Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Taisho Pharmaceutical Holdin / Event-Driven

<ul>
<li>Six+ weeks ago, the founding family which controls a 33% stake in cash-rich <a href="https://www.smartkarma.com/entities/taisho-pharmaceutical-holdin" target="_blank" data-smartkarma-citation="entities:3774:1" rel="noopener">Taisho Pharmaceutical Holdin (4581 JP)</a> announced a Tender Offer MBO to buy out minorities.</li>
<li>¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That's low - comps are 2+x book and twice the EV/EBITDA ratio.</li>
<li>But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.</li>
</ul>


Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That's low - comps are 2+x book and twice the EV/EBITDA ratio.
But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.


Taisho Pharma (4581) - Slouching Activism May Not Get This Bumped

Japan Petroleum Exploration / Event-Driven

<ul>
<li>Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.</li>
<li>The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.</li>
<li>In this insight I look at several possible rankings for potential large buyback targets.</li>
</ul>


Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
In this insight I look at several possible rankings for potential large buyback targets.


JAPAN GOVERNANCE CHANGES II - Who Could Surprise on Buybacks? Quant Rankings

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>On 26 December, CVC extended its <a href="https://www.smartkarma.com/entities/macromill-inc" target="_blank" rel="noopener">Macromill, Inc. (3978 JP)</a> offer period by 10 business days to 17 January. The offer price remained unchanged, but it was not declared final.</li>
<li>The extension is unsurprising as the shares have traded above terms for 30 out of 32 trading days. The emergence of Oasis as the largest shareholder is an added complication. </li>
<li>Lowering the minimum acceptance condition is not a viable option. A bump is increasingly likely. Trading patterns suggest a minimum required revised offer of around JPY1,200.</li>
</ul>


On 26 December, CVC extended its Macromill, Inc. (3978 JP) offer period by 10 business days to 17 January. The offer price remained unchanged, but it was not declared final.
The extension is unsurprising as the shares have traded above terms for 30 out of 32 trading days. The emergence of Oasis as the largest shareholder is an added complication. 
Lowering the minimum acceptance condition is not a viable option. A bump is increasingly likely. Trading patterns suggest a minimum required revised offer of around JPY1,200.


Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable

Nec Networks & System Integr / Event-Driven

<ul>
<li>Oasis has become a substantial shareholder of <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</a>, representing 13.2 million shares or an 8.83% ownership ratio. </li>
<li>Oasis has not commented on its intentions, but its stake signifies two possibilities – the start of an activist campaign to secure a bump or a play on appraisal rights.</li>
<li>A bump while possible is not a certainty. NEC is likely to wait to see to if Oasis increases its stake to a level which threatens its offer. </li>
</ul>


Oasis has become a substantial shareholder of Nec Networks &amp; System Integr (1973 JP), representing 13.2 million shares or an 8.83% ownership ratio. 
Oasis has not commented on its intentions, but its stake signifies two possibilities – the start of an activist campaign to secure a bump or a play on appraisal rights.
A bump while possible is not a certainty. NEC is likely to wait to see to if Oasis increases its stake to a level which threatens its offer. 


NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC

<ul>
<li>
<a href="https://www.smartkarma.com/entities/descente-ltd" target="_blank" data-smartkarma-citation="entities:8225:1" rel="noopener">Descente Ltd (8114 JP)</a> has announced that <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" rel="noopener">Itochu Corp (8001 JP)</a>’s tender offer precondition has been satisfied. The offer terms are unchanged at JPY4,350 per share. </li>
<li>The offer is arguably light due to the peer re-rating and historical trading ranges. It is also below the midpoint of the special committee’s IFA DCF valuation range. </li>
<li>Nevertheless, the offer will likely succeed. There is no vocal opposition, the volume traded through terms is low, and the offer implies a premium multiple compared to peers. </li>
</ul>



Descente Ltd (8114 JP) has announced that Itochu Corp (8001 JP)’s tender offer precondition has been satisfied. The offer terms are unchanged at JPY4,350 per share. 
The offer is arguably light due to the peer re-rating and historical trading ranges. It is also below the midpoint of the special committee’s IFA DCF valuation range. 
Nevertheless, the offer will likely succeed. There is no vocal opposition, the volume traded through terms is low, and the offer implies a premium multiple compared to peers. 


Descente (8114 JP): Itochu’s (8001 JP) Tender Offer Launches

Japan

Taisho Pharmaceutical Holdings Company Ltd. produces and sells pharmaceuticals, foods, and  other related products. The Company also provides insurance agency and information processing services and operates hotel businesses.

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Taisho Pharmaceutical Holdin (4581 JP)

Taisho Pharma (4581) - Slouching Activism May Not Get This Bumped

Taisho Pharma's TOB closes soon. It should have had a bump, but I think it needed a large vocal shareholder to say so, not a small fund asking the...

Travis Lundy

JAPAN GOVERNANCE CHANGES II - Who Could Surprise on Buybacks? Quant Rankings

JAPAN GOVERNANCE: There is a buyback story coming. It will be big. Bigger than the past year or two, and it will continue. What to buy?

Travis Lundy

Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable

On 26 December, CVC extended its Macromill offer period to 17 January. A bump is increasingly likely. Trading patterns suggest a minimum required...

Arun George

NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC

Since announcing the offer, the shares have traded at or above terms. Including Oasis’ pre-tender stake, the total potential “NO” volume is 35.0m...

Arun George

Descente (8114 JP): Itochu’s (8001 JP) Tender Offer Launches

While light the offer will likely succeed. There is no vocal opposition, the volume traded through terms is low, and the offer implies a premium...

Arun George

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