Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>Shinsung Tongsang shares rose 10% to 2,510 won today after it was announced that the tender offer failed. Basically, the tender offer failed because the tender offer price was too low. </li>
<li>Only 26% of the 31.664 million shares responded to the tender offer. Accordingly, the shareholding ratio of Chairman Yeom and his related parties increased from 77.98% to 83.88%. </li>
<li>Top Ten has benefited from executing its strategy well (such as employing Lee Na-Young in advertisements to grab customers from Uniqlo). Overall, we remain positive on Shinsung Tongsang.</li>
</ul>


Shinsung Tongsang shares rose 10% to 2,510 won today after it was announced that the tender offer failed. Basically, the tender offer failed because the tender offer price was too low. 
Only 26% of the 31.664 million shares responded to the tender offer. Accordingly, the shareholding ratio of Chairman Yeom and his related parties increased from 77.98% to 83.88%. 
Top Ten has benefited from executing its strategy well (such as employing Lee Na-Young in advertisements to grab customers from Uniqlo). Overall, we remain positive on Shinsung Tongsang.


Shinsung Tongsang: Tender Offer Fails and How to Take Away Customers From Uniqlo

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Last month, apparel play <strong><a href="https://www.smartkarma.com/entities/shinsung-tongsang-co-ltd" target="_blank" data-smartkarma-citation="entities:4107:1" rel="noopener">Shinsung Tongsang (005390 KS)</a></strong> announced a Tender Offer from Canaan Co for 22.02% of shares out, at ₩2,300/share, a 15.84% premium to undisturbed.</li>
<li>Canaan Co. and related parties hold a combined stake of 77.68%, which increases to 99.7% IF the Offer is successful. Canaan needs 95% to force delisting. </li>
<li>Shinsung's share price has languished over the past 12 months or so, despite improving market share and earnings. Getting to 95% might be a stretch. In need of a bump?</li>
</ul>


Last month, apparel play Shinsung Tongsang (005390 KS) announced a Tender Offer from Canaan Co for 22.02% of shares out, at ₩2,300/share, a 15.84% premium to undisturbed.
Canaan Co. and related parties hold a combined stake of 77.68%, which increases to 99.7% IF the Offer is successful. Canaan needs 95% to force delisting. 
Shinsung's share price has languished over the past 12 months or so, despite improving market share and earnings. Getting to 95% might be a stretch. In need of a bump?


Shinsung Tongsang (005390 KS)'s Cheeky Delisting Offer

<ul>
<li>On 21 June 2024, Canaan Co. announced a tender offer and taking private of Shinsung Tongsang. Tender offered shares are 31.664 million shares, representing 22.02% of outstanding shares.</li>
<li>It could be difficult to complete this tender offer at 2,300 won, because there could be many investors that simply refuse to sell their shares at such low valuations.</li>
<li>On the business side, the company has successfully captured higher market share and enjoyed higher profit margins especially for the Top Ten apparel brand, taking away market share from Uniqlo.</li>
</ul>


On 21 June 2024, Canaan Co. announced a tender offer and taking private of Shinsung Tongsang. Tender offered shares are 31.664 million shares, representing 22.02% of outstanding shares.
It could be difficult to complete this tender offer at 2,300 won, because there could be many investors that simply refuse to sell their shares at such low valuations.
On the business side, the company has successfully captured higher market share and enjoyed higher profit margins especially for the Top Ten apparel brand, taking away market share from Uniqlo.


Tender Offer and Taking Private of Shinsung Tongsang

<ul>
<li>On the<a href="https://www.bdapartners.com/transaction/bda-advises-praxis-on-sale-of-businesson-to-skylake/" target="_blank" rel="noopener"> 25th July</a>, SkyLake Equity Partners acquired a 46.9% stake from Praxis Capital Partners in <strong><a href="https://www.smartkarma.com/entities/businesson-communication-co-ltd" target="_blank" data-smartkarma-citation="entities:26040:1" rel="noopener">BusinessOn Communication (138580 KS)</a></strong>, Korea’s leading B2B SaaS company; plus 24.3% from BusinessOn's management. </li>
<li>SkyLake has now launched a Tender Offer for 28.94% of BusinessOn. The Tender offer price is ₩15,849/share.</li>
<li>Super clean deal. SkyLake will acquire all shares tendered. There is no minimum tendering % condition. </li>
</ul>


On the 25th July, SkyLake Equity Partners acquired a 46.9% stake from Praxis Capital Partners in BusinessOn Communication (138580 KS), Korea’s leading B2B SaaS company; plus 24.3% from BusinessOn's management. 
SkyLake has now launched a Tender Offer for 28.94% of BusinessOn. The Tender offer price is ₩15,849/share.
Super clean deal. SkyLake will acquire all shares tendered. There is no minimum tendering % condition. 


BusinessOn Communication (138580 KS): SkyLake's Delisting Offer

<ul>
<li>In this insight, we review the major tender offers of Korean companies in 2024. The tender offers have mostly been profitable for the investors in these targeted companies.</li>
<li>What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week and month.</li>
<li>The number of tender offers in Korea increased from 6 in 2020 to 12 in 2021, 7 in 2022, 18 in 2023, and 28 in 2024.</li>
</ul>


In this insight, we review the major tender offers of Korean companies in 2024. The tender offers have mostly been profitable for the investors in these targeted companies.
What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week and month.
The number of tender offers in Korea increased from 6 in 2020 to 12 in 2021, 7 in 2022, 18 in 2023, and 28 in 2024.


A Review of Tender Offers in Korea in 2024

South Korea

Shinsung Tongsang Co., Ltd. designs, manufactures, and sells ladies' and men's garments.  The Company's products include shirts, sweaters, jackets, suits, pants, and skirts.  Shinsung Tongsang markets its products under the brand names such as Union Bay, Olzen, and Ziozia and supplies them to JC Penney, Sears, and Target. In addition, the Company operates construction business.

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Shinsung Tongsang (005390 KS)

Shinsung Tongsang: Tender Offer Fails and How to Take Away Customers From Uniqlo

Shinsung Tongsang shares rose 10% to 2,510 won today after it was announced that the tender offer failed. Basically, the tender offer failed...

Douglas Kim