Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>After <a href="https://www.smartkarma.com/entities/lifestyle-china-group-ltd" target="_blank" data-smartkarma-citation="entities:26090:1" rel="noopener">Lifestyle China (2136 HK)</a> was suspended pursuant to then Takeovers Code, the takeaway was that Thomas Lau with 74.91% of shares out would table a Scheme.</li>
<li>Which is <a href="https://www.smartkarma.com/compose/insight/169377/Lifestyle%20China%20(2136%20HK):%20Thomas%20Yau%20Scheme%20Expected.%20Read%20more:" target="_blank" rel="noopener">exactly what unfolded</a>. What was not expected was a stingy 21.7% premium to last close. </li>
<li>
The Offer Price has not been declared final. Lifestyle China is trading at 0.11x P/B. This Offer deserves a bump. Otherwise minorities should vote this down.</li>
</ul>


After Lifestyle China (2136 HK) was suspended pursuant to then Takeovers Code, the takeaway was that Thomas Lau with 74.91% of shares out would table a Scheme.
Which is exactly what unfolded. What was not expected was a stingy 21.7% premium to last close. 

The Offer Price has not been declared final. Lifestyle China is trading at 0.11x P/B. This Offer deserves a bump. Otherwise minorities should vote this down.


Lifestyle China (2136 HK): Thomas Lau's Scheme - The Premium Is Wrong

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lifestyle-china-group-ltd" target="_blank" data-smartkarma-citation="entities:26090:1" rel="noopener">Lifestyle China (2136 HK)</a> disclosed a Cayman scheme privatisation offer from Mr Thomas Lau at HK$0.913 per share, a 21.7% premium to the last close price of HK$0.75. </li>
<li>The offer is unattractive compared to precedent transactions, peer multiples, and historical trading ranges. It has not been declared final. </li>
<li>While no shareholder holds a blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. Therefore, a bump is probable.</li>
</ul>



Lifestyle China (2136 HK) disclosed a Cayman scheme privatisation offer from Mr Thomas Lau at HK$0.913 per share, a 21.7% premium to the last close price of HK$0.75. 
The offer is unattractive compared to precedent transactions, peer multiples, and historical trading ranges. It has not been declared final. 
While no shareholder holds a blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. Therefore, a bump is probable.


Lifestyle China (2136 HK): Thomas Lau’s Low-Balled Scheme Offer

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lifestyle-china-group-ltd" target="_blank" data-smartkarma-citation="entities:26090:1" rel="noopener">Lifestyle China (2136 HK)</a> is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers. </li>
<li>Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of <a href="https://www.smartkarma.com/entities/lifestyle-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:112:1" rel="noopener">Lifestyle International Holdings (1212 HK)</a> with the privatisation of Lifestyle China.  </li>
<li>We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).</li>
</ul>



Lifestyle China (2136 HK) is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers. 
Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of Lifestyle International Holdings (1212 HK) with the privatisation of Lifestyle China.  
We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).


Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?

<ul>
<li>Respectively in 2013 and 2016, <a href="https://www.smartkarma.com/entities/lifestyle-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:112:1" rel="noopener">Lifestyle International Holdings (1212 HK)</a> spun-off and separately listed <a href="https://www.smartkarma.com/entities/sansheng-holdings-group-co-l" target="_blank" data-smartkarma-citation="entities:7112:1" rel="noopener">Lifestyle Properties Development (2183 HK)</a> and PRC-department store play <a href="https://www.smartkarma.com/entities/lifestyle-china-group-ltd" target="_blank" data-smartkarma-citation="entities:26090:1" rel="noopener">Lifestyle China (2136 HK)</a>.
</li>
<li>Lifestyle Props' listing was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/1220/2023122000555.pdf" target="_blank" rel="noopener">cancelled in 2023</a>; and Thomas Lau privatized <a href="https://www.smartkarma.com/entities/lifestyle-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:112:1" rel="noopener">Lifestyle International</a> late-2023: see <a href="https://www.smartkarma.com/compose/insight/168794/Lifestyle%20(1212%20HK):%20Timing%20Is%20Everything%20As%20Shareholders%20Go%20To%20Vote%20on%2021%20Nov.%20Read%20more:%20https:/skr.ma/MvREo" target="_blank" rel="noopener">Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov</a>. 
</li>
<li>
<a href="https://www.smartkarma.com/entities/lifestyle-china-group-ltd" target="_blank" data-smartkarma-citation="entities:26090:1" rel="noopener">Lifestyle China</a> is now suspended pursuant to then Takeovers Code. Thomas Lau holds 74.9%. No prizes for guessing what comes next. </li>
</ul>


Respectively in 2013 and 2016, Lifestyle International Holdings (1212 HK) spun-off and separately listed Lifestyle Properties Development (2183 HK) and PRC-department store play Lifestyle China (2136 HK).

Lifestyle Props' listing was cancelled in 2023; and Thomas Lau privatized Lifestyle International late-2023: see Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov. 


Lifestyle China is now suspended pursuant to then Takeovers Code. Thomas Lau holds 74.9%. No prizes for guessing what comes next. 


Lifestyle China (2136 HK): Thomas Lau Scheme Expected

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads: <a href="https://www.smartkarma.com/entities/arcadium-lithium-plc" target="_blank" data-smartkarma-citation="entities:40438:1" rel="noopener">Arcadium Lithium (LTM AU)</a>, <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, <a href="https://www.smartkarma.com/entities/insignia-financial-ltd" target="_blank" data-smartkarma-citation="entities:12349:1" rel="noopener">Insignia Financial (IFL AU)</a>, <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a>, <a href="https://www.smartkarma.com/entities/get-nice-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:29667:1" rel="noopener">Get Nice Financial Group Ltd (1469 HK)</a>. </li>
<li>Lowest spreads: <a href="https://www.smartkarma.com/entities/renewable-japan-co-ltd" target="_blank" data-smartkarma-citation="entities:35211:1" rel="noopener">Renewable Japan (9522 JP)</a>, <a href="https://www.smartkarma.com/entities/lifestyle-china-group-ltd" target="_blank" data-smartkarma-citation="entities:26090:1" rel="noopener">Lifestyle China (2136 HK)</a>, <a href="https://www.smartkarma.com/entities/macromill-inc" target="_blank" data-smartkarma-citation="entities:24026:1" rel="noopener">Macromill, Inc (3978 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-soft-inc" target="_blank" data-smartkarma-citation="entities:17504:1" rel="noopener">Fuji Soft Inc (9749 JP)</a>, <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</a>, <a href="https://www.smartkarma.com/entities/nishimoto-co-ltd" target="_blank" data-smartkarma-citation="entities:44086:1" rel="noopener">Nishimoto (9260 JP)</a>. </li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Arcadium Lithium (LTM AU), Seven &amp; I Holdings (3382 JP), Insignia Financial (IFL AU), Shanghai Henlius Biotech (2696 HK), Get Nice Financial Group Ltd (1469 HK). 
Lowest spreads: Renewable Japan (9522 JP), Lifestyle China (2136 HK), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks &amp; System Integr (1973 JP), Nishimoto (9260 JP). 


Merger Arb Mondays (16 Dec) - ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks

Hong Kong

Lifestyle China Group Limited operates department store chains. The Company sells a wide range of merchandise including apparels, cosmetics, household products, toys, foods, candy, and other related products.

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Lifestyle China (2136 HK)