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In today’s briefing:
- Sumitomo Precision Products (6355) Buyout by Sumitomo Corp – Likely To Get Done
- Selling Sogo Seibu Doesn’t Mean Seven & I Will Sell Ito-Yokado
- Conflicts of Interest Prevent TSE from Resolving Prime Market Listing Criteria Issues
Sumitomo Precision Products (6355) Buyout by Sumitomo Corp – Likely To Get Done
- On Friday, Sumitomo Corp (8053 JP) announced a bid for equity affiliate (they own 27+% but Nippon Steel 15%, top 2 is 40+%) Sumitomo Precision Products (6355 JP).
- It’s a one-year high and 4-year high price, and 8x average 10yr EV/EBITDA but 4.6x 2024e EBITDA from the Mid Term Plan. And way below a 10-year high.
- This gets done if Retail agrees to the tender. If 50% put in, that should do it. So I expect this gets done.
Selling Sogo Seibu Doesn’t Mean Seven & I Will Sell Ito-Yokado
- Seven & I has at last agreed to sell the ailing Sogo Seibu chain – although not for enough to offset years of investment with little to show for it.
- Some hope that this means the start of a house cleaning exercise to rid the group of its multiple under-performing retail assets, leaving a gleaming exemplar of rational efficiency.
- This is unlikely, especially for the original Ito-Yokado general merchandise chain and a problem given the lack of growth potential in the group’s domestic business.
Conflicts of Interest Prevent TSE from Resolving Prime Market Listing Criteria Issues
- For companies applying transitional measures, it was an opportunity to attract investor attention and consider what is listing. This should serve as an opportunity to promote metabolism of listed companies.
- Listing fees are set at the highest rates for prime market, so if the number of prime market companies decreases, TSE revenues will decrease. A conflict of interest has arisen.
- With such a conflict of interest at TSE, it is unlikely that the contradiction between the prime market concept and listing criteria that many market participants perceive can be resolved.
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