Australia

• Back on the 13 June, cybersecurity firm Tesserent Ltd (TNT AU) announced a Scheme with France’s Thales SA (HO FP). Thales is offering A$0.13/share, a 165% premium to last close. 
• The Scheme Doc has been despatched with Tesserent shareholders voting on the 18 September. Tesserent’s board (holding 9.23%) and the IE are supportive. Implementation expected on the 4 October.
• The Offer is also subject to FIRB signing off. New Zealand’s OIO gave the green light on the 18 July.

• DDH1 (DDH AU)‘s IE considers Perenti Global (PRN AU)’s A$0.1238 cash plus 0.7111 PRN shares for each DDH share offer fair and reasonable. 
• The offer requires DDH1 shareholder approval. Shareholders representing 38.0% of outstanding shares will vote in favour of the scheme.
• The low spread points to a done deal. At the last close price and for the 6 October payment, the gross and annualised spread is 1.5% and 10.8%, respectively.

• Back on the 26 June, specialty mining driller DDH1 (DDH AU)announced a merger, by way of a Scheme, with Perenti Global (PRN AU).
• Under the agreement, DDH1 shareholders would receive for each DDH1 share held $0.1238 cash plus 0.7111 Perenti shares, for an implied value of A$1.01/share, or a 17.4% premium.
• I thought the terms were fair. The Independent Expert has now concluded the same. Shareholders will have their say at the Scheme Meeting on the 18 September. 

• State Gas Limited (ASX:GAS) is a junior energy producer and explorer with assets concentrated in the Bowen Basin, Queensland.
• Having secured a capital injection through a recent equity placement, the company is set to make the transition from explorer to producer with the imminent start-up of the Rolleston West CNG Project.
• Although only a small-scale start-up, first gas is always a critical event driver in demonstrating the commercial potential of the assets and providing a platform from which growth strategies can emanate. 

• We forecast 26 changes across the ASX50 Index, ASX100 Index, S&P/ASX 200 (AS51 INDEX) and ASX300 Index at the September rebalance.
• The review period ends tomorrow, so most changes are high probability. Though there are some changes that will be up to the discretion of the index committee.
• There will be a lot of stock to trade on the changes to the ASX200 and indices higher up the hierarchy. But there will be a lot of pre-positioning too.

• Splitit Ltd (SPT AU) will seek approval from shareholders to delist the Buy Now, Pay Later micro-play from the ASX and redomicile to the Cayman Islands.
• Concurrent with the voluntary delisting proposal, PE outfit Motive Partners will pump in US$50mn in exchange for preference shares – assuming the delisting occurs and certain earnings targets are met. 
• This is not an Offer for shares. If delisted, Splitit shareholders will hold scrip in an unlisted private vehicle. 

• Tesserent Ltd (TNT AU)‘s IE considers Thales SA (HO FP)’s A$0.13 offer fair and reasonable as it is above its valuation range of A$0.098 to A$0.109 per share. 
• The offer is subject to FIRB and shareholder approval. New Zealand’s OIO approval suggests that Australia’s FIRB approval should be forthcoming. Pearson’s recent selldown lowers the vote risk.
• At the last close price and for the 4 October payment, the gross and annualised spread is 4.0% and 32.0%, respectively.

Vection Technologies reported rapid contract growth in its Q423 update, driven by upsells, new contract wins and progress with its potential A$30m defence tender. The ability to integrate AI software, like ChatGPT, and Apple’s entry into the market underpins the rising commercial value of extended reality software. This is translating into increased demand across a range of verticals, where management is aiming to solidify its market position through M&A, alongside developments to its IntegratedXR product suite. Higher investment could impact FY23 profitability but the group’s plan to build operating leverage should support FY24 margins.

• Ionic Tech begins REO recycled magnet production at Belfast facility; 
• IXR’s flagshipMakuutu Rare Earths project is significant given its ionic adsorption clayhostedgeology
• In Sep22 IXR received a £1.72m grant from the UK government todevelop its demonstration magnet recycling plant in Belfast, UK.

• Originally, this was an analysis of tax-loss selling baskets over the years, and seasonal performance of baskets of stocks with certain attributes. On average, they fell vs index.
• Of course, on average, they also rose vs index after the selling was done.
• This insight puts a cap on the 2023 edition with results across the four baskets. The sell made 4.2% vs ASX200 in May, then is up

• We turn to granular Pillar 3 disclosure of NAB seeing divergent moves in PD buckets
• Its worst PD buckets are seeing sharp rise, while best buckets are falling, flat-ish
• LT credit cost data, PD buckets, timely CBA data, suggests higher provision costs

Following the proposed acquisition of Access Managed Services in May 2023, Respiri announced that it has raised the A$3m as planned as part of the share purchase plan (SPP), which we believe are the funds needed to close the acquisition (10 August scheduled closing date). The company has raised a total of A$4.35m (including a convertible note with Obsidian Global) to cover the upfront payment (US$1.25m) for the acquisition, working capital to accelerate US commercialisation and the US$0.25m acquisition purchase consideration due three months post-close. Also, in Q423 (ending June 2023), Respiri signed three new remote patient monitoring (RPM) agreements, increasing the total contracted healthcare customers to 13 (across eight US states), while also bolstering its sales pipeline. The acquisition of the Access platform is a key component of management’s commercialization strategy and we anticipate Respiri to be on track to reach break-even in mid-CY24.

• There could be two deletes for the index in September. There are two other stocks that are close to the deletion threshold.
• Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of around 2.7% and a one-way trade of A$51m.
• Short interest has been increasing on Charter Hall (CHC AU) and JB Hi-Fi Ltd (JBH AU) and could be partially driven by potential index deletions.

• There should be one deletion from the index in September. And there could be another deletion. And there will be capping changes for a few stocks.
• The index changes will lead to a one-way turnover of 2.12% resulting in a one-way trade of A$13m. There is only one stock with over A$5m to trade.
• Following the spinoff, Abacus Group (ABG AU) and Abacus Storage King (ASK AU) will be the lowest ranked index constituents and at risk of deletion from the index.

• In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the September 2023 Rebalance.
• I expect one change for ASX 100 and 3 ADDs and 4 DELs for ASX 200. There could be 11 ADDs and 9 DELs for ASX 300.
• ASX 300 member Leo Lithium (LLL AU) is currently suspended from trading and that could have interesting implications for the stock’s ASX 300 membership.

Actinogen recently provided a Q423 quarterly update summarising that its two development programmes for lead candidate Xanamem remain on track, with the Phase IIb XanaMIA study portion assessing the drug in lead indication Alzheimer’s disease (AD) still scheduled to start in H2 CY23, with results still expected in H2 CY25. For the company’s XanaCIDD study in patients with cognitive impairment (CI) associated with major depressive disorder (MDD), enrolment is approaching 25% and the company continues to expect results in H1 CY24 as it is opening new US-based study sites to compensate for regulatory delays in the UK. The company reported a 30 June cash position A$8.46m and has announced a A$10m rights offering allowing existing shareholders to purchase up to 400m shares at A$0.025 per share. After rolling forward our estimates, our pre-financing valuation adjusts slightly to A$645m, or A$0.36/share, versus A$640m (A$0.35/share) previously. Overall, we view the financing as a positive and necessary step to continue Xanamem development.

• After pitching a A$13/share NBIO on the 15 May, TPG has now inked a Scheme Implementation agreement with InvoCare (IVC AU) at A$12.70/share, inclusive of a A$0.60/share fully franked dividend. 
• This compares to PE-outfit TPG’s A$12.65/share NBIO on the 7 March – which Australia’s leading funeral services provider InvoCare promptly rejected.  
• A comparatively benign flu season, and an expected ~10% decline in 1H23 EBITDA, largely account for InvoCare’s change of heart.

• Credit cost surge in 1H23 is strangely tempered in 2H23 results, although still rising
• Despite rising credit costs, they remain at relatively low levels compared with history
• Data on credit metrics suggest to us that credit costs should have been higher in 2H23

• Invocare Ltd (IVC AU) has entered a SID with TPG at A$12.70 per share, a modest -2.3% discount to the previous non-binding offer of A$13.00 per share.
• The price cut was justified by a trading update which noted a challenging near-term macro-environment and softening in market volumes. The median peers’ share prices have also derated.
• The offer requires shareholder, FIRB and OIO approval. At the last close and for the end of November payment, the gross and annualised spread is 1.8% and 5.7%, respectively. 

• Invocare has entered into a scheme implementation deed with TPG at A$12.7/share. This is higher than the initial offer of A$12.65/share but lower than the revised offer of A$13/share.
• There is an extra A$0.26/share in franking credits for Invocare Ltd (IVC AU) shareholders that can use them.
• Passives will need to sell nearly 11m shares of Invocare Ltd (IVC AU) on the last trading day and there will be an adhoc inclusion to the S&P/ASX 200 Index.

• After its initial bid of $3.00/share was rejected by Estia Health (EHE AU), Bain returned on the 7 June with a $3.20/share non-binding proposal and was granted exclusive due diligence.
• Estia and Bain Capital have now entered into a Scheme Implementation Agreement at A$3.20/share, a 50% premium to undisturbed. 
• A shareholder meeting is expected to be held in November with implementation expected prior to the end of 2023. 

• Estia Health (EHE AU) has entered a SID with Bain Capital at A$3.20 per share, a 49.5% premium to the undisturbed price (21 March).
• The offer is attractive in comparison to historical share prices and multiples. The offer is also attractive in comparison to the Japara Healthcare (JHC AU) precedent transaction. 
• The MAC clause, particularly around material regulatory events, could be risky. At the last close and for an end-of-December payment, the gross and annualised spread is 3.7% and 9.5%, respectively.

• Western Australian-based miner OreCorp Ltd (ORR AU) has signed a Scheme Implementation Deed with Canada’s Silvercorp Metals (SVM CN).
• Assuming the Scheme is successful, OreCorp shareholders will receive A$0.15 in cash and 0.0967 new Silvercorp shares – or an implied value of A$0.60 – for each OreCorp share held.
• A shareholder meeting is expected to be held in mid-November with implementation expected end-Nov, early-Dec. Separately, Perseus (PRU AU) is understood to be kicking OreCorp’s tyres.

• Orecorp Ltd (ORR AU) has entered a SID with Silvercorp Metals (SVM US) at A$0.15 cash and 0.0967 SVM shares per ORR share, a 31.5% premium to the undisturbed price.
• The offer is attractive compared to the adjusted exchange ratios and historical prices. However, the offer is light in comparison to peer multiples. 
• The bid could spur Perseus Mining (PRU AU), a rumoured suitor, to show its hand. At the last close, the gross spread of the offer is 19.1%.

• I tally 43 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals this week: Itochu Corp (8001 JP)‘s Tender Offer for Itochu Techno Solutions (4739 JP), and the Superloop Ltd (SLC AU) / Symbio Holdings (SYM AU) merger.
• Key updates took place forDali Foods Group (3799 HK), Allkem Ltd (AKE AU), and Oishi Group PCL (OISHI TB)