Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Event-Driven

<p style="text-align: start;">The Toshiba Corporation activist campaign appears at an inflexion point following the 2021 AGM. </p>
<p>The current investment case for Toshiba is not based primarily on the fundamentals and valuation of the company as you would expect. As a result of the activist campaign, the current position of key stakeholders and the potential outcomes from their actions the investment case must now involve strategic consideration of all factors. </p>
<p>We examine the position and likely strategic needs to be achieved for an amicable end to the current activist campaign.</p>
<p>We highlight why the 12<sup>th</sup> August, mid-September 2021 and Q4 2021 are key to the next key dates for this activist led campaign.</p>
<p>Our conclusion leaves investors with a list of key positive and negative flags.</p>

The Toshiba Corporation activist campaign appears at an inflexion point following the 2021 AGM. 
The current investment case for Toshiba is not based primarily on the fundamentals and valuation of the company as you would expect. As a result of the activist campaign, the current position of key stakeholders and the potential outcomes from their actions the investment case must now involve strategic consideration of all factors. 
We examine the position and likely strategic needs to be achieved for an amicable end to the current activist campaign.
We highlight why the 12th August, mid-September 2021 and Q4 2021 are key to the next key dates for this activist led campaign.
Our conclusion leaves investors with a list of key positive and negative flags.

Toshiba Corp (6502 JP) Chapter 5: Assessing the Next Move

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: SOHO China, Toshiba, Boral Ltd, Yageo/Chilisin, Microstrategy


For the month of June, 11 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$14.8bn.



Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow-up discussions, or simply click on the insight link(s) below the name.






New Deals


Industry


Size (US$bn)


Type


Premium




Australia




Altium Ltd (ALU AU) 
Software
3.7
Scheme
41.5%


Altium Ltd (ALU) Rebuffs Autodesk Offer



Hansen Technologies (HSN AU) 
Software
1.0
Scheme
25.0%


Hansen Technologies (HSN AU)'s Assured Deal With BGH



Milton Corp Ltd (MLT AU) 
Fund manager
3.1
Scheme
20.0%



WHSP's Proposed Merger With Milton Corp Milton Merger Is A Most Marvelous Arb Milton-WHSP Merger Index Implications and the Marvelous Arb



 



Hong Kong




Bestway Global Holding (3358 HK) 
Leisure products
0.1
Scheme
27.0%


Bestway Global (3358 HK): Scheme Proposal From Founder



Soho China Ltd (410 HK) 
Real estate
3.3
VGO
31.6%


SOHO China (410 HK) Suspended Pursuant To The Takeovers Code - Again SOHO China's (410 HK) Done &amp; Dusted VGO



WH Group (288 HK) 
Meat supplier
0.5
Buyback/Partial



WH Group (288 HK): Today's Pig Is Tomorrow's Bacon?  WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk  WH Group Vs Peers - Too Many Piggies Going to Market?






Japan




Oliver Corp (7959 JP) 
Designer
0.1
Tender Offer
39.0%


Oliver (7959 JP) MBO - Please Sir, I Want Some More!



Sanshin Electronics (8150 JP) 
Electronics
1.5
Buyback Tender



Sanshin Electronics (8150 JP) BIG Buyback Tender - Not Designed For You










Malaysia




Ijm Plantations (IJMP MK) 
Palm Oil
0.7
SPA/MGO
56.19%


IJM Plantations' Potential MGO From KLK







MMC Corp Bhd (MMC MK) 
Infrastructure
0.7
SCR
70.94%


MMC Corp (MMC MK): Privatisation Offer From Syed Mokhtar  MMC Corp (MMC MK): Let's Talk About Timing










Singapore




Dutech Holdings (DTECH SP) 
Security 
0.1
Cash Offer
60.0%


Dutech Holdings (DTECH SP): A Safe Bet


Source: Smartkarma Insights






The average premium for the new deals announced (or first discussed) in June was ~41%, with a year-to-date average of ~32% (89 deals &amp; total deal size of US$161bn). This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively. 




Summary of News in June of Arb Situations On Smartkarma's Radar



(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation)






Australia


Comments (with links to announcements &amp; insights)




APN Property Group (APD AU) 

16-Jun: APN Property (APD AU): Scheme Booklet Out. EGM Firmed




Asaleo Care Ltd (AHY AU) 

2-Jun: Asaleo (ASX: AHY): Essity’s Offer Gets Up




Bingo Industries (BIN AU) 

9-Jun: Bingo Industries (BIN AU)'s Scheme Booklet has been registered with ASIC. 
The board unanimously recommends MIRA's Offer. The Independent Expert also gives the thumbs up. The Scheme Meeting will take place on the 13 July with an expected implementation date of 5 August. 14-Jun: Bingo Industries (BIN AU): Scheme Booklet Out. EGM Tabled




Boral Ltd (BLD AU) 

4-Jun: Boral Ltd (BLD AU)'s Target Statement is expected to be released next week in response to Seven Group Holdings (SVW AU) Offer.   9-Jun: Not surprisingly, in the Target Statement,  Boral Ltd (BLD AU) has recommended shareholders reject Seven Group Holdings (SVW AU)'s Offer.  28-Jun: Boral Ltd (BLD AU) Rejects Seven's Bump




Crown Resorts (CWN AU) 

15-Jun: Crown Resorts (CWN AU): Oaktree's Intriguing Proposal




Galaxy Resources (GXY AU) 

No June update




Japara Healthcare (JHC AU) 

15-Jun: Japara Healthcare (JHC AU): Bolton Clarke Spoils Calvary's Charge




Mainstream Group Holdings Ltd (MAI AU) 

9-Jun: Mainstream (MAI AU): Apex on Top Again as Bidding War Continues.... 21-June: Mainstream Group Holdings Ltd (MAI AU) confirmed that SS&amp;C did not exercise their matching rights. Consequently, they are now in discussions with Apex. Apex's Offer was at A$2.80/share.  25-Jun: Mainstream Group Holdings Ltd (MAI AU) has confirmed that they have entered into a Scheme Implementation Deed with Apex. The Offer Price is A$2.80/share.




McPherson's Ltd (MCP AU) 

15-Jun: Arrotex walks - and McPherson's Ltd (MCP AU) tanks 15.22%




Mortgage Choice (MOC AU) 

No June update



Primewest Group Ltd (PWG AU)

3-Jun: Primewest (PWG AU): Centuria Offer Period Extended; Trading Wide 4-Jun: This Offer is now unconditional.




Think Childcare (TNK AU) 

No June update




Vitalharvest Freehold Trust (VTH AU) 

28-Jun: Vitalharvest Freehold Trust (VTH AU)'s shareholders approve MAFM's Scheme. 




Vocus Communications (VOC AU) 

22-Jun: Vocus Communications (VOC AU)'s shareholders overwhelmingly approve MIRA's Scheme.










Hong Kong


Comments (with links to announcements &amp; insights)




China Machinery Engineering (1829 HK) 

4-Jun:  CMEC (1829 HK): Clarity On Timing As Pre-Cons Fulfilled




China Traditional Chinese Medicine (570 HK) 

8-Jun: In its monthly update regarding a potential Offer, China Traditional Chinese Medicine (570 HK) says there is no update.




China Youzan Limited (8083 HK) 

18-Jun: China Youzan (8083 HK) has now extends the Scheme long stop date out to the 26 November 2021. 




Chong Hing Bank (1111 HK) 

8-Jun: As expected, Chong Hing Bank (1111 HK) delays the Scheme Doc to the 9 July. I had the 17 July in my indicative table  18-Jun: Chong Hing Bank (1111 HK) announced it has now pushed back the despatch of the Scheme Document to the 30 July, around two weeks past my prior estimate. 




Kerry Logistics Network (636 HK) 

7-Jun: The free float waiver has been received.  A bunch of other pre-cons still remain outstanding.  15-Jun: Shareholders of Kerry Logistics Network (636 HK) approve the partial Offer. Various pre-conditions have yet to be fulfilled.  29-Jun: CFIUS approval received. Various pre-conditions remain outstanding. 




Rivera Holdings (281 HK) 

30-Jun: Scheme Doc out. Scheme Meeting is the 23 July. Payment expected on the 30 August. 




Sichuan Languang Justbon Service Group (2606 HK) 

17-Jun: EGM gets up. Close of acceptances on the 2 July. This is done.










India


Comments (with links to insights)




Adani Power (ADANI IN) 

3-Jun: Not Much Time Left for Adani Power Delisting Offer




Mphasis Ltd (MPHL IN) 

No June update




Vedanta Ltd (VEDL IN) 

20-Jun: VEDL has continued to outperform peers while VEDL has underperformed HZL so the VEDL stub has underperformed. 










Japan


Comments (with links to announcements &amp; insights)




Aomori Bank (8342 JP) / Michinoku Bank (8350 JP) 
No June update



BeNEXT Group (2154 JP) 
No June update



EPS Holdings (4282 JP) 
1-Jun:  EPS MBO Is Cheap. Too Cheap. But Be Careful Of Your Assumptions




Fuji Kosan Company (5009 JP) 
15-Jun: Tender offer extended to the 9 July 25-Jun: Fuji Kosan Wins In Court, Aslead Walks Away




Hitachi Metals (5486 JP) 

No June update




Honshu Chemical Industry (4115 JP) 

14-Jun: The Tender Offer for Honshu Chemical Industry (4115 JP) was completed. The owners now control 84.6%.




Invesco Office J Reit (3298 JP) 

1-Jun: Starwood Bumps Invesco Office Price to Match But STILL Not a Done Deal. 11-Jun:  Invesco Real Estate Bumps Intended Tender Offer Price 16-Jun: Starwood Tender for Invesco Fails - Invesco Deal More Likely To Work But....  17-Jun: Invesco Real Estate have announced their Tender Offer for Invesco Office J Reit (3298 JP) from June 18 to July 27. JPY 22,750/share. If you own, now is the time to sell. 



Japan Asia (3751 JP)
15-Jun: CIE Boosts Its Japan Asia Group (3751) TOB Price - Hidden Implications




Locoguide (4497 JP) / Kufu (4399 JP)

No June update



Maruka Machinery (7594 JP) / Furusato Industries (8087 JP) 
No June update



Sawada Holdings (8699 JP) 

23-Jun: Sawada Holdings (8699 JP)announced that after Khan Bank applied to the Mongolian Central Bank in February for permission to pay a dividend for the year ended 31/12/2020, the MCB had responded on 18 June and so the company will receive a dividend of JPY 4.41bn and record it as operating revenue in the current fiscal year. IN ADDITION, Sawada announced that the MCB had asked for confirmation and documentation on the selldown by a Qualifying Shareholder. This was Tower. Tower sold. Tower reported they had sold. This should be open and shut.  In the meantime, J Trust Co Ltd (8508 JP) has 14.39% of Sawada. See the link.




Secom Co Ltd (9735 JP) 

1-Jun: The Tender Offer filing for Secom Co Ltd (9735 JP)'s tender offer for Secom Joshinetsu (4342 JP) was filed on 31 May.




Toshiba Corp (6502 JP) 

7-Jun: Toshiba Shareholder Return - A Little of This, A Little of That, But Sticky and Accretive 10-Jun: Toshiba's 2020 AGM Investigative Report Is Damning 11-Jun: Toshiba – Hands in the Cookie Jar 13-Jun: With Directors Under Fire, Toshiba Axes Two, May Need Another EGM 18-Jun: Toshiba – Who Should Stay and Who Should Go 22-Jun: Toshiba – A Tale of Two Investigative Reports 24-Jun: How Much of Toshiba Is Owned By "Activists"? The Answer 25-Jun: Toshiba Board in Disarray! Likely Need ANOTHER EGM 28-Jun: Toshiba – The Fallout




Yamada Denki (9831 JP) 

9-Jun: Yamada Denki and Otsuka Kagu Do The Deed - A Quick Merger









Malaysia


Comments 




Can-One Bhd (CAN MK) 
15-Jun: Offer closed on the 15 June.



IHH Healthcare (IHH MK) 
No June update











New Zealand


Comments (&amp; link to insight)




Tilt Renewables Ltd (TLT NZ) 

13-Jun: Tilt Renewables: Scheme Booklet Out. EGM Firmed










Travis Lundy

<p><a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> announced results in mid-May along with a somewhat surprising plan to "return ¥150bn to shareholders", with method to be specified later - in early June. </p><p>On 7 June in the morning, Toshiba <a href="https://www.toshiba.co.jp/about/ir/en/news/20210607_1.pdf?_ga=2.28792570.77540220.1623036254-478027331.1623036254" target="_blank" rel="noopener">announced</a> how it would allocate that ¥150 billion.</p><div>
<ul style="list-style-type: disc;">
<li>Toshiba would pay a <a href="https://www.toshiba.co.jp/about/ir/en/news/20210607_2.pdf?_ga=2.28905850.77540220.1623036254-478027331.1623036254" target="_blank" rel="noopener">¥50 billion dividend</a> (¥110/share) to shareholders of record on 30 June 2021. Toshiba fell ¥125/share today (29 June) closing at ¥4765 as that dividend went ex-.</li>
<li>Toshiba would <a href="https://www.toshiba.co.jp/about/ir/en/news/20210607_1.pdf?_ga=2.28792570.77540220.1623036254-478027331.1623036254" target="_blank" rel="noopener">buy back</a> up to 27mm shares spending up to ¥100 billion in a buyback using ToSTNeT-3 and open-market buybacks, with the program lasting until the end of calendar 2021.</li>
</ul>
<p>Today after the close, Toshiba announced a buyback of up to ¥100 billion to be executed via ToSTNeT-3 tomorrow morning from 8:00-8:45 JST for up to 20,986,300 shares.</p>
<section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/215/978/original/Screenshot+2021-06-29+at+5.31.02+PM.png?1624959123" class="editor-image img-responsive" data-smartkarma-image-id="215978"></figure><div style="text-align: center;" class="content-caption">source: Toshiba <a href="https://www.toshiba.co.jp/about/ir/jp/news/20210629_1.pdf" target="_blank" rel="noopener">announcement</a> (Japanese)</div></section><p>This is not dissimilar to the explanation provided in the third ToSTNeT-3 transaction Toshiba conducted in Q4 2018. This one, is however, quite a bit smaller than that one was. </p>
<p>It is worth thinking about here. While Toshiba may not intend this to be a prisoner's dilemma situation, it resembles one. </p>
<p>That deserves more explanation and discussion, below.</p></section><p></p>
</div>

Toshiba Corp (6502 JP) announced results in mid-May along with a somewhat surprising plan to "return ¥150bn to shareholders", with method to be specified later - in early June. On 7 June in the morning, Toshiba announced how it would allocate that ¥150 billion.

Toshiba would pay a ¥50 billion dividend (¥110/share) to shareholders of record on 30 June 2021. Toshiba fell ¥125/share today (29 June) closing at ¥4765 as that dividend went ex-.
Toshiba would buy back up to 27mm shares spending up to ¥100 billion in a buyback using ToSTNeT-3 and open-market buybacks, with the program lasting until the end of calendar 2021.

Today after the close, Toshiba announced a buyback of up to ¥100 billion to be executed via ToSTNeT-3 tomorrow morning from 8:00-8:45 JST for up to 20,986,300 shares.
source: Toshiba announcement (Japanese)This is not dissimilar to the explanation provided in the third ToSTNeT-3 transaction Toshiba conducted in Q4 2018. This one, is however, quite a bit smaller than that one was. 
It is worth thinking about here. While Toshiba may not intend this to be a prisoner's dilemma situation, it resembles one. 
That deserves more explanation and discussion, below.


Toshiba ToSTNeT-3 Buyback For All The Marbles, and 🐓s

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>On Friday Toshiba’s AGM ended with both Chairman Nagayama and audit committee member Kobayashi rejected by shareholders. The result is notable for its potential corporate governance impact in Japan but its impact on Toshiba and the prospects for activists in Japan are a lot more mixed in our view.</p>

On Friday Toshiba’s AGM ended with both Chairman Nagayama and audit committee member Kobayashi rejected by shareholders. The result is notable for its potential corporate governance impact in Japan but its impact on Toshiba and the prospects for activists in Japan are a lot more mixed in our view.

Japan

Toshiba Corporation manufactures and markets electrical and electronic products. The Company's products include digital products such as PCs and televisions, NAND flash memories, and system LSIs (large-scale integrated), as well as social infrastructures such as power generators, medical equipment, and home appliances.

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Toshiba Corp (6502 JP)