Australia

OZ Minerals Ltd (OZL AU) has entered into a SID with BHP Group Ltd (BHP AU) at A$28.25 per share, a 49.3% premium to the undisturbed price (5 August).
The offer price is attractive. The key conditions are shareholder and regulatory (Brazil and Vietnam) approvals. The scheme meeting is in late March/early April 2023.
The key risk is the rise in copper prices. At last close and for the end-April payment, the gross and annualised spread to the offer is 1.6% and 4.8%, respectively.

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Dec 22

Daily Brief Australia: Warrego Energy and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Warrego Energy: Reinhart Disses Strike’s “Superior” Offer

Warrego Energy: Reinhart Disses Strike’s “Superior” Offer

After the Gina Reinhart-backed Hancock bumped its Offer for Warrego Energy (WGO AU) to A$0.28/share, in cash, Beach Energy (BPT AU) declined to match the revised Offer.
With Hancock seemingly in the driver’s seat, Strike Energy (STX AU), with 19.9% of shares out, proposed a one-for-one scrip Offer, with an indicative price of A$0.335/share.
Hancock has responded that its Offer provides certainty, with cash, whereas Strike’s proposal does not. Now 15.84% of the register has come out in support of Hancock’s Offer.

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Dec 21

Daily Brief Australia: Syrah Resources and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the run up to the March 2023 Rebalance.
Pendal Group (PDL AU)‘s deletion is expected in early-January 2023 and this could trigger an intra-review addition to the ASX 200 index.
I expect there to be one, two, and four changes, respectively, for the ASX 20, ASX 100, and ASX 200 indices in the March 2023 Rebalance.

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Dec 20

Daily Brief Australia: Warrego Energy and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Warrego (WGO AU): Strike Energy (STX AU) Strikes with a Revised Offer

Warrego (WGO AU): Strike Energy (STX AU) Strikes with a Revised Offer

Strike Energy (STX AU)’s revised off-market takeover is 1 STX share per Warrego Energy (WGO AU) share, a 29.0% premium to its previous offer and a 21.4% premium to Hancock’s offer.
Hancock has the war chest to comfortably outbid STX. However, the smart move for Hancock is to be disciplined on price and instead bid for the combined STX/WGO post-completion.
The Board’s view will be sent in Target’s statement to be despatched by 29 December. At the last close, the gross spread to STX’s offer is 6.3%.

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Dec 18

Daily Brief Australia: Norwest Energy Nl, Elmo Software and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Norwest Energy (NWE)’s Opportunistic Bid from Mineral Resources (MIN AU)
Elmo Software (ELO AU)’s Scheme Meeting on 30 January

Norwest Energy (NWE)’s Opportunistic Bid from Mineral Resources (MIN AU)

Mineral Resources (MIN AU) has launched an all-scrip off-market takeover offer at 1 MIN share for every 1,367 Norwest Energy Nl (NWE AU) shares, a 33.3% premium to undisturbed price.
There is no minimum acceptance condition, and the offer is only subject to prescribed occurrences. The timing is opportunistic and motivated by recent Perth Basin consolidation activity.
While the offer implies a premium to historical prices, the gross exchange ratio is unattractive. MIN’s key aim is privatisation, and a bump is likely required to achieve that goal.

Elmo Software (ELO AU)’s Scheme Meeting on 30 January

The IE considers K1’s A$4.85 offer for Elmo Software (ELO AU) to be fair and reasonable as it is towards the high end of its valuation range of A$4.39-4.98.
K1 has received FIRB and US antitrust approval. The remaining key conditions are shareholders and court approval.
This is a done deal. At the last close price and for the 23 February 2023 payment, the gross and annualised spread is 1.9% and 10.9%, respectively.

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Dec 16

Daily Brief Australia: Norwest Energy Nl and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

MinRes’ “Unconditional” Offer For Norwest

MinRes’ “Unconditional” Offer For Norwest

Iron ore and lithium play Mineral Resources (MIN AU) is offering one new share for every 1,367 Norwest Energy (NWE AU), an onshore O&G play, in an off-market takeover.
The implied value of A$0.06/share under the Offer represents a 27% premium to NWE’s one-month VWAP.
MinRes currently owns 19.9% in Norwest. There is no minimum acceptance condition. This is done and will trade tight.

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Dec 14

Daily Brief Australia: Omni Bridgeway, Cromwell Property, Origin Energy, Endeavour Group and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

S&P/ASX Index Rebalance Preview: A Busy March (Maybe January and February Too)
MVIS Australia A-REITs Index Rebalance: Cromwell Property (CMW) Is a Deletion
Origin Energy: Gas Price Cap Compromises Brookfield’s Offer
Endeavour Group Placement – Recent Momentum Has Been Very Weak

S&P/ASX Index Rebalance Preview: A Busy March (Maybe January and February Too)

We currently see one change each for the ASX20 and ASX100 indices, 4 changes for the S&P/ASX 200 and 10 adds/ 6 deletes for the ASX300 Index in March.
There could be an addition to the S&P/ASX 200 (AS51 INDEX) in January following Pendal Group (PDL AU)‘s acquisition by Perpetual Ltd (PPT AU).
PEXA Group (PXA AU) is a potential inclusion to the S&P/ASX 200 (AS51 INDEX) if Link Administration (LNK AU)‘s in-specie distribution of PEXA shares to its shareholders is approved.

MVIS Australia A-REITs Index Rebalance: Cromwell Property (CMW) Is a Deletion

Cromwell Property (CMW AU) is a deletion from the MVIS Australia A-REITS Index at the close on 16 December.
Passive trackers will need to sell 13.9m shares (5 days ADV) of Cromwell Property (CMW AU) and there appears to be little to no pre-positioning on the stock.
There are a few other stocks that will have over 0.5 days of ADV to buy from passive trackers.

Origin Energy: Gas Price Cap Compromises Brookfield’s Offer

On the 10 November, Brookfield and EIG/MidOcean offered Origin Energy (ORG AU) shareholders $9.00/share, a 54.9% premium to last close, by way of a Scheme. The Offer is non-binding.
On the 9 December, the Aussie government said it would take action to limit the worst impacts of the forecast gas price increases to protect Australian households, industry, and manufacturers.
This includes a temporary price cap on new domestic wholesale gas contracts by east coast producers, such as Origin, for 12 months.

Endeavour Group Placement – Recent Momentum Has Been Very Weak

By Sumeet Singh

Woolworths Ltd (WOW AU) plans to raise around US$438m via selling 5.5% of Endeavour Group (EDV AU).
Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

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Dec 13

Daily Brief Australia: Genesis Minerals, Home Consortium Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Genesis Minerals (GMD AU) And St Barbara (SBM AU) Merger
Home Consortium (HMC AU) FTSE EPRA Index Deletion – Underperforming but STILL Expensive
St Barbara’s Reverse Merger Of Genesis

Genesis Minerals (GMD AU) And St Barbara (SBM AU) Merger

St Barbara Ltd (SBM AU) and Genesis Minerals (GMD AU) will merge via a scheme at a gross exchange ratio of 2.0338 SBM shares per GMD share.
The deal metrics are favourable for GMD shareholders. The gross exchange ratio is attractive and values GMD at a slight premium to mid-cap ASX peers on an EV/Resource basis.
The likely pushback from SMB shareholders is that the terms were struck from a position of share price weakness. However, the low SMB shareholder voting threshold (50%) will help.

Home Consortium (HMC AU) FTSE EPRA Index Deletion – Underperforming but STILL Expensive

By Travis Lundy

Home Consortium Ltd (HMC AU) is a Super Stapled Security, having developed HomeCo Daily Needs REIT (HDN AU), overseen the Aventus Group (AVN AU) merger, IPOed HealthCo REIT (HCW AU).
The current market cap is 1.6x book and probably closer to 2x tangible book as a large “management and development capability premium” is baked in.
There is a FTSE EPRA Nareit index deletion on Friday. That could prompt further underperformance.

St Barbara’s Reverse Merger Of Genesis

Gold miners St Barbara Ltd (SBM AU) and Genesis Minerals (GMD AU) have agreed to merge via a Scheme. Inter-conditionally, SBM will demerge Atlantic, Simberi, and other assets.
SBM will issue 2.0338 of its own shares for each GMD share. Conditional on the Scheme and asset demerger, Genesis will raise $275m to fund the merged entity.
At completion, SBM shareholders will hold 38% in the combined group, current Genesis shareholders 41%, with the remaining 22% held by participants in the capital raising.

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Dec 12

Daily Brief Australia: Tyro Payments, Nitro Software Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Tyro Payments (TYR AU): Potentia Returns with a A$1.60 Offer
Merger Arb Mondays (12 Dec) – Nitro, Tyro, Bigtincan, Warrego, Genex, Elmo, Golden Energy
Potentia Bumps But Tyro Shuts Down Talks

Tyro Payments (TYR AU): Potentia Returns with a A$1.60 Offer

The AFR reports that Potentia has increased its offer for Tyro Payments (TYR AU) by 26.0% from A$1.27 to A$1.60 per share, a 62.4% premium to the undisturbed price.
The revised offer remains light and likely to be rejected again by the Board. Grok’s get-out clause with Potentia now sets the floor price of a competing bid at A$1.85.
Potentia’s revised bid is the catalyst for the other rumoured suitors (Westpac Banking (WBC AU) and Moneris) to get their act together. A competing offer of around A$2.00 is possible.

Merger Arb Mondays (12 Dec) – Nitro, Tyro, Bigtincan, Warrego, Genex, Elmo, Golden Energy

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Bigtincan Holdings Ltd (BTH AU), Golden Energy & Resources (GER SP), Origin Energy.
Lowest spreads Nitro Software Ltd (NTO AU), Warrego Energy (WGO AU), Chip Eng Seng Corp (CHIP SP), Uzabase Inc (3966 JP), Elmo Software (ELO AU), OZ Minerals Ltd (OZL AU).

Potentia Bumps But Tyro Shuts Down Talks

Potentia has increased its indicative proposal for Tyro Payments (TYR AU) to A$1.60/share from A$1.27/share. Grok, holding 12.5% of shares out, remains supportive.
However, Tyro’s board believes the revised terms remain below what is considered fair, and has ceased all discussions.
Separately, Westpac has decided not to submit an Offer. After conducting due diligence. Shares are down 19.5% as I type.

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Dec 10

Daily Brief Australia: Tietto Minerals Ltd, Liontown Resources and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes

MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes

Filo Mining (FIL CN) and Tietto Minerals (TIE AU) are adds while Fresnillo (FRES LN), Galiano Gold (GAU US), Jaguar Mining (JAG CN) and Novo Resources (NVO CN) are deletes.
One way turnover is estimated at 4.3% resulting in a one-way trade of US$163m. There is over 1 day of ADV to trade on 24 stocks.
Largest inflows are on Filo Mining (FIL CN) and Tietto Minerals Ltd (TIE AU) while largest outflows are on Fresnillo PLC (FRES LN) and Centerra Gold (CG CN).

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes