Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Toshiba, Cathay, OFAC's Walk Back, Trad Chi Med, Enplas, Car, Japan Asia

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

China Traditional Chinese Medicine / Event-Driven

<p>On Friday after market close, <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>/CTCM announced that Sinopharm Hongkong, the controlling shareholder with a 32.46% stake, is currently exploring a proposal to privatise CTCM. The announcement was in response to <a href="https://www.reuters.com/article/us-sinopharm-m-a-china-tcm-exclusive-idUSKBN29W0J5" target="_blank" rel="noopener">a Reuters article</a> on 27 January that Sinopharm is leading a consortium to privatise CTCM. The rumoured privatisation price of HK$5.10 per share is a 26.6% premium to the unaffected price of HK$4.03 per share (26 January) and an 18.6% premium to the last close of HK$4.30 per share (27 January prior to the trading halt). </p><div class="content-highlight"><p>We believe that the privatisation will be likely done through a scheme of arrangement. As a Hong Kong incorporated company, the key condition precedent is the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). Overall, we think that at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a formal proposal).  </p></div>

On Friday after market close, China Traditional Chinese Medicine (570 HK)/CTCM announced that Sinopharm Hongkong, the controlling shareholder with a 32.46% stake, is currently exploring a proposal to privatise CTCM. The announcement was in response to a Reuters article on 27 January that Sinopharm is leading a consortium to privatise CTCM. The rumoured privatisation price of HK$5.10 per share is a 26.6% premium to the unaffected price of HK$4.03 per share (26 January) and an 18.6% premium to the last close of HK$4.30 per share (27 January prior to the trading halt). We believe that the privatisation will be likely done through a scheme of arrangement. As a Hong Kong incorporated company, the key condition precedent is the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). Overall, we think that at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a formal proposal).  

China Traditional Chinese Medicine Possible Privatisation



For the month of January, 22 new deals were discussed on Smartkarma with an overall announced deal size of ~US$52bn.


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




Bingo Industries (BIN AU) 
Waste collection
1.8
Scheme
19.8%



Bingo Industries (ASX: BIN): Talking Trash
Bingo Industries (BIN AU): CPE/MIRA's Scavenger Hunt




Hong Kong




China Machinery Engineering (1829 HK) 
Construction
0.4
Merger by Absorption
45.1%



China Machinery Engineering (1829 HK): Possible Offer
China Machinery Engineering (1829 HK): Delisting Offer From Parent




Polytec Asset Holdings (208 HK) 
Real Estate
0.4
Scheme
61.3%


Polytec Asset (208 HK): Offer By Way Of A Scheme



HKC Holdings (190 HK) 
Holding Co.
0.2
Scheme
120.39%



China Renewable Energy (987 HK): Possible Privatisation Offer
HKC (190 HK): Take-Private Offer By Way Of A Scheme




New Century REIT (1275 HK) 
Hospitality
0.25
Scheme-like
14.3%


New Century (1275 HK): Closing Down Sale



Rivera Holdings (281 HK) 
Real estate
0.1
Scheme
62.5%


Rivera (281 HK): Scheme Or Face Delisting



China Traditional Chinese (570 HK) 
TCM
3.0
??
??


Trad Chi Med (570 HK): Sinopharm's Feverish Proposal



Zhejiang New Century Hotel (1158 HK) 
Hospitality
0.65
Merger by Absorption
24.7%


Zhejiang New Century (1158 HK): Pre-Conditional Offer



Zhuhai Holdings Investment (908 HK) 
Ports
0.2
Scheme
37.8%


Zhuhai Holdings (908 HK): Zhuhai SASAC Reloads With Scheme Offer



India




Engineers India (ENGR IN) 
Engineering
0.1
Buyback tender
10%


Hefty Engineers India Buyback Tender - Worth The Arb If You Own



Japan




Tokyo Rope Mfg (5981 JP) 
Wire rope
0.2
Partial
39%



Nippon Steel's HOSTILE Partial Tender Offer for Tokyo Rope: A Move to Mark Territory?
New Money for Old Rope? Gaming Out A Hostile Partial Offer on Tokyo Rope (5981)




Singapore




CEI Limited (CEI SP) 
Electronics
0.1
VGO
16.2%


CEI Limited (CEI SP): Privatization Deal by AEM Holdings (AEM SP) Trading with a View to Complete



GL Ltd (GLL SP) 
Hospitality
0.2
VGO
25.0%


GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco



Penguin International (PBS SP) 
Boat builder
0.1
VGO
30%


Penguin International (PBS SP): Friendly Privatization Deal Might Need A Bump



Europe




CA Immobilien Anlagen AG (CAI AV) 
Real estate
3.8
Offer
16.9%


CA Immo - Starwood: Mandatory Offer



Carrefour SA (CA FP) 
Convenience
20.0
Merger
29.3%


Carrefour - Alimentation Couche-Tard Non-Binding Offer



Enlabs AB (NLAB SS) 
Sports betting
0.3
Offer
1.1%


Enlabs - Entain Beefing Up



Entain (ENT LN) 
Entertainment
11.0
Offer
22%


MGM's Prospective Offer for Entain



Liberbank SA (LBK SM) 
Financing
0.9
Merger



Liberbank - Unicaja Agreed Merger



Naturgy Energy Group SA (NTGY SM) 
Energy
6.0
Partial offer
20%


IFM Investors to Launch a Partial Hostile Tender Offer for Naturgy



Handicare Group AB (HANDI SS) 
Medi aid
0.4
Offer
22.0%


Handicare - Savaria: Recommended Offer



Tikkurila Oyj (TIK1V FH) 
Paints
1.7
Offer
84.5%


Akzo Nobel Tops PPG's Offer for Tikkurila


Source: Smartkarma Insights




The average premium for the new deals announced (or first discussed) in January was ~35%. This compared to the average premium in 2020 and 2019 of 31% and 31.5% respectively. 




Summary of News in January 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. Where a new insight was written on these names in July, I've included a link, in bold, to that insight in italics.)






Australia


Comments (with links to announcements &amp; insights)




3P Learning (3PL AU) 

21-Jan: Non-binding term sheet entered into




amaysim Australia (AYS AU) 

18-Jan:
WAM Capital Ltd (WAM AU) has bumped its Offer for amaysim Australia (AYS AU) to 1 new WAM share for every 2.675 AYS share; or A$0.70/share cash per share, from 1 new WAM share for every 2.7 AYS share; or A$0.695/share cash per share. AYS' largest shareholder, Longfrist with 19.19%, supports WAM's Offer.




Asaleo Care Ltd (AHY AU) 

27-Jan: Independent board rejects non-binding proposal




Cardinal Resources (CDV AU) 

27-Jan: Shandong to compulsory acquire shares. Shares to be cease trading on the 3 Feb




Coca Cola Amatil (CCL AU) 

6-Jan: Coca-Cola Amatil Takeover Offer: A Bump Forthcoming?




Link Administration Holdings (LNK AU) 

3-Jan: SS&amp;C withdraws proposal for Link Administration Holdings (LNK AU).




Regis Healthcare (REG AU) 

20-Jan Washington H. Soul Pattinson and Co. (SOL AU)withdraws




Think Childcare (TNK AU) 

20-Jan: Think Childcare (TNK AU): Bigger Bid by Busy Bees




Vitalharvest Freehold Trust (VTH AU) 

No January update




WPP PLC (WPP LN) 

No January update










Hong Kong


Comments (with links to announcements &amp; insights)




Beijing Jingneng Clean Energy (579 HK) 

31-Dec: Beijing Jingneng (579 HK): Doc Out. IFA Says Fair &amp; Reasonable
11-Jan: As expected, SAIF (6.13% of total issued H  shares, and 11.53% of independent H shares; and Goldwind (2.83% &amp; 5.32% respectively) have given letters of intent to support the Offer. 
25-Jan:Quiddity M&amp;A : A Guide To Mergers By Absorption




Car Inc (699 HK) 

7-Jan: Car Inc (699 HK):  Are We Missing Anything?
26-Jan: Car Inc (699 HK):  No, We Are Not Missing Anything




China Logistics Property Holdings (1589 HK) 

18-Jan: Bloomberg is reporting that Blackstone Group Inc., ESR Cayman Ltd., and JD Logistics Inc. are among bidders for control of China Logistics Property Holdings (1589 HK). Meituan (3690 HK) is also reportedly in the mix.




Cowell E Holdings (1415 HK) 

1-Jan: Cowell E Holdings (1415 HK) delays the dispatch of the Composite Doc to the 22 January. 
15-Jan: Doc issued. Fist close is the 5 Feb




Huifu Payment Limited (1806 HK) 

27-Jan: Huifu Payment (1806 HK): Scheme Doc Out. IFA Says Fair




I.T Ltd (999 HK) 

20-Jan: Pre-cons satisfied. 




Shanghai Prime Machinery H (2345 HK) 

11-Jan: Shanghai Prime Machinery H (2345 HK) shareholders approved the merger. 12 Jan was the last day of trading. 




SHK Hong Kong Industries (666 HK) 

No January update




Tonly Electronics Holdings (1249 HK) 

29-Jan: Tonly Electronics (1249 HK): Scheme Doc Out. IFA Says Fair




China Zhongdi Dairy (1492 HK) 

18-Jan:  Zhongdi Dairy (1492 HK): Doc Out. Compulsory Acquisition Afforded










India


Comments (with links to insights)




Allcargo Logistics (AGLL IN) 

No January update




INEOS Styrolution India Limited (INEOS IN) 

No January update




Vedanta Ltd (VEDL IN) 

11-Jan: Vedanta (VEDL IN) Promoter To Launch an Open Offer To Buy More










Japan


Comments (with links to insights)




Cocokara Fine (3098 JP) 
No January update



Honshu Chemical Industry (4115 JP) 

No January update




Japan Asia (3751 JP) 

11-Dec: City Index Eleventh is now 14.91% of the register at Japan Asia (3751 JP).
18-Jan: Murakami Fund's Tender for JAG (3751):  May Be Rangebound Near-Term
26-Jan: Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100% 




Joban Kaihatsu (1782 JP) 

4-Jan: Black Clover today reported they owned 12.29% of Joban Kaihatsu (1782 JP) 
23-Jan: Joban Kaihatsu MBO Price Bumped, Tender Extended: Still Not Rolling In Clover




Keihanshin Building (8818 JP) 

13-Jan Tender offer fails. Funny that. 




Kenedix Inc (4321 JP) 

9-Jan: Kenedix Inc (4321 JP) reported  that SMFL MIrai Partners had completed the Tender Offer for Kenedix shares and ended up with 62.35%
12-Jan: FTSE announced today that it would reduce the weight of Kenedix Inc (4321 JP) in its index from 97.7309% to 34.90958490918% while keeping the share count unchanged at 218,917,200 shares. The change takes place at the close of business on the 14th of January




Medical &amp; Biological Laboratories (4557 JP) 

Delisted 13 January




Pressance Corp (3254 JP) 

17-Jan: Pressance Partial Tender - Almost EVERYONE Tendered




Softbrain (4779 JP) 

Delisted on Jan 19




Tokyo Dome Corp (9681 JP) 

19-Jan: Mitsui Fudosan (8801 JP) announced the results of its Tender Offer for Tokyo Dome Corp (9681 JP). That will trigger an EGM and a resulting squeezeout.  It will also trigger a FTSE and MSCI downweight.




Toa Oil Co Ltd (5008 JP) 

13-Jan: Toa Oil (5008) Tender Offer Update - Looks Bumpity
14-Jan: Cornwall Capital announced it had increased its position in Toa Oil Co Ltd (5008 JP) from 20.86% (as of the last report) to 21.89% (as of the 6th of January). 
28-Jan: Cornwall Capital announced it had increased its position to 22.98%










Malaysia


Comments (with links to insights)




Batu Kawan Bhd (BAK MK) 

No January update




FGV Holdings Bhd (FGV MK) 

26-Jan: FGV (FGB MK): IFA Says Offer Not Fair








New Zealand


Comments (with links to insights and announcements)




Infratil Ltd (IFT NZ) 

28-Jan: Announced a strategic review of 51%-held Trustpower Ltd (TPW NZ) 








Philippines


Comments (with links to insights and announcements)




Lopez Holdings (LPZ PM) 

21-Jan: Tender Offer report despatched. Closing date is the 19 Feb,










Singapore


Comments 




Hi P International (HIP SP) 

No January update




Soilbuild Business Space REIT (SBREIT SP) 

24-Jan: First court hearing to be held on the 8 Feb.








Taiwan


Comments (with links to insights)




Jih Sun Financial (5820 TT) 

6-Jan: Fubon Financial Offer for Jih Sun Gets Even Weirder
7-Jan: Taiwanese news agency CNA has said that the FSC is investigating whether or not Capital Target Limited and its Responsible Officer Derek MD Chen (who I had believed to be the Responsible Person) is indeed the controller of Capital Target Limited.




Thinflex Corp (3144 TT) 

Tender Offer was completed, 100% pro-ration. (Japanese)













Europe/UK


Comments (with links to announcements and insights)




Altice NV A (ATC NA) 


22-Jan: Offer declared unconditional




Calisen PLC (1779730D LN) 


18-Jan: Sche doc issued




Entra ASA (ENTRA NO) 

No January update




KAZ Minerals (KAZ LN) 

25-Jan:  KAZ Minerals




Siltronic AG (WAF GR) 

25-Jan: GlobalWafers Ups Offer for Siltronic




Recipharm AB (RECIB SS) 
28-Jan: Roar bumps Offer



RSA Insurance (RSA LN) 
No January update



Tele Columbus AG (TC1 GR) 
No January update



Veolia Environnement SA (VIE FP) 
11-Jan: Veolia Steps up Pressure on Suez






Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

<p>In light of the proposed privatisation of China TCM, this Insight briefly discusses precedent transactions involving China pharmaceutical companies and some of the issues that have weighed on the shares' valuation. Precedent transaction data argue for a much higher valuation, but the buyers have substantial leverage in this case.</p>

In light of the proposed privatisation of China TCM, this Insight briefly discusses precedent transactions involving China pharmaceutical companies and some of the issues that have weighed on the shares' valuation. Precedent transaction data argue for a much higher valuation, but the buyers have substantial leverage in this case.

Trad Chi Med (570 HK): Additional Thoughts

<div>
<p><a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> ("CTCM") is the Traditional Chinese Medicine (TCM) arm of China National Pharmaceutical Group Corporation (CNPGC), one of the largest healthcare groups in China, managed directly by SASAC.</p>
<p>Shares in CTCM were suspended in afternoon trading today "<em>pursuant to Rule 13.09(2)</em>"*. </p>
<p>According to a Reuters article, Sinopharm Group Hongkong Co, an indirect wholly-owned subsidiary of CNPGC and CTCM’s major shareholder, is teaming up with the next two biggest stockholders, Ping An Insurance Group Co and executive director Wang Xiaochun, collectively holding a 49.4% stake, to take CTCM private.</p>
<p>The rumoured price tag is $5.10/share, a 19% premium to the last close of $4.30/share. CTCM's shares were up 6.7% ahead of the suspension.</p>
</div>
<div>As always, more below the fold.</div>
<div><hr></div>
<div>* <a href="https://en-rules.hkex.com.hk/rulebook/1309-0" target="_blank" rel="noopener"><em>Rule13.09(2)</em></a>
<ol style="list-style-type: lower-alpha;">
<li><em>Where an issuer is required to disclose inside information under the Inside Information Provisions, it must also simultaneously announce the information.</em></li>
<li><em>An issuer must simultaneously copy to the Exchange any application to the Commission for a waiver from disclosure under the Inside Information Provisions, and promptly upon being notified of the Commission's decision copy the Exchange with the Commission's decision.</em></li>
</ol>
</div>


China Traditional Chinese Medicine (570 HK) ("CTCM") is the Traditional Chinese Medicine (TCM) arm of China National Pharmaceutical Group Corporation (CNPGC), one of the largest healthcare groups in China, managed directly by SASAC.
Shares in CTCM were suspended in afternoon trading today "pursuant to Rule 13.09(2)"*. 
According to a Reuters article, Sinopharm Group Hongkong Co, an indirect wholly-owned subsidiary of CNPGC and CTCM’s major shareholder, is teaming up with the next two biggest stockholders, Ping An Insurance Group Co and executive director Wang Xiaochun, collectively holding a 49.4% stake, to take CTCM private.
The rumoured price tag is $5.10/share, a 19% premium to the last close of $4.30/share. CTCM's shares were up 6.7% ahead of the suspension.

As always, more below the fold.

* Rule13.09(2)

Where an issuer is required to disclose inside information under the Inside Information Provisions, it must also simultaneously announce the information.
An issuer must simultaneously copy to the Exchange any application to the Commission for a waiver from disclosure under the Inside Information Provisions, and promptly upon being notified of the Commission's decision copy the Exchange with the Commission's decision.



Trad Chi Med (570 HK): Sinopharm's Feverish Proposal

Hong Kong

China Traditional Chinese Medicine Co. Limited, through its subsidiaries, manufactures and sells medicine and pharmaceutical products in China.

China Traditional Chinese Medicine (570 HK)

Price Gauge
52-week Range	0.00 - 0.00
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China Traditional Chinese Medicine (570 HK)

Last Week in Event SPACE: Toshiba, Cathay, OFAC's Walk Back, Trad Chi Med, Enplas, Car, Japan Asia

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

China Traditional Chinese Medicine Possible Privatisation

Sinopharm Hongkong, the controlling shareholder, is currently exploring a privatisation proposal. At the last close price, the downside risk is low...

Arun George

(Mostly) Asia M&A: January 2021 Roundup

The average premium for the new deals announced (or first discussed) in January was ~36%. This compared to the average premium in 2020 and 2019 of...

David Blennerhassett

Trad Chi Med (570 HK): Additional Thoughts

This Insight briefly discusses precedent transactions and issues that have weighed on 570HK. Precedent transaction data argue for a much higher...

Kemp Dolliver, CFA

Trad Chi Med (570 HK): Sinopharm's Feverish Proposal

Share currently suspended, so there's nothing to be done as such. The insight is labeled bullish as an Offer appears forthcoming.

David Blennerhassett

Price Gauge

52-week Range

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