In today’s briefing:
- Itochu (8001 JP) Lowball TOB for Descente (8114) Is Here – Trades Tight But No Big Holder Appeared
- T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder
- T-Gaia (3738 JP): Reality Check as Bain Launches a Takeunder
- Swiggy Pre-IPO Tearsheet
- Descente (8114 JP): Itochu’s (8001 JP) Tender Offer Launches
- China Consumption Weekly (30 Sep 2024): PDD, Meituan, BYD, Benz, Miniso, Yonghui
- Not Many Companies Have Implemented Full-Scale Improvements in Return on Capital
- PepsiCo Inc.: What Are The Challenges Responsible For Their Moderated Guidance? – Major Drivers
- Harley-Davidson Inc.: Expansion Into Electric Motorcycles & Global Market Penetration! – Major Drivers
- British American Tobacco p.l.c.: Strategic Investments in Heated Products & Modern Oral Products Driving Growth! – Major Drivers
Itochu (8001 JP) Lowball TOB for Descente (8114) Is Here – Trades Tight But No Big Holder Appeared
- Today, Itochu Corp (8001 JP) announced that it had received SAMR approval and would launch its Tender Offer to take private its affiliate, Descente Ltd (8114 JP).
- As warned last year, Descente is cheap on a forward basis due to very strong growth and profitability of Descente China Holdings but Itochu can downplay that future.
- And indeed, it appear they did, and unless someone takes them to task, this probably gets done. So far, nobody has.
T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder
- Today, just before the close, the Nikkei put out a scoop that Bain would buy T Gaia Corp (3738 JP) for ¥140bn. Sounds big. It was a 30% discount.
- There is a three Tender Offer process whereby minorities, who could be squeezed out regardless, are offered the opportunity to block the deal by not tendering at ¥2,670.
- This not-quite “majority of minority” of the super-minority is an interesting governance condition established by the Special Committee. It bears some study.
T-Gaia (3738 JP): Reality Check as Bain Launches a Takeunder
- T Gaia Corp (3738 JP) disclosed a Bain tender offer at JPY2,670, a 35.9% premium to the undisturbed price but a 27.2% discount to the last close.
- Bain has set the minimum number of shares to be purchased at a 12.67% ownership ratio to appease the Board, which has a neutral recommendation.
- Bain hopes the offer’s harsh reality check will burst the share price bubble, nudging minorities to accept. An auction process suggests that the chance of a competing offer is low.
Swiggy Pre-IPO Tearsheet
- Swiggy (1255298D IN) Swiggy is looking to raise about US$1.25bn in its upcoming India IPO. The deal will be run by Kotak, Citi, Jefferies, Avendus, JPM, BofA and ICICI.
- Swiggy Limited (Swiggy) is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
- The platform can also be used to make restaurant reservations (Dineout), event bookings (SteppinOut), product pick-up/drop-off services (Genie) and other hyperlocal commerce activities (Swiggy Minis).
Descente (8114 JP): Itochu’s (8001 JP) Tender Offer Launches
- Descente Ltd (8114 JP) has announced that Itochu Corp (8001 JP)’s tender offer precondition has been satisfied. The offer terms are unchanged at JPY4,350 per share.
- The offer is arguably light due to the peer re-rating and historical trading ranges. It is also below the midpoint of the special committee’s IFA DCF valuation range.
- Nevertheless, the offer will likely succeed. There is no vocal opposition, the volume traded through terms is low, and the offer implies a premium multiple compared to peers.
China Consumption Weekly (30 Sep 2024): PDD, Meituan, BYD, Benz, Miniso, Yonghui
- Temu as a subsidiary of PDD becomes the second largest global e-commerce website.
- Meituan merges departments into fewer business units to cut expenses further.
- Mercedes-Benz left the joint venture with BYD, as its high end products are not as popular as Tesla models.
Not Many Companies Have Implemented Full-Scale Improvements in Return on Capital
- Certainly, the “TSE’s request” has begun to change companies’ mindsets, but what we focus on now is whether they have put the plan into action and whether it’s producing results.
- The importance of investor engagement is also indicated in the Japan Investor Relations Association’s survey summary. Companies that receive overseas investor engagement are furthering their efforts to improve profitability.
- Even among companies with high IR awareness, few have taken serious steps to reform their business portfolios, as under 60% have begun to reform business portfolios.
PepsiCo Inc.: What Are The Challenges Responsible For Their Moderated Guidance? – Major Drivers
- PepsiCo’s 2024 second quarter earnings report reflects a complex landscape shaped by strategic adjustments and variable consumer behavior, especially in the context of a challenging US market.
- The company’s results are indicative of both resilience and areas requiring attention, navigating ongoing economic shifts and consumer sentiment.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Harley-Davidson Inc.: Expansion Into Electric Motorcycles & Global Market Penetration! – Major Drivers
- Harley-Davidson recently reported its financial results for the second quarter of 2024, showcasing several advancements and challenges in its performance.
- The company reported a 12% increase in consolidated revenue, driven by growth in both the Harley-Davidson Motor Company (HDMC) and the Harley-Davidson Financial Services (HDFS) sectors, marking a resilient performance amid prevailing economic headwinds.
- The earnings per share showed a significant improvement at $1.63, and the overall operating income grew by 9% to $241 million.
British American Tobacco p.l.c.: Strategic Investments in Heated Products & Modern Oral Products Driving Growth! – Major Drivers
- The latest earnings presentation from British American Tobacco (BAT) provided an in-depth view of the company’s performance and strategic approaches amidst its significant transitory phase.
- BAT is navigating through a challenging market landscape, marked by robust investments in transformation and innovation, particularly aimed to strengthen their U.S. business and accelerate new category offerings globally.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
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