In today’s briefing:
- Sep24 Nikkei 225 Rebal – Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse
- L’Occitane (973 HK): Dilemma as the Share Alternative Pre-Condition Met
- L’Occitane (973 HK): On Activism And The Scrip Alternative
- Kansai Food Market (9919) Minorities Get Squeezed into H2O Retailing (8242)
- Business On The Fly: Malaysia Airports (MAHB MK)’s RM11.00/Share Offer
- Quiddity Leaderboard ASX Jun 24: Intra-Review Replacement Surprise Possible
- Block Deal Sale of 3% Stake in HD Hyundai Heavy Industries
- Huafa Property (982 HK)’s Potential Offer
- Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart
Sep24 Nikkei 225 Rebal – Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse
- The Sep 2024 Nikkei 225 Review data set is mostly done, and one can interpolate results relatively accurately. It still leaves us with one ADD, one DELETE, and capping fun.
- Recently, Yanai-san sold more Fast Retailing (9983 JP). There is more Real World Float- more active holders own more stock (which may mean less interest to buy later).
- There is a dark horse candidate which is on investor radar for other reasons. It would not be out of the question, but the precedent is old, and different.
L’Occitane (973 HK): Dilemma as the Share Alternative Pre-Condition Met
- L’Occitane (973 HK) announced that the share alternative pre-condition was satisfied. However, The share alternative offer is at the offeror’s discretion and with the consent of the financing parties.
- The share alternative offer poses a dilemma due to the requirement to satisfy the minimum acceptance condition while not breaching the upper limit of the share alternative offer.
- The share alternative offer is a play on higher multiples by relisting the business. At HK$50.00, L’Occitane would trade in line with its median global beauty peers’ multiples.
L’Occitane (973 HK): On Activism And The Scrip Alternative
- In the 29th April HK$34/share VGO announcement, a share scrip alternative may be afforded if 10% of L’Occitane (973 HK)‘s disinterested shareholders expressed interest by the 15th May
- That pre-condition has been satisfied. However, we are none the wiser whether you receive shares of the levered-up Bidco, at some undetermined scrip ratio; or keep shares of L’Occitane as-is.
- Some shareholders, like Butler Hall, considered terms low-balled. They now have the option to rollover. But there are still other large activists on the register, whose intentions are not known.
Kansai Food Market (9919) Minorities Get Squeezed into H2O Retailing (8242)
- Two and a half years ago, H2O Retailing (8242 JP) the 10.9% owner, arranged to merge its own units into Kansai Super Market (9919 JP) to get control. OK Corp complained.
- OK Corp offered to double the price in a Tender Offer but wouldn’t go hostile. KSM/KFM said no go. Shares popped to ¥2,000+ then when the deal failed, they fell.
- H₂O ended up with 58% (64.9% of votes now). The ultimate goal was to swallow it paying zero premium. On 15 May, it announced the merger to do just that.
Business On The Fly: Malaysia Airports (MAHB MK)’s RM11.00/Share Offer
- Khazanah Nasional, the EPF, the Abu Dhabi Investment Authority, and Global Infrastructure Partners, are offering to buy all shares not already owned in Malaysia Airports Holdings (MAHB MK) at RM11.00/share.
- The pre-conditional voluntary Offer price is a 5.77% premium to last close; but a life-time high. The Offeror consortium collectively holds 41.22% of shares out.
- The pre-cons include regulatory approvals (in Malaysia, Turkey, Saudi Arabia, and Egypt). The Offer is subject to a 90% acceptance condition; which may be reduced.
Quiddity Leaderboard ASX Jun 24: Intra-Review Replacement Surprise Possible
- In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
- We expect one ASX 20 change and two ASX 100 changes during the regular rebalance event.
- For the ASX 200 index, there could be two intra-review changes in the month of June 2024 and one of those names could be a surprise.
Block Deal Sale of 3% Stake in HD Hyundai Heavy Industries
- HD Korea Shipbuilding & Offshore Engineering (009540 KS) plans to sell 2.66 million shares (3% of outstanding shares) of HD Hyundai Heavy Industries (329180 KS) in a block deal sale.
- We would avoid participating in this block deal sale and we have a Negative view of HD Hyundai Heavy Industries (329180 KS) over the next one year.
- After this block deal sale, we believe there could be concerns about HD Korea Shipbuilding & Offshore Engineering potentially selling additional shares of HD HHI in the next 2-3 years.
Huafa Property (982 HK)’s Potential Offer
- Huafa Property Services Group (982 HK) is currently suspended pursuant to the Takeovers Code.
- This SOE-backed property management play recently announced its highest-ever earnings.
- Shares have gained ~32% in the past fortnight, touching a three-year high. IF an Offer were to unfold, expect an Offer Price ~10% above the last close.
Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart
- Talks circulate that E-Mart may sell its 5% stake in Samsung Life Insurance, valued around ₩1T, due to fundraising needs linked to SSG.com investors’ put options.
- Initially, Starbucks Korea was a potential sale, but U.S. HQ approval makes it unfeasible. Shinsegae L&B and Food weren’t enough to raise funds, leading E-Mart to focus on Samsung Life.
- E-Mart’s block deal timing is uncertain due to potential legal disputes over unmet put option conditions, yet recent local market discussions suggest E-Mart may avoid legal battles.
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