Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Event-Driven

After the close Friday, major Japanese P&amp;C insurer <a href="https://www.smartkarma.com/entities/632" target="_blank" data-smartkarma-citation="entities:632">Sompo Japan</a>  officially announced that it would attempt to take over beleaguered nursing care operations company <a href="https://www.smartkarma.com/entities/10361" target="_blank" data-smartkarma-citation="entities:10361">Message Co Ltd</a>  (2400 JP) in a two-step process, with 34.69% of the shares scheduled to be tendered in Step1 at 2500 yen a share, and a Second Tender Offer to be launched, contingent on the First Tender Offer being successful, at 3500 yen a share. As is often the case in Japanese mergers, the news Sompo Japan would aim at a transaction to obtain 50+% or more of Message was actually noted in Friday morning's Nikkei and the stock was limit up all day long, closing at 2854 yen. Actual details did not emerge until after the close.For those just looking at a longer-dated price chart, this looks like a takeunder which might have trouble getting done. However, Message has had issues recently and the founder and his family have undertaken to tender in the First Tender Offer, which will get Sompo Japan to a holding of ~38%. Then they will need 12+% of the remaining 62% of shares outstanding to get a majority. But they intend to keep the company listed. And if nobody actually tenders in the Second Tender Offer, Sompo Japan has plans to get to 50+% anyway.For Message, this represents a 'rescue' from its recent troubles. For Sompo Japan, it furthers the company's ambitions in the space (it has already invested in a few nursing care operators in the last few years - The Nursing Is Strong In This One!) so Sompo Japan will become the second largest nursing home operator in Japan (in what is a VERY diverse space).The English language document is linked <a href="http://www.sompo-hd.com/~/media/hd/en/files/news/2015/e_20151218_3.pdf" target="_blank">here</a> and is in the list of attachments at right.This is an interesting transaction. It is a somewhat unusual structure, I expect there to be multiple opinions about this company's future, and minorities get a completely free put to sell shares at 48% above the recent trading price.A much more thorough discussion is below the fold...

After the close Friday, major Japanese P&amp;C insurer Sompo Japan  officially announced that it would attempt to take over beleaguered nursing care operations company Message Co Ltd  (2400 JP) in a two-step process, with 34.69% of the shares scheduled to be tendered in Step1 at 2500 yen a share, and a Second Tender Offer to be launched, contingent on the First Tender Offer being successful, at 3500 yen a share. As is often the case in Japanese mergers, the news Sompo Japan would aim at a transaction to obtain 50+% or more of Message was actually noted in Friday morning's Nikkei and the stock was limit up all day long, closing at 2854 yen. Actual details did not emerge until after the close.For those just looking at a longer-dated price chart, this looks like a takeunder which might have trouble getting done. However, Message has had issues recently and the founder and his family have undertaken to tender in the First Tender Offer, which will get Sompo Japan to a holding of ~38%. Then they will need 12+% of the remaining 62% of shares outstanding to get a majority. But they intend to keep the company listed. And if nobody actually tenders in the Second Tender Offer, Sompo Japan has plans to get to 50+% anyway.For Message, this represents a 'rescue' from its recent troubles. For Sompo Japan, it furthers the company's ambitions in the space (it has already invested in a few nursing care operators in the last few years - The Nursing Is Strong In This One!) so Sompo Japan will become the second largest nursing home operator in Japan (in what is a VERY diverse space).The English language document is linked here and is in the list of attachments at right.This is an interesting transaction. It is a somewhat unusual structure, I expect there to be multiple opinions about this company's future, and minorities get a completely free put to sell shares at 48% above the recent trading price.A much more thorough discussion is below the fold...

Sompo Tender for Message: Adding to A Phalanx of Nursing Homes

Japan

LONGLIFE HOLDING Co., Ltd. provides nursing services for senior citizens and Alzheimer's disease patients at its nursing facilities and at clients' home.

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Longlife Holding (4355 JP)

Sompo Tender for Message: Adding to A Phalanx of Nursing Homes

After the close Friday, major Japanese P&C insurer Sompo Japan officially announced that it would attempt to take over beleaguered nursing...

Travis Lundy

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