Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

This morning in the Nikkei there is an <a href="https://asia.nikkei.com/Business/Business-deals/Toshiba-receives-offer-from-CVC-to-go-private-in-20bn-deal" target="_blank" rel="noopener">article</a> (English, Japanese is <a href="https://www.nikkei.com/article/DGXZQOUC06CLO0W1A400C2000000/?unlock=1" target="_blank" rel="noopener">here</a>) headlined...<blockquote>Toshiba receives offer from CVC to go private in $20bn deal</blockquote>The accompanying article in Japanese including CEO Kurumatani-san's comments suggests that the board will meet today to discuss it. The initial response to the press was that it had received the initial proposal yesterday without any previous consultation, so the company would seek more information and consider the proposal carefully.It's early days. The headline number of ¥5,000/share is too low, by a fair bit, and there are a lot of hurdles (which are NOT shareholders wanting more) before this could go forward (allowing shareholders to want more).Exactly one year ago today, I wrote <a href="https://www.smartkarma.com/insights/an-mbo-for-toshiba-not-as-silly-as-it-sounds" target="_blank" data-smartkarma-citation="insights:38199" rel="noopener">An MBO for Toshiba? Not As Silly As It Sounds</a> after an article in an "investigative" magazine called FACTA (most famous for pre-commenting on the fraud on Olympus nearly a decade ago) put out an article "Toshiba: Kurumatani's Astonishing MBO Scheme: Will He Be Able to Expel Noisy Shareholders?" (東芝・車谷が「MBO」画策の仰天: 物言う株主「放逐」は叶うか).The article spent a lot of time talking about Kurumatani-san as a person, the insinuations that he hates shareholders, and about his desire to control his own fate - to "have his own castle" (by getting noisy activists out). The story suggested then that he saw his chance now (early April 2020) as the fall in the share price saw foreigners sell (that analysis was weak; I expect the activists were not the ones selling down hard in an illiquid market in the covid-crash, and I said as much). The article name-dropped PE funds and related parties (one fund, Integral, was led by a former SMBC colleague; and CVC - where Kurumatani-san spent a year as the Japan rep after leaving SMBC when he didn't get the nod for the top job - was mentioned as another), but I highlighted, <div>
<blockquote>The "astonishing scheme" about the MBO though is not to be ignored. It serves a LOT of purposes. </blockquote>
I stand by that conclusion, and it is worth thinking about how this might play out.
Much more below the fold.
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This morning in the Nikkei there is an article (English, Japanese is here) headlined...Toshiba receives offer from CVC to go private in $20bn dealThe accompanying article in Japanese including CEO Kurumatani-san's comments suggests that the board will meet today to discuss it. The initial response to the press was that it had received the initial proposal yesterday without any previous consultation, so the company would seek more information and consider the proposal carefully.It's early days. The headline number of ¥5,000/share is too low, by a fair bit, and there are a lot of hurdles (which are NOT shareholders wanting more) before this could go forward (allowing shareholders to want more).Exactly one year ago today, I wrote An MBO for Toshiba? Not As Silly As It Sounds after an article in an "investigative" magazine called FACTA (most famous for pre-commenting on the fraud on Olympus nearly a decade ago) put out an article "Toshiba: Kurumatani's Astonishing MBO Scheme: Will He Be Able to Expel Noisy Shareholders?" (東芝・車谷が「MBO」画策の仰天: 物言う株主「放逐」は叶うか).The article spent a lot of time talking about Kurumatani-san as a person, the insinuations that he hates shareholders, and about his desire to control his own fate - to "have his own castle" (by getting noisy activists out). The story suggested then that he saw his chance now (early April 2020) as the fall in the share price saw foreigners sell (that analysis was weak; I expect the activists were not the ones selling down hard in an illiquid market in the covid-crash, and I said as much). The article name-dropped PE funds and related parties (one fund, Integral, was led by a former SMBC colleague; and CVC - where Kurumatani-san spent a year as the Japan rep after leaving SMBC when he didn't get the nod for the top job - was mentioned as another), but I highlighted, 
The "astonishing scheme" about the MBO though is not to be ignored. It serves a LOT of purposes. 
I stand by that conclusion, and it is worth thinking about how this might play out.
Much more below the fold.



Toshiba - The CEO Gets His MBO Bidder and Toshiba Will Get Interestinger

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Positive news flow for Toshiba continues as the <a href="https://asia.nikkei.com/Business/Business-deals/Micron-and-Western-Digital-explore-possible-deal-for-Kioxia-WSJ" target="_blank" rel="noopener">Nikkei reported</a> that both Micron and Western Digital have expressed interest in acquiring equity affiliate Kioxia for as much as $30bn. With Toshiba owning 40.2% of the company that would be a significant haul for the company regardless of whether the quoted figure is market cap or EV.

Positive news flow for Toshiba continues as the Nikkei reported that both Micron and Western Digital have expressed interest in acquiring equity affiliate Kioxia for as much as $30bn. With Toshiba owning 40.2% of the company that would be a significant haul for the company regardless of whether the quoted figure is market cap or EV.

Toshiba – Rumoured Deal for Kioxia a Big Positive

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Market dynamics have deteriorated and are now much more mixed overall. Deteriorating signals include RS improvement for defensive Sectors, RS deterioration for small-caps, and the US dollar breaking above 92. Despite this mild deterioration in market dynamics, there are plenty of indicators that remain positive. This tells us any weakness should be treated as a buying opportunity and our outlook remains constructive for the months ahead.

Market dynamics have deteriorated and are now much more mixed overall. Deteriorating signals include RS improvement for defensive Sectors, RS deterioration for small-caps, and the US dollar breaking above 92. Despite this mild deterioration in market dynamics, there are plenty of indicators that remain positive. This tells us any weakness should be treated as a buying opportunity and our outlook remains constructive for the months ahead.

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Equity Bottom-Up

Micron Technology's March 31 second-fiscal-quarter earnings call told not only of a strong recent quarter, but of a very positive outlook for the next several quarters as the DRAM market is experiencing a growing shortage and the NAND flash market seems to be going into balance.

Micron Technology's March 31 second-fiscal-quarter earnings call told not only of a strong recent quarter, but of a very positive outlook for the next several quarters as the DRAM market is experiencing a growing shortage and the NAND flash market seems to be going into balance.

Micron 2QF21: Everything's Good and Getting Even Better

In an investor confernce call today <a href="https://www.smartkarma.com/entities/micron-technology-inc" target="_blank" data-smartkarma-citation="entities:13382:1" rel="noopener">Micron Technology (MU US)</a> revealed that it would discontinue its 3D XPoint memory efforts and sell the facility that produces it.  Will its sole customer <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a> be undermined by this move?

In an investor confernce call today Micron Technology (MU US) revealed that it would discontinue its 3D XPoint memory efforts and sell the facility that produces it.  Will its sole customer Intel Corp (INTC US) be undermined by this move?

Micron Kills 3D XPoint - Is Intel in Trouble?

United States

Western Digital Corporation is a global provider of solutions for the collection, storage, management, protection and use of digital content, including audio and video. The Company's products include hard drives, solid-state drives, and home entertainment and networking products.

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Western Digital (WDC US)

Toshiba - The CEO Gets His MBO Bidder and Toshiba Will Get Interestinger

3mos ago Toshiba was cheap. Now TOPIX squeezes float, Kioxia is hot, Activists won the EGM, now looking at the AGM. Whoops. Look at the Birdie!...

Travis Lundy

Toshiba – Rumoured Deal for Kioxia a Big Positive

A sale of Kioxia to Micron or WDC could help Toshiba realise further value and would mark an increasingly positive news flow cycle following...

Mio Kato

Upgrading U.S. Staples To Market Weight

Despite mild deterioration in market dynamics, there are plenty of indicators that remain positive and our outlook remains constructive for the...

Vermilion Research

Micron 2QF21: Everything's Good and Getting Even Better

Micron's management showed surprising bullishness in its most recent earnings call, as the markets for their two products are entering a protracted...

Jim Handy

Micron Kills 3D XPoint - Is Intel in Trouble?

Will Micron's sudden exit from the 3D XPoint market threaten Intel or Intel's customers? It seems that this will actually be a relatively...

Jim Handy

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