Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>An Australian Royal Commission on aged care providers was <a href="https://agedcare.royalcommission.gov.au/sites/default/files/2021-03/final-report-volume-1_0.pdf" target="_blank" rel="noopener">issued</a> on the 26 February 2021 with 148 recommendations to address what was deemed a weak and ineffective regulatory arrangement, including a new aged care act, the introduction of a system of star rating system for facilities, and some form of aged care levy for the funding of the system. The government also made an initial pledged of $452mn in additional funding.</p>
<p>The share price reaction to the report from the three key aged-care Aussie listed operators - <a href="https://www.smartkarma.com/entities/regis-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:2086:1" rel="noopener">Regis Healthcare (REG AU)</a>, <a href="https://www.smartkarma.com/entities/estia-health-ltd" target="_blank" data-smartkarma-citation="entities:77:1" rel="noopener">Estia Health (EHE AU)</a>, and <a href="https://www.smartkarma.com/entities/japara-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:14760:1" rel="noopener">Japara Healthcare (JHC AU)</a> - was largely one of "meh". Nevertheless, the ongoing speculation as to the Royal Commission findings, in tandem with COVID, had resulted in Japara's shares trading down 75% in the last five, and ~60% a-piece for Regis and Estia in the same time frame, at that time.</p>
<p>Neither company, to date, has comprehensively addressed the conclusions of the report.</p>
<h3>The New News</h3>
<p>JHC <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02369261-3A566260?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> this morning it had received an unsolicited, indicative, conditional, and non-binding Offer from Little Company of Mary Health Care - otherwise known as Calvary - by way of a Scheme, at A$1.04/share.</p>
<p>JHC said it is reviewing its options.</p>
<p>My initial reaction is that this is an opportunistic bid. This is the third Offer in this space in the last year. <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a> was eventually taken private.  Regis fielded an Offer from its co-founder and <a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson And Co. (SOL AU)</a> in September last year, which was subsequently withdrawn, despite a bump in terms. Regis has outperformed the market since.</p>
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<div>More below the fold.</div>
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An Australian Royal Commission on aged care providers was issued on the 26 February 2021 with 148 recommendations to address what was deemed a weak and ineffective regulatory arrangement, including a new aged care act, the introduction of a system of star rating system for facilities, and some form of aged care levy for the funding of the system. The government also made an initial pledged of $452mn in additional funding.
The share price reaction to the report from the three key aged-care Aussie listed operators - Regis Healthcare (REG AU), Estia Health (EHE AU), and Japara Healthcare (JHC AU) - was largely one of "meh". Nevertheless, the ongoing speculation as to the Royal Commission findings, in tandem with COVID, had resulted in Japara's shares trading down 75% in the last five, and ~60% a-piece for Regis and Estia in the same time frame, at that time.
Neither company, to date, has comprehensively addressed the conclusions of the report.
The New News
JHC announced this morning it had received an unsolicited, indicative, conditional, and non-binding Offer from Little Company of Mary Health Care - otherwise known as Calvary - by way of a Scheme, at A$1.04/share.
JHC said it is reviewing its options.
My initial reaction is that this is an opportunistic bid. This is the third Offer in this space in the last year. Metlifecare Ltd (MET NZ) was eventually taken private.  Regis fielded an Offer from its co-founder and Washington H. Soul Pattinson And Co. (SOL AU) in September last year, which was subsequently withdrawn, despite a bump in terms. Regis has outperformed the market since.

More below the fold.


Japara Healthcare (JHC AU): Here Comes The Calvary

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<div><p>S&amp;P Dow Jones Indices will announce changes to the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> as part of the March index review on 12 March and the changes will be effective after the close of trading on 19 March.</p></div><div>
<p>The data cutoff for the March review was 26 February.</p>
<p>We see <a href="https://www.smartkarma.com/entities/nuix-limited" target="_blank" data-smartkarma-citation="entities:31040:1" rel="noopener">Nuix Limited (NXL AU)</a>, <a href="https://www.smartkarma.com/entities/codan-ltd-australia" target="_blank" data-smartkarma-citation="entities:6189:1" rel="noopener">Codan Ltd (CDA AU)</a> and <a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> as potential inclusions to the index, while we see <a href="https://www.smartkarma.com/entities/service-stream-ltd" target="_blank" data-smartkarma-citation="entities:18493:1" rel="noopener">Service Stream (SSM AU)</a>, <a href="https://www.smartkarma.com/entities/tassal-group-ltd" target="_blank" data-smartkarma-citation="entities:16234:1" rel="noopener">Tassal (TGR AU)</a> and <a href="https://www.smartkarma.com/entities/bravura-solutions-ltd" target="_blank" data-smartkarma-citation="entities:23648:1" rel="noopener">Bravura Solutions (BVS AU)</a> as potential exclusions from the index.</p>
<p><a href="https://www.smartkarma.com/entities/champion-iron-ltd" target="_blank" data-smartkarma-citation="entities:19734:1" rel="noopener">Champion Iron (CIA AU)</a> and <a href="https://www.smartkarma.com/entities/de-grey-mining-ltd" target="_blank" data-smartkarma-citation="entities:6192:1" rel="noopener">De Grey Mining (DEG AU)</a> are close adds while <a href="https://www.smartkarma.com/entities/gwa-group-ltd" target="_blank" data-smartkarma-citation="entities:663:1" rel="noopener">Gwa Group Ltd (GWA AU)</a> and <a href="https://www.smartkarma.com/entities/smartgroup-corp-ltd" target="_blank" data-smartkarma-citation="entities:19954:1" rel="noopener">Smartgroup Corp (SIQ AU)</a> are close deletes.</p>
<p>Short interest on the potential inclusions has been decreasing and is currently near the lows while short interest on the potential deletions has been steadily increasing and is at the highs.</p>
<p>Since the last index review in December, <a href="https://www.smartkarma.com/entities/pointsbet-holdings-pty-ltd" target="_blank" data-smartkarma-citation="entities:29102:1" rel="noopener">PointsBet Holdings Pty Ltd (PBH AU)</a> was included in the index replacing <a href="https://www.smartkarma.com/entities/saracen-mineral-holdings-limited" target="_blank" data-smartkarma-citation="entities:2415:1" rel="noopener">Saracen Mineral Holdings (SAR AU)</a> following its merger of equals with <a href="https://www.smartkarma.com/entities/northern-star-resources-ltd" target="_blank" data-smartkarma-citation="entities:4243:1" rel="noopener">Northern Star Resources (NST AU)</a>.</p>
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S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the March index review on 12 March and the changes will be effective after the close of trading on 19 March.
The data cutoff for the March review was 26 February.
We see Nuix Limited (NXL AU), Codan Ltd (CDA AU) and Pilbara Minerals (PLS AU) as potential inclusions to the index, while we see Service Stream (SSM AU), Tassal (TGR AU) and Bravura Solutions (BVS AU) as potential exclusions from the index.
Champion Iron (CIA AU) and De Grey Mining (DEG AU) are close adds while Gwa Group Ltd (GWA AU) and Smartgroup Corp (SIQ AU) are close deletes.
Short interest on the potential inclusions has been decreasing and is currently near the lows while short interest on the potential deletions has been steadily increasing and is at the highs.
Since the last index review in December, PointsBet Holdings Pty Ltd (PBH AU) was included in the index replacing Saracen Mineral Holdings (SAR AU) following its merger of equals with Northern Star Resources (NST AU).


ASX200 Index Rebalance Preview: Three Potential Changes & Some Close Names

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<p>Back on the 30 November, UK-based <a href="https://www.smartkarma.com/entities/wpp-plc" target="_blank" data-smartkarma-citation="entities:22213:1" rel="noopener">WPP PLC (WPP LN)</a>, the world's largest advertising company, tabled a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02315430-2A1266721?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">proposal</a> to delist 61.5%-held subsidiary <a href="https://www.smartkarma.com/entities/wpp-aunz-ltd" target="_blank" data-smartkarma-citation="entities:15931:1" rel="noopener">WPP AUNZ (WPP AU)</a> at A$0.55/share, in cash, a 34.1% premium to last close, and a 69.3% premium to the six-month VWAP. </p>
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<p>This was an unsolicited Offer and no binding implementation agreement (BIA) had been entered into.</p>
<p>In <em><a href="https://skr.ma/JSrkm" target="_blank" rel="noopener">WPP AUNZ: Mad Men At Work</a></em>, I argued there was an air of opportunism to the Offer, and recommended buying at or below terms - on the expectation of a bump, as management argues the upside from its wide-ranging cost cuts.</p>
<h3><strong>The New News</strong></h3>
<p>WPP PLC has returned with a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02323439-2A1270746?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">A$0.70/share offer</a>, by way of  Scheme, valuing WPP AUNZ at an implied enterprise value of A$717mn. It is the intention of WPP AUNZ to enter into a BIA.</p>
<p>With that 27.3% bump, this looks done.</p>
</div>
<p>More below the fold.</p>
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<p></p>
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Back on the 30 November, UK-based WPP PLC (WPP LN), the world's largest advertising company, tabled a proposal to delist 61.5%-held subsidiary WPP AUNZ (WPP AU) at A$0.55/share, in cash, a 34.1% premium to last close, and a 69.3% premium to the six-month VWAP. 


This was an unsolicited Offer and no binding implementation agreement (BIA) had been entered into.
In WPP AUNZ: Mad Men At Work, I argued there was an air of opportunism to the Offer, and recommended buying at or below terms - on the expectation of a bump, as management argues the upside from its wide-ranging cost cuts.
The New News
WPP PLC has returned with a A$0.70/share offer, by way of  Scheme, valuing WPP AUNZ at an implied enterprise value of A$717mn. It is the intention of WPP AUNZ to enter into a BIA.
With that 27.3% bump, this looks done.

More below the fold.




<p>UK-based <a href="https://www.smartkarma.com/entities/wpp-plc" target="_blank" data-smartkarma-citation="entities:22213:1" rel="noopener">WPP PLC (WPP LN)</a>, the world's largest advertising company, has tabled a proposal to delist 61.5%-held subsidiary <a href="https://www.smartkarma.com/entities/wpp-aunz-ltd" target="_blank" data-smartkarma-citation="entities:15931:1" rel="noopener">WPP AUNZ (WPP AU)</a>.</p>
<p>The Offer price is A$0.55/share, in cash, a 34.1% premium to last close, and a 69.3% premium to the six-month VWAP. </p>
<p>WPP is assessing whether to launch the Offer by way of a Scheme or an Off-Market Takeover.</p>
<p>A fully franked dividend is up for negotiation as part of the Offer; although if paid, it will reduce the Offer price. </p>
<p>A binding implementation agreement has not yet been entered into. The independent directors of WPP AUNZ are considering the proposal.</p>
<p>More below the fold.</p>
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UK-based WPP PLC (WPP LN), the world's largest advertising company, has tabled a proposal to delist 61.5%-held subsidiary WPP AUNZ (WPP AU).
The Offer price is A$0.55/share, in cash, a 34.1% premium to last close, and a 69.3% premium to the six-month VWAP. 
WPP is assessing whether to launch the Offer by way of a Scheme or an Off-Market Takeover.
A fully franked dividend is up for negotiation as part of the Offer; although if paid, it will reduce the Offer price. 
A binding implementation agreement has not yet been entered into. The independent directors of WPP AUNZ are considering the proposal.
More below the fold.





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<p><a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson And Co. (SOL AU)</a> ("Soul Patts") has teamed up with Bryan Dorman, co-founder of aged-care provider <a href="https://www.smartkarma.com/entities/regis-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:2086:1" rel="noopener">Regis Healthcare (REG AU)</a>, in making a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02311146-3A555888?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">non-binding indicative proposal</a> of A$1.85/share by way of a Scheme. The Offer implies an equity value of A$557mn and an enterprise value of A$773mn.</p>
<p>The Offer Price is a 25% premium to the last close and a 64% premium to the three-month VWAP.</p>
<p>Dorman, via Ashburn P/L, holds 27.2% in Regis. Ian Roberts, Regis' other co-founder, holds 27.2%.</p>
<p>A scrip alternative into a newly incorporated company is also proposed, in which Dorman will hold 27.2%, and Soul Patts a maximum of 72.8%, before any additional scrip taken up by Regis' shareholders.</p>
<p>As per the substantial shareholder <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02311153-3A555890?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announcement</a>, Soul Patts also made a non-binding and indicative offer for Regis on September 30, in "<em>partnership with a financial partner</em>". No other details relating to that proposal were disclosed.</p>
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<p>Regis was only listed on the <a href="https://www.regis.com.au/site/wp-content/uploads/pdf/Regis-Healthcare-Prospectus.pdf" target="_blank" rel="noopener">14 October 2014</a>, at $3.65/share.</p>
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<p>More below the fold.</p>
</div>


Washington H. Soul Pattinson And Co. (SOL AU) ("Soul Patts") has teamed up with Bryan Dorman, co-founder of aged-care provider Regis Healthcare (REG AU), in making a non-binding indicative proposal of A$1.85/share by way of a Scheme. The Offer implies an equity value of A$557mn and an enterprise value of A$773mn.
The Offer Price is a 25% premium to the last close and a 64% premium to the three-month VWAP.
Dorman, via Ashburn P/L, holds 27.2% in Regis. Ian Roberts, Regis' other co-founder, holds 27.2%.
A scrip alternative into a newly incorporated company is also proposed, in which Dorman will hold 27.2%, and Soul Patts a maximum of 72.8%, before any additional scrip taken up by Regis' shareholders.
As per the substantial shareholder announcement, Soul Patts also made a non-binding and indicative offer for Regis on September 30, in "partnership with a financial partner". No other details relating to that proposal were disclosed.

Regis was only listed on the 14 October 2014, at $3.65/share.

More below the fold.


Regis Healthcare (REG AU): Potential New Home For The Old

Australia

Estia Health Limited provides aged care services. The Company operates a network of retirement homes, providing housing, nursing, food preparation, community building, and related services. Estia Health serves residents throughout Victoria, Australia.

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Estia Health (EHE AU)

Japara Healthcare (JHC AU): Here Comes The Calvary

For what is likely a sector in recovery mode, one in which the Commission overhang is largely removed, and a comprehensive reform package to be...

David Blennerhassett

ASX200 Index Rebalance Preview: Three Potential Changes & Some Close Names

We see three potential changes to the ASX200 in the March review while there are another two close adds/deletes. High short interest on the...

Brian Freitas

WPP AUNZ: More Mad Men At Work

This solid bump should see this deal through. Expect WPP AUNZ to trade tight to terms - I see A$0.70/share as I type - on account of shareholders...

David Blennerhassett

WPP AUNZ: Mad Men At Work

There is an air of opportunism here, however, the indicative Offer Price is okay, if looking at WPP's trading pattern ahead of COVID-19. A bump...

David Blennerhassett

Regis Healthcare (REG AU): Potential New Home For The Old

There is an abundance of issues faced by Regis, and the aged care reform outlook is uncertain amid diminished public confidence. Yet the indicative...

David Blennerhassett

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