Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the September 2022 Rebalance.</li>
<li>Based on current rankings, there could be around 11 ADDs/DELs in the September 2022 Rebalance.</li>
<li>The completion of the <a href="https://www.smartkarma.com/entities/avast-plc" target="_blank" data-smartkarma-citation="entities:33815:1" rel="noopener">Avast PLC (AVST LN)</a> and <a href="https://www.smartkarma.com/entities/meggitt-plc" target="_blank" data-smartkarma-citation="entities:22044:1" rel="noopener">Meggitt PLC (MGGT LN)</a> deals could result in intra-review changes in September 2022.</li>
</ul>


In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the September 2022 Rebalance.
Based on current rankings, there could be around 11 ADDs/DELs in the September 2022 Rebalance.
The completion of the Avast PLC (AVST LN) and Meggitt PLC (MGGT LN) deals could result in intra-review changes in September 2022.


STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<ul>
<li>British competition regulator surprises by provisionally approving the acquisition of Avast by NortonLifeLock; Avast's share price reacted by increasing by 43%. Now the deal will complete.</li>
<li>If the planned procedures are fulfilled, the purchase of Avast would become effective on 12 September. The Majority cash option should be preferred vs. the majority stock option.</li>
<li>The spread on the majority cash option is 0.87% (tightened from 43.7% prior to the CMA announcement), with a 6.3% estimated annual return.</li>
</ul>


British competition regulator surprises by provisionally approving the acquisition of Avast by NortonLifeLock; Avast's share price reacted by increasing by 43%. Now the deal will complete.
If the planned procedures are fulfilled, the purchase of Avast would become effective on 12 September. The Majority cash option should be preferred vs. the majority stock option.
The spread on the majority cash option is 0.87% (tightened from 43.7% prior to the CMA announcement), with a 6.3% estimated annual return.


NortonLifeLock/​Avast: CMA Announces Provisional Clearance

<ul>
<li>The British competition regulator questions the acquisition of cybersecurity company <a href="https://www.smartkarma.com/entities/avast-plc" target="_blank" data-smartkarma-citation="entities:33815:1" rel="noopener">Avast PLC (AVST LN)</a> by <a href="https://www.smartkarma.com/entities/nortonlifelock-inc" target="_blank" data-smartkarma-citation="entities:18211:1" rel="noopener">NortonLifeLock (NLOK US)</a>. and refers the transaction for an in-depth phase 2 investigation.</li>
<li>The combination would not hold more than c.31% of the UK antivirus market and probably less than 30% in malware protection. The CMA investigation should take 20-24 weeks.</li>
<li>Deal closing could happen during Q4 2022. Spread on the majority cash option is 11.9%, spread on the majority stock option is 3.9%.</li>
</ul>


The British competition regulator questions the acquisition of cybersecurity company Avast PLC (AVST LN) by NortonLifeLock (NLOK US). and refers the transaction for an in-depth phase 2 investigation.
The combination would not hold more than c.31% of the UK antivirus market and probably less than 30% in malware protection. The CMA investigation should take 20-24 weeks.
Deal closing could happen during Q4 2022. Spread on the majority cash option is 11.9%, spread on the majority stock option is 3.9%.


NortonLifeLock/Avast: CMA In-Depth Investigation, Spread

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

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.

Equity Bottom-Up

<ul>
<li>The demand for cybersecurity products and services has been expanding in Japan amidst an increase in frequent and sophisticated cyber-attacks in the country.</li>
<li>Due to shortage of in-house IT professionals with knowledge on cyber security, there has been growing demand for outsourced managed security services in Japan.</li>
<li>We have identified <a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro Inc (4704 JP)</a> as our top pick in the Japanese cyber security market as there is further potential for top line and margins to expand.</li>
</ul>


The demand for cybersecurity products and services has been expanding in Japan amidst an increase in frequent and sophisticated cyber-attacks in the country.
Due to shortage of in-house IT professionals with knowledge on cyber security, there has been growing demand for outsourced managed security services in Japan.
We have identified Trend Micro Inc (4704 JP) as our top pick in the Japanese cyber security market as there is further potential for top line and margins to expand.


Japan Cybersecurity: Frequent and Sophisticated Cyber-Attacks Drive Demand

<ul>
<li>On 24 February, the Spanish antitrust regulator, the National Markets and Competition Commission (CNMC) approved the proposed merger.</li>
<li>All Regulatory Conditions have now been satisfied, other than approval by the UK's CMA. The deal advances to completion but the Effective Date has been pushed to 4 April 2022.</li>
<li>As of now, the majority cash option ($7.61 + 0.0302 NortonLifeLock shares/Avast share) should be preferred vs. the majority stock option. The spread on the majority cash option is 1.4%.</li>
</ul>


On 24 February, the Spanish antitrust regulator, the National Markets and Competition Commission (CNMC) approved the proposed merger.
All Regulatory Conditions have now been satisfied, other than approval by the UK's CMA. The deal advances to completion but the Effective Date has been pushed to 4 April 2022.
As of now, the majority cash option ($7.61 + 0.0302 NortonLifeLock shares/Avast share) should be preferred vs. the majority stock option. The spread on the majority cash option is 1.4%.


NortonLifeLock/Avast: Deal Progress & Spreads

Czech Republic

Avast PLC operates as a cyber-security software company. The Company designs and develops cloud-based security infrastructure solutions that offers desktop security and server protection services. Avast serves individuals and businesses worldwide.

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Avast PLC (AVST LN)

STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More

I see 11 ADDs/DELs based on current numbers but there are several other names that are only a small price change away from becoming ADDs/DELs

Janaghan Jeyakumar, CFA

NortonLifeLock/Avast: CMA Announces Provisional Clearance

Following the CMA provisional clearance, the takeover of AVAST by NortonLifeLock is set to complete in September. The spread on this cash and...

Jesus Rodriguez Aguilar

NortonLifeLock/Avast: CMA In-Depth Investigation, Spread

On 25 March, the CMA referred the transaction for an in-depth phase 2 investigation. The deal is left in limbo for 20-24 weeks and completion...

Jesus Rodriguez Aguilar

Japan Cybersecurity: Frequent and Sophisticated Cyber-Attacks Drive Demand

Demand for cybersecurity products and services has been expanding in Japan amidst an increase in frequent and sophisticated cyber-attacks in the...

Shifara Samsudeen, ACMA, CGMA

NortonLifeLock/Avast: Deal Progress & Spreads

The deal advances towards completion. All Regulatory Conditions have now been satisfied, other than approval (or the completion of review...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More

I see 11 ADDs/DELs based on current numbers but there are several other names that are only a small price change away from becoming ADDs/DELs

Janaghan Jeyakumar, CFA

NortonLifeLock/​Avast: CMA Announces Provisional Clearance

Following the CMA provisional clearance, the takeover of AVAST by NortonLifeLock is set to complete in September. The spread on this cash and...

Jesus Rodriguez Aguilar

NortonLifeLock/Avast: CMA In-Depth Investigation, Spread

On 25 March, the CMA referred the transaction for an in-depth phase 2 investigation. The deal is left in limbo for 20-24 weeks and completion...

Jesus Rodriguez Aguilar

Japan Cybersecurity: Frequent and Sophisticated Cyber-Attacks Drive Demand

Demand for cybersecurity products and services has been expanding in Japan amidst an increase in frequent and sophisticated cyber-attacks in the...

Shifara Samsudeen, ACMA, CGMA

NortonLifeLock/Avast: Deal Progress & Spreads

The deal advances towards completion. All Regulatory Conditions have now been satisfied, other than approval (or the completion of review...

Jesus Rodriguez Aguilar

NortonLifeLock/Avast: CMA Announces Provisional Clearance