Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The companion piece to this insight <a href="https://www.smartkarma.com/insights/nittoc-construction-1929-jp-partial-tender-by-existing-shareholder-part-1" target="_blank" data-smartkarma-citation="insights:23642">Nittoc Construction (1929 JP) Partial Tender by Existing Shareholder: Part 1</a>lays out the situation of the Tender Offer. The Partial Tender Offer has no minimum hurdle and a maximum purchase of 6,783,810 shares. If purchased, it would take the current large shareholder owner - AN Holdings, a unit of Asō Corp (affiliated with former PM Tarō Asō's family-run cement and construction operation, which is now run by his nephew) - from 41.65% of votes to 57.91%. That's a majority but not quite a super-majority. A super-majority would be within shouting distance. With 2.5mm shares of crossholdings (financial and corporate) and a very large value holder who may be looking for liquidity, this strikes me as an easy get for the buyer.The Tender Offer is at a premium to book (unlike the MBO announced for <a href="https://www.smartkarma.com/entities/14036" target="_blank" data-smartkarma-citation="entities:14036:1">Kuwayama Corp (7889 JP)</a> Friday which is at half of book), but it is at 4.1x expected March 2019 EV/EBITDA (a little high multiple based on company forecasts) which when the company provides an ROE of 13% seems a little low. The multiple is 6.1x if The rest of this insight provides my Patented Arb Grids for partial tender offers. The Arb Grids show breakevens on a variety of fundamental ratios and show the deal is probably done too cheaply.Shareholder breakdown, fundamentals, and pro-ration analysis are available in the first insight <a href="https://www.smartkarma.com/insights/nittoc-construction-1929-jp-partial-tender-by-existing-shareholder-part-1" target="_blank" data-smartkarma-citation="insights:23642">Nittoc Construction (1929 JP) Partial Tender by Existing Shareholder: Part 1</a>Read the Conclusions below before going into the Arb Grids.

The companion piece to this insight Nittoc Construction (1929 JP) Partial Tender by Existing Shareholder: Part 1lays out the situation of the Tender Offer. The Partial Tender Offer has no minimum hurdle and a maximum purchase of 6,783,810 shares. If purchased, it would take the current large shareholder owner - AN Holdings, a unit of Asō Corp (affiliated with former PM Tarō Asō's family-run cement and construction operation, which is now run by his nephew) - from 41.65% of votes to 57.91%. That's a majority but not quite a super-majority. A super-majority would be within shouting distance. With 2.5mm shares of crossholdings (financial and corporate) and a very large value holder who may be looking for liquidity, this strikes me as an easy get for the buyer.The Tender Offer is at a premium to book (unlike the MBO announced for Kuwayama Corp (7889 JP) Friday which is at half of book), but it is at 4.1x expected March 2019 EV/EBITDA (a little high multiple based on company forecasts) which when the company provides an ROE of 13% seems a little low. The multiple is 6.1x if The rest of this insight provides my Patented Arb Grids for partial tender offers. The Arb Grids show breakevens on a variety of fundamental ratios and show the deal is probably done too cheaply.Shareholder breakdown, fundamentals, and pro-ration analysis are available in the first insight Nittoc Construction (1929 JP) Partial Tender by Existing Shareholder: Part 1Read the Conclusions below before going into the Arb Grids.

Nittoc Construction (1929 JP) Partial Tender: Part II The Arb Grids

Japan

KUWAYAMA CORPORATION manufactures and retails precious metals and jewelry.  The products include gold and platinum chains such as necklaces and bracelets as well as precious stones including diamonds and pearls.  The Company maintains its production lines at its own factories in Japan, China, and Thailand.

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Nittoc Construction (1929 JP) Partial Tender: Part II The Arb Grids

The companion piece to this insight Nittoc Construction (1929 JP) Partial Tender by Existing Shareholder: Part 1lays out the situation of the...

Travis Lundy