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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sanyo-special-steel-co-ltd" target="_blank" data-smartkarma-citation="entities:15900:1" rel="noopener">Sanyo Special Steel (5481 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/nippon-steel-corporation" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel Corporation (5401 JP)</a>’s tender offer at JPY2,750, a 37.4% premium to the last close.</li>
<li>The offer is light, implying a P/B of 0.67x, below the midpoint of the IFA DCF range, below the Board's requested price, and unattractive compared to peer multiples. </li>
<li>The lack of an irrevocable and unattractive offer suggests that satisfying the minimum acceptance condition is likely challenging. This situation requires activism to force a bump.   </li>
</ul>



Sanyo Special Steel (5481 JP) has recommended Nippon Steel Corporation (5401 JP)’s tender offer at JPY2,750, a 37.4% premium to the last close.
The offer is light, implying a P/B of 0.67x, below the midpoint of the IFA DCF range, below the Board's requested price, and unattractive compared to peer multiples. 
The lack of an irrevocable and unattractive offer suggests that satisfying the minimum acceptance condition is likely challenging. This situation requires activism to force a bump.   


Sanyo Special Steel (5481 JP): Nippon Steel (5401 JP)’s Light Tender Offer Begs for Activism

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>6-7 years ago <a href="https://www.smartkarma.com/entities/sanyo-special-steel-co-ltd" target="_blank" data-smartkarma-citation="entities:15900:1" rel="noopener">Sanyo Special Steel (5481 JP)</a> bought out a large foreign specialty steel company, and funded it by getting Nippon Steel to inject capital at below book. </li>
<li>Now Nippon Steel is buying the rest of Sanyo Special Steel in a Tender Offer at 0.66x book, where most of book is Net Receivables, Inventory, WIP, and Materials.</li>
<li>This is the second time in a decade where the Board has decided to sell control of itself at far below book value. They should be ashamed of themselves.</li>
</ul>


6-7 years ago Sanyo Special Steel (5481 JP) bought out a large foreign specialty steel company, and funded it by getting Nippon Steel to inject capital at below book. 
Now Nippon Steel is buying the rest of Sanyo Special Steel in a Tender Offer at 0.66x book, where most of book is Net Receivables, Inventory, WIP, and Materials.
This is the second time in a decade where the Board has decided to sell control of itself at far below book value. They should be ashamed of themselves.


Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<ul>
<li>Nippon Steel's $14.9 billion acquisition bid for U.S. Steel, announced in December 2023, faced regulatory resistance and was blocked by the Biden administration over national security concerns.</li>
<li>U.S. Steel’s Big River Steel 2 expansion will double capacity to 6.3 million tons by 2026, contributing over 50% of EBITDA and supporting enhanced free cash flow generation.</li>
<li>Despite the failed merger, U.S. Steel’s intrinsic value, supported by a $39.75 fair value estimate, easing capex, and reshoring tailwinds, offers a ~19% upside from the $33.30 closing price.</li>
</ul>


Nippon Steel's $14.9 billion acquisition bid for U.S. Steel, announced in December 2023, faced regulatory resistance and was blocked by the Biden administration over national security concerns.
U.S. Steel’s Big River Steel 2 expansion will double capacity to 6.3 million tons by 2026, contributing over 50% of EBITDA and supporting enhanced free cash flow generation.
Despite the failed merger, U.S. Steel’s intrinsic value, supported by a $39.75 fair value estimate, easing capex, and reshoring tailwinds, offers a ~19% upside from the $33.30 closing price.


Nippon Steel/US Steel: Deal Blocked but Offering Robust Standalone Value

<ul>
<li>The 2024 U.S. presidential election could heavily impact M&amp;A, with contrasting policies from Harris and Trump potentially raising or easing regulatory barriers, especially in sectors like tech and energy.</li>
<li>Harris's focus on strict antitrust enforcement and potential corporate tax hikes contrasts with Trump’s pro-business, deregulation stance, which aims to stimulate M&amp;A by reducing regulatory challenges.</li>
<li>A Trump administration might boost investor confidence through tax cuts and reduced oversight, potentially increasing domestic M&amp;A, while Harris could promote competitive growth by supporting small and medium enterprises.</li>
</ul>


The 2024 U.S. presidential election could heavily impact M&amp;A, with contrasting policies from Harris and Trump potentially raising or easing regulatory barriers, especially in sectors like tech and energy.
Harris's focus on strict antitrust enforcement and potential corporate tax hikes contrasts with Trump’s pro-business, deregulation stance, which aims to stimulate M&amp;A by reducing regulatory challenges.
A Trump administration might boost investor confidence through tax cuts and reduced oversight, potentially increasing domestic M&amp;A, while Harris could promote competitive growth by supporting small and medium enterprises.


Potential Consequences of the U.S. Presidential Election on North America M&A

<ul>
<li>On September 26, Nippon Steel's president affirmed the company's commitment to completing the <a href="https://www.smartkarma.com/entities/united-states-steel-corp" target="_blank" data-smartkarma-citation="entities:202:1" rel="noopener">United States Steel (X US)</a> acquisition by year-end, despite the CFIUS review being extended until December.</li>
<li>U.S. Steel, with an expected value of $45.19/share offers 27% upside potential. This discount, driven by acquisition/fundamental value, supports a buy recommendation thus, I would be long U.S. Steel.</li>
<li>If the deal were to succeed, the likelihood of it closing before the end of 2024 is low, primarily due to the complexities surrounding the American presidential elections.</li>
</ul>


On September 26, Nippon Steel's president affirmed the company's commitment to completing the United States Steel (X US) acquisition by year-end, despite the CFIUS review being extended until December.
U.S. Steel, with an expected value of $45.19/share offers 27% upside potential. This discount, driven by acquisition/fundamental value, supports a buy recommendation thus, I would be long U.S. Steel.
If the deal were to succeed, the likelihood of it closing before the end of 2024 is low, primarily due to the complexities surrounding the American presidential elections.


Nippon Steel/US Steel: Appealing Expected Value

Japan

Nippon Steel Corp is an integrated steel maker. The Company produces various types of steel products used for industrial machinery & equipment and exports them worldwide.  Nippon Steel provides plant construction and urban development and also develops new businesses such as chemicals, ceramics, electronic equipment and information & communication systems.

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Nippon Steel Corporation (5401 JP)

Sanyo Special Steel (5481 JP): Nippon Steel (5401 JP)’s Light Tender Offer Begs for Activism

The offer is light, implying a P/B of 0.67x, below the midpoint of the IFA DCF range and unattractive compared to peer multiples. This needs...

Arun George

Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book

Nippon Steel convinced Sanyo Special Steel to do a bad-governance deal in 2018 to take it from 15% to 51%. Now they are buying out SS at a LOWER...

Travis Lundy

Nippon Steel/US Steel: Deal Blocked but Offering Robust Standalone Value

Nippon Steel's bid for U.S. Steel blocked, but U.S. Steel's expansion plans and strong intrinsic value offer upside potential despite regulatory...

Jesus Rodriguez Aguilar

Potential Consequences of the U.S. Presidential Election on North America M&A

The 2024 U.S. presidential election could heavily impact M&A, with contrasting policies from Harris and Trump potentially raising or easing...

Jesus Rodriguez Aguilar

Nippon Steel/US Steel: Appealing Expected Value

Nippon Steel remains committed to acquiring U.S. Steel despite CFIUS review extension, offering 27% upside potential. Deal may not close before...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Sanyo Special Steel (5481 JP): Nippon Steel (5401 JP)’s Light Tender Offer Begs for Activism

The offer is light, implying a P/B of 0.67x, below the midpoint of the IFA DCF range and unattractive compared to peer multiples. This needs...

Arun George

Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book

Nippon Steel convinced Sanyo Special Steel to do a bad-governance deal in 2018 to take it from 15% to 51%. Now they are buying out SS at a LOWER...

Travis Lundy

Nippon Steel/US Steel: Deal Blocked but Offering Robust Standalone Value

​Nippon Steel's bid for U.S. Steel blocked, but U.S. Steel's expansion plans and strong intrinsic value offer upside potential despite regulatory...

Jesus Rodriguez Aguilar

Potential Consequences of the U.S. Presidential Election on North America M&A

The 2024 U.S. presidential election could heavily impact M&A, with contrasting policies from Harris and Trump potentially raising or easing...

Jesus Rodriguez Aguilar

Nippon Steel/US Steel: Appealing Expected Value

​Nippon Steel remains committed to acquiring U.S. Steel despite CFIUS review extension, offering 27% upside potential. Deal may not close before...

Jesus Rodriguez Aguilar

Nippon Steel's bid for U.S. Steel blocked, but U.S. Steel's expansion plans and strong intrinsic value offer upside potential despite regulatory...

Nippon Steel remains committed to acquiring U.S. Steel despite CFIUS review extension, offering 27% upside potential. Deal may not close before...