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/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro Inc (4704 JP)</a> shares rose 14.8% on Friday after Reuters reported that it is exploring a sale after attracting buyout interest. </li>
<li>The interest is unsurprising due to the weak share price. Since ValueAct disclosed a stake on 8 August 2022, the shares are down 0.7% vs the Nikkei 225’s 23.6% increase.</li>
<li>The lack of a controlling shareholder and increased cybersecurity M&amp;A activity support the buyout interest. A privatisation price is likely to be around JPY9,000. Valuation is undemanding at last close.</li>
</ul>



Trend Micro Inc (4704 JP) shares rose 14.8% on Friday after Reuters reported that it is exploring a sale after attracting buyout interest. 
The interest is unsurprising due to the weak share price. Since ValueAct disclosed a stake on 8 August 2022, the shares are down 0.7% vs the Nikkei 225’s 23.6% increase.
The lack of a controlling shareholder and increased cybersecurity M&amp;A activity support the buyout interest. A privatisation price is likely to be around JPY9,000. Valuation is undemanding at last close.


Trend Micro (4704 JP): Evaluating the Privatisation Rumours

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>A Reuters <a href="https://www.reuters.com/markets/deals/cybersecurity-firm-trend-micro-explores-sale-sources-say-2024-08-08/" target="_blank" rel="noopener">article</a> overnight says Trend Micro might be up for sale. This caused the ADRs to jump 10% overnight. The remaining co-founders are 65 and 70 this year. </li>
<li>The stock has effectively gone sideways the last few years as Value Act has been activisting. Now one has to exercise one's imagination to think about a possible sale price. </li>
<li>On a DCF basis, a PE fund couldn't reasonably do this. Multiples are too high. That means a strategic buyer would be more likely. But Who? Why? And How much?</li>
</ul>


A Reuters article overnight says Trend Micro might be up for sale. This caused the ADRs to jump 10% overnight. The remaining co-founders are 65 and 70 this year. 
The stock has effectively gone sideways the last few years as Value Act has been activisting. Now one has to exercise one's imagination to think about a possible sale price. 
On a DCF basis, a PE fund couldn't reasonably do this. Multiples are too high. That means a strategic buyer would be more likely. But Who? Why? And How much?


Trend Micro (4704) Up For Sale? Would Be a HUGE Buyout But How Huge? And Who?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro Inc (4704 JP)</a> has been under pressure to improve capital allocation after Value Act bought in 2022. In February 2023, Trend announced a weak sauce capital return policy.</li>
<li>They promised a 100% payout ratio with 70% div payout ratio. But with huge piles of cash and securities, it wasn't going to be enough, and shareholder structure ALWAYS matters.</li>
<li>Here it meant Trend Micro was vulnerable to further attack. Today, Trend announced a HUGE capital return with buyback, and a special div and this will excite Nikkei 225 arbs.</li>
</ul>



Trend Micro Inc (4704 JP) has been under pressure to improve capital allocation after Value Act bought in 2022. In February 2023, Trend announced a weak sauce capital return policy.
They promised a 100% payout ratio with 70% div payout ratio. But with huge piles of cash and securities, it wasn't going to be enough, and shareholder structure ALWAYS matters.
Here it meant Trend Micro was vulnerable to further attack. Today, Trend announced a HUGE capital return with buyback, and a special div and this will excite Nikkei 225 arbs.


Trend Micro BIG Bonanza But Shareholder AND Balance Sheet Structure Matter. N225 Divs Get a Fillip

Equity Bottom-Up

<ul>
<li>Last November, <a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro Inc (4704 JP)</a> announced a second change to Shareholder Return Policy in 9 months. Activist ValueAct had been pushing. This was their big win.</li>
<li>I discussed, bullishly, in <a href="https://www.smartkarma.com/insights/trend-micro-big-bonanza-but-shareholder-and-balance-sheet-structure-matter-n225-divs-get-a-fillip" target="_blank" data-smartkarma-citation="insights:117167" rel="noopener">Trend Micro BIG Bonanza But Shareholder AND Balance Sheet Structure Matter. N225 Divs Get a Fillip</a>. </li>
<li>Yesterday, with 2024 earnings, we got the promised special dividend and 2024 buyback, and in-line forecasts. No surprises. But the stock is down hard as yesterday's hopium met today's reason.</li>
</ul>


Last November, Trend Micro Inc (4704 JP) announced a second change to Shareholder Return Policy in 9 months. Activist ValueAct had been pushing. This was their big win.
I discussed, bullishly, in Trend Micro BIG Bonanza But Shareholder AND Balance Sheet Structure Matter. N225 Divs Get a Fillip. 
Yesterday, with 2024 earnings, we got the promised special dividend and 2024 buyback, and in-line forecasts. No surprises. But the stock is down hard as yesterday's hopium met today's reason.


Trend Micro (4704) - In-Line Announcement Causes Selloff - Hopium Meets Reason

<ul>
<li>Today saw the publication of three different articles regarding the <a href="https://www.smartkarma.com/entities/alimentation-couche-tard-inc" target="_blank" data-smartkarma-citation="entities:25103:1" rel="noopener">Alimentation Couche-Tard (ATD CN)</a> approach and offer to purchase all the shares of <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> </li>
<li>The first in the Nikkei said ATD could push offer a high price, even up to ¥8 trillion. The second mentioned debt financing being feasible because of prodigious cash flow.</li>
<li>The third in Bloomberg noted that 7&amp;i had requested the government upgrade its FEFTA status to "core", which would lead to a more burdensome/restrictive government approval process.</li>
</ul>


Today saw the publication of three different articles regarding the Alimentation Couche-Tard (ATD CN) approach and offer to purchase all the shares of Seven &amp; I Holdings (3382 JP) 
The first in the Nikkei said ATD could push offer a high price, even up to ¥8 trillion. The second mentioned debt financing being feasible because of prodigious cash flow.
The third in Bloomberg noted that 7&amp;i had requested the government upgrade its FEFTA status to "core", which would lead to a more burdensome/restrictive government approval process.


Updates on The Couche-Tard Deal for 7&I (3382 JP)

Japan

Trend Micro Incorporated develops and markets anti-virus computer software and internet security software.  The Company also sells its products in the United States, Europe, and Asia.

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Trend Micro Inc (4704 JP)

Trend Micro (4704 JP): Evaluating the Privatisation Rumours

The lack of a controlling shareholder and increased cybersecurity M&A activity support the buyout interest. A privatisation price is likely to be...

Arun George

Trend Micro (4704) Up For Sale? Would Be a HUGE Buyout But How Huge? And Who?

Trend Micro - target of Value Act which has gone sideways for 2 years - is apparently considering a sale. Founders are 65-70. They need new...

Travis Lundy

Trend Micro BIG Bonanza But Shareholder AND Balance Sheet Structure Matter. N225 Divs Get a Fillip

Trend Micro announced a "big" but softish shareholder return plan in February. It fell a bit flat. Now they have a bigger better one. Looks...

Travis Lundy

Trend Micro (4704) - In-Line Announcement Causes Selloff - Hopium Meets Reason

Trend Micro (4704)'s new Shareholder Return Policy in November = stock rally. Now in-line announcements get the stock sold off. It's not clear this...

Travis Lundy

Updates on The Couche-Tard Deal for 7&I (3382 JP)

The ATD deal for 3382 will be long-dated. It will take months, not weeks. Effectively, both parties want 3382's share price higher. If higher,...

Travis Lundy

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