions being asked suggests they are not going about this lightly. UNIZO may have some "internal options" in addition to the market hope and/or expectation that either a white knight will present itself or H.I.S. will be obliged to raise its offer price. 
Today marked the day when enough shares had traded post-announcement so that if all shares traded were to tender, they would complete the H.I.S. tender. One should assume there has been substantial internal turnover, but 40% of the shares have traded. It is to note, however, that the cumulative VWAP since the deal came over the wires is over ¥3,120/share and since the first full day of non-limit-up trading, the average VWAP is ¥3,184/share. 
It is to note that since the close of the first full day of trading post-announcement, 

the shares have not traded below the Tender Offer Price once, 
60% of the post-announcement volume has traded above the Tender Offer Price,
and 36% of the shares have traded at on the first day at a VWAP of ~¥3,050 (i.e. higher than one would expect for a partial tender at a 50+% premium to undisturbed.

The market clearly expects some kind of a bump and has put its money where its mouth is.
For information on Japan M&amp;A rules and practices, including hostile tender offers, please refer to the Quiddity Japan M&amp;A Guide 2019 (other guides in the series are here).

ユニゾ取締役会、HISの買収提案に関する声明を発表 - 現時点では意見なし