Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>There are increasing signs that Hankook Tire &amp; Technology's M&amp;A of Hanon Systems could be falling apart. </li>
<li>The deadline for signing the main M&amp;A contract to purchase a 25% stake in Hanon Systems has been postponed indefinitely.
</li>
<li>
New contingent liabilities at Hanon Systems have been uncovered during the 10 week due diligence process of Hanon Systems by Hankook T&amp;T.</li>
</ul>


There are increasing signs that Hankook Tire &amp; Technology's M&amp;A of Hanon Systems could be falling apart. 
The deadline for signing the main M&amp;A contract to purchase a 25% stake in Hanon Systems has been postponed indefinitely.


New contingent liabilities at Hanon Systems have been uncovered during the 10 week due diligence process of Hanon Systems by Hankook T&amp;T.


Hankook Tire & Technology: M&A of Hanon System Falling Apart?

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<ul>
<li>Today's news indicates Hankook Tire found contingent liabilities in Hanon Systems' finances, meeting conditions to break the May agreement and putting the deal on indefinite hold.</li>
<li>Hankook Tire plans to adjust the new share price first, then the existing share price, while Hahn &amp; Co, unable to delay its exit, will likely accept it.</li>
<li>With Hahn &amp; Co likely to accept Hankook Tire’s price adjustment request, consider a long-short setup: Hankook Tire may benefit from positive momentum, while Hanon Systems faces negative dilution.</li>
</ul>


Today's news indicates Hankook Tire found contingent liabilities in Hanon Systems' finances, meeting conditions to break the May agreement and putting the deal on indefinite hold.
Hankook Tire plans to adjust the new share price first, then the existing share price, while Hahn &amp; Co, unable to delay its exit, will likely accept it.
With Hahn &amp; Co likely to accept Hankook Tire’s price adjustment request, consider a long-short setup: Hankook Tire may benefit from positive momentum, while Hanon Systems faces negative dilution.


Latest Update on Hanon Systems Stake Sale: Consider Long Short Setup on Hankook Tire & Hanon

<ul>
<li>On 3 May, it was reported that Hankook Tire &amp; Technology agreed to purchase a 25% in Hanon Systems for 1.37 trillion won from Hahn &amp; Co private equity firm. </li>
<li>After this deal, Hankook Tire &amp; Technology will own a controlling 50.5% stake in Hanon Systems.</li>
<li>We have a negative view on Hankook Tire &amp; Technology's additional purchase of Hanon Systems, which has experienced a declining profit margins in the past several years.</li>
</ul>


On 3 May, it was reported that Hankook Tire &amp; Technology agreed to purchase a 25% in Hanon Systems for 1.37 trillion won from Hahn &amp; Co private equity firm. 
After this deal, Hankook Tire &amp; Technology will own a controlling 50.5% stake in Hanon Systems.
We have a negative view on Hankook Tire &amp; Technology's additional purchase of Hanon Systems, which has experienced a declining profit margins in the past several years.


Hankook Tire & Technology to Become the Controlling Shareholder of Hanon Systems

<ul>
<li>Since Choi and his affiliates can’t buy shares directly, his only play is to recruit more white knights to boost his stake.</li>
<li>He needs at least 6% from the 23% free float, costing over ₩800 billion. This hefty price tag is why the stock hasn't moved much from the tender offer price.</li>
<li>The market isn’t ruling out Hyundai getting aggressive to secure Korea Zinc’s nickel, making this a hot trading point during the tender offer.</li>
</ul>


Since Choi and his affiliates can’t buy shares directly, his only play is to recruit more white knights to boost his stake.
He needs at least 6% from the 23% free float, costing over ₩800 billion. This hefty price tag is why the stock hasn't moved much from the tender offer price.
The market isn’t ruling out Hyundai getting aggressive to secure Korea Zinc’s nickel, making this a hot trading point during the tender offer.


Clearing up Legal Confusion on Counter Offers and Getting a Clear Read on the Korea Zinc Tender

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

CK Infrastructure Holdings / Event-Driven

<ul>
<li>The Aussie Tax-Loss Selling Baskets worked very well on the sell side from 30 April through end-June 2024. What now?  Unwind.</li>
<li>
<a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener">CK Infrastructure Holdings (1038 HK)</a> has now submitted an application for a secondary listing, not a dual-primary listing, on the London stock exchange. Admission expected on the 19th August. </li>
<li>The right trade is to buy <a href="https://www.smartkarma.com/entities/jtower-inc" target="_blank" data-smartkarma-citation="entities:31042:1" rel="noopener">JTower (4485 JP)</a> below terms. The really right trade is to already be an owner. IF you're an arbitrageur, you know what to do.</li>
</ul>


The Aussie Tax-Loss Selling Baskets worked very well on the sell side from 30 April through end-June 2024. What now?  Unwind.

CK Infrastructure Holdings (1038 HK) has now submitted an application for a secondary listing, not a dual-primary listing, on the London stock exchange. Admission expected on the 19th August. 
The right trade is to buy JTower (4485 JP) below terms. The really right trade is to already be an owner. IF you're an arbitrageur, you know what to do.


Last Week in Event SPACE: Aussie Tax Loss Basket, CK Infra, JTower, Porsche

South Korea

Hankook Tire & Technology Co. Ltd. develops and manufactures radial tires for passenger cars, light trucks, trucks, and buses.  The Company also produces batteries and aluminum alloy wheels and operates real estate business.

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Hankook Tire & Technology (161390 KS)

Hankook Tire & Technology: M&A of Hanon System Falling Apart?

There are increasing signs that Hankook Tire & Technology's M&A of Hanon Systems could be falling apart. New contingent liabilities at Hanon...

Douglas Kim

Latest Update on Hanon Systems Stake Sale: Consider Long Short Setup on Hankook Tire & Hanon

This post offers the latest update on the Hanon Systems share sale agreement between Hankook Tire and Hahn & Co and discusses trading setups to...

Sanghyun Park

Hankook Tire & Technology to Become the Controlling Shareholder of Hanon Systems

We have a negative view on Hankook Tire & Technology's additional purchase of Hanon Systems, which has experienced a declining profit margins in...

Douglas Kim

Clearing up Legal Confusion on Counter Offers and Getting a Clear Read on the Korea Zinc Tender

This post clarifies legal misunderstandings about counter offers in the Korea Zinc tender and a precise understanding of the current situation.

Sanghyun Park

Last Week in Event SPACE: Aussie Tax Loss Basket, CK Infra, JTower, Porsche

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

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