Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

TechnoPro Holdings, Inc. offers services and solutions in mechanical and electronic design, IT and software development, and wide range of technological fields through outsourcing. The Company also has presence in biological, chemical and construction management businesses.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/technopro-holdings-inc" target="_blank" data-smartkarma-citation="entities:6955:1" rel="noopener">Technopro Holdings (6028 JP)</a> is a temp/contract staffing platform which specialises in engineering staff (IT engineers far more than machinery, construction, chemicals). The company has been growing.</li>
<li>Overnight, an article appeared in MergerMarket - a high-dollar M&amp;A-related news service - saying the company was going through a sale process. The company confirmed it was one possibility.</li>
<li>The stock went limit up. This quick writeup looks at the framework of the idea, and possibilities.</li>
</ul>



Technopro Holdings (6028 JP) is a temp/contract staffing platform which specialises in engineering staff (IT engineers far more than machinery, construction, chemicals). The company has been growing.
Overnight, an article appeared in MergerMarket - a high-dollar M&amp;A-related news service - saying the company was going through a sale process. The company confirmed it was one possibility.
The stock went limit up. This quick writeup looks at the framework of the idea, and possibilities.


[Japan M&A] TechnoPro Holdings (6028) May Be Up For Grabs

AICHI STEEL CORPORATION is a manufacturer of specialty steel.   The Company's products include rolled steel and forged products.  Aichi Steel jointly works with Toyota Motors to develop automobile parts.  The Company also makes magnetic and electronic parts, including plastic magnets.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aichi-steel-corp" target="_blank" data-smartkarma-citation="entities:4517:1" rel="noopener">Aichi Steel (5482 JP)</a> announced earnings on 25-April during market hours. Results were OK. Guidance was OK. The div was WAY up for Mar26. Shares fell. Then rose 26-April.</li>
<li>Aichi Steel is a Toyota Motors equity affiliate (26-27%), Toyota Industries, Toyota R.E., megabanks, the Kyoeikai, and Nippon Steel all have stakes. Nippon Steel recently reduced its position. </li>
<li>Activist Murakami has about 10% across two entities. This morning, the Company was to buy back 16%. WHO is selling? We don't know yet. Likely a mix. Details may matter.</li>
</ul>



Aichi Steel (5482 JP) announced earnings on 25-April during market hours. Results were OK. Guidance was OK. The div was WAY up for Mar26. Shares fell. Then rose 26-April.
Aichi Steel is a Toyota Motors equity affiliate (26-27%), Toyota Industries, Toyota R.E., megabanks, the Kyoeikai, and Nippon Steel all have stakes. Nippon Steel recently reduced its position. 
Activist Murakami has about 10% across two entities. This morning, the Company was to buy back 16%. WHO is selling? We don't know yet. Likely a mix. Details may matter.


[Japan Activism?] Toyota Group Equity Affiliate and Murakami Target Aichi Steel Does Large ToSTNeT-3

Sumitomo Mitsui Construction / Event-Driven

Sumitomo Mitsui Construction Co., Ltd. is a general contractor nationwide and overseas.  The Company constructs infrastructure such as railways, roads and energy facilities.  Sumitomo Mitsui Construction also builds residential, commercial, and institutional buildings such as high-rise housings. Additionally, the Company operates real estate brokerage and leasing businesses.

<ul>
<li>Noted activist Yoshiaki MURAKAMI and associates owned ~12.5% in March 2024, perhaps a tad more. Now they own ~29%. </li>
<li>Integrated Construction Co <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> - congenitally allergic to paying full price for acquisitions - is buying <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-construction" target="_blank" data-smartkarma-citation="entities:17731:1" rel="noopener">Sumitomo Mitsui Construction (1821 JP)</a> well below FAs' DCF range midpoints.</li>
<li>But MURAKAMI-san has tossed his cards in, agreeing to tender. This looks like it gets done, but there are interesting angles.</li>
</ul>


Noted activist Yoshiaki MURAKAMI and associates owned ~12.5% in March 2024, perhaps a tad more. Now they own ~29%. 
Integrated Construction Co INFRONEER Holdings (5076 JP) - congenitally allergic to paying full price for acquisitions - is buying Sumitomo Mitsui Construction (1821 JP) well below FAs' DCF range midpoints.
But MURAKAMI-san has tossed his cards in, agreeing to tender. This looks like it gets done, but there are interesting angles.


[Japan M&A/Activism] Infroneer To Buy Out Activist Target Sumi Mits Construction (1821) Cheapish

The Nippon Road Co Ltd paves a variety of roads.  The Company also performs civil engineering works and constructs buildings.  Nippon Road manufactures and sells paving materials such as asphalt and concrete compounds.  The Company, affiliated with Shimizu Corp., operates real estate leasing business.  Nippon Road develops recycling systems for industrial waste.

<ul>
<li>In February 2022, <a href="https://www.smartkarma.com/entities/shimizu-corp" target="_blank" data-smartkarma-citation="entities:8530:1" rel="noopener">Shimizu Corp (1803 JP)</a> bought an additional 25% to get to 50.1% of <a href="https://www.smartkarma.com/entities/nippon-road-co-ltd" target="_blank" data-smartkarma-citation="entities:12581:1" rel="noopener">Nippon Road (1884 JP)</a>. It wasn't a great price.</li>
<li>It was, however, a good trade to buy the dip after, as recommended. I expected Shimizu to come back in one to three years. It took three. </li>
<li>Like last time, the price is light. The multiple is low. There are no synergies in the price analysis, in specific violation of the METI Fair M&amp;A/CorpTakeover Guidelines.  Bah humbug.</li>
</ul>


In February 2022, Shimizu Corp (1803 JP) bought an additional 25% to get to 50.1% of Nippon Road (1884 JP). It wasn't a great price.
It was, however, a good trade to buy the dip after, as recommended. I expected Shimizu to come back in one to three years. It took three. 
Like last time, the price is light. The multiple is low. There are no synergies in the price analysis, in specific violation of the METI Fair M&amp;A/CorpTakeover Guidelines.  Bah humbug.


[Japan M&A] - Three+ Years Later, Shimizu Comes In To Buy Out Minorities in Nippon Road (1884)

Equity Capital Markets

GMO Internet, Inc. offers marketing services. The Company offers internet advertising, mobile advertising, search engine marketing, and other services to medium sized advertising agencies. GMO Internet conducts businesses throughout Japan.

<ul>
<li>Last year, GMO injected its internet business into <a href="https://www.smartkarma.com/entities/gmo-internet-inc-919fd60b-ad2a-4c5f-b333-167a849b67b0" target="_blank" data-smartkarma-citation="entities:9029:1" rel="noopener">GMO Internet (4784 JP)</a> and took shares as consideration. Somehow, GMO Internet got a TOPIX inclusion earlier this year. </li>
<li>The company has 1.24% float of 3.4mm shares. GMO Internet Group - the parent - will now offload 91.7mm shares in an equity offering to meet TSE Continued Listing Requirements.</li>
<li>That is about ¥279bn at current price against float of ¥10bn. Full market cap is ¥850bn. That's 170x Dec25e Net Income. I expect the price will fall. You were warned. </li>
</ul>


Last year, GMO injected its internet business into GMO Internet (4784 JP) and took shares as consideration. Somehow, GMO Internet got a TOPIX inclusion earlier this year. 
The company has 1.24% float of 3.4mm shares. GMO Internet Group - the parent - will now offload 91.7mm shares in an equity offering to meet TSE Continued Listing Requirements.
That is about ¥279bn at current price against float of ¥10bn. Full market cap is ¥850bn. That's 170x Dec25e Net Income. I expect the price will fall. You were warned. 


GMO Internet (4784) Offering - This Is a GINORMOUS Re-IPO - AVOID LIKE THE PLAGUE

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.

Travis Lundy
Pan-Asia Catalysts/Events
• Quiddity Advisors

[Japan M&A] TechnoPro Holdings (6028) May Be Up For Grabs

A specialist M&A news service suggests TechnoPro Holdings may be a take-private candidate with bids due in 6 weeks. It doesn't not make sense. I...

Travis Lundy

[Japan Activism?] Toyota Group Equity Affiliate and Murakami Target Aichi Steel Does Large ToSTNeT-3

Aichi Steel was a very low PBR stock a year ago. Murakami-san targeted it. It went up. Now the company did a large buyback at 0.7x book. Who sold?...

Travis Lundy

[Japan M&A/Activism] Infroneer To Buy Out Activist Target Sumi Mits Construction (1821) Cheapish

Infroneer does a deal to buy beleaguered Sumitomo Mitsui Construction, "saving" it from activist Murakami-san's 29% ownership. The deal comes light...

Travis Lundy

[Japan M&A] - Three+ Years Later, Shimizu Comes In To Buy Out Minorities in Nippon Road (1884)

Shimizu TOB for Nippon Road. This was expected. Round 2 is again at a low price and despite the fact synergies are de rigueur for this kind of deal...

Travis Lundy

GMO Internet (4784) Offering - This Is a GINORMOUS Re-IPO - AVOID LIKE THE PLAGUE

GMO Internet was the subject of a reverse takeover on January 1. The stock has risen sharply because of a low-float squeeze. Now comes the HUGE...

Travis Lundy