In today’s briefing:
- JSR Corporation (4185 JP): Tender Offer Risk/Reward
- OCI Swap Arbitrage: A Bit More Complex Structure, Still Juicy Spread in Play
- Dow Inc.: New Partnership with New Energy Blue to Pioneer Sustainable Bio-Based Plastics & Other Developments
- Nucor Corporation: What Is Its Competitive Advantage? – Key Drivers
- Atomic Aspirations
JSR Corporation (4185 JP): Tender Offer Risk/Reward
- JSR Corp (4185 JP)‘s pre-conditional tender offer from JIC is JPY4,350 per share. Since the deal announcement on 26 June, the gross spread has averaged 6.4%.
- The wide gross spread reflects the risk in satisfying the pre-conditions related to country approvals, particularly in China. JIC, unusually can waive all or part of the conditions precedent.
- The wild card is geopolitical developments. There are three China approval scenarios. The likely scenario is the deal approval under a normal procedure with a delay to the tender start.
OCI Swap Arbitrage: A Bit More Complex Structure, Still Juicy Spread in Play
- This is a classic swap arbitrage of shorting the acquirer and using the tendered shares to repay it. However, executing now would be meaningless as the swap ratio isn’t finalized.
- Nevertheless, we should consider securing a long position in OCI Holdings in advance. The target (45%) is quite substantial, indicating that the practical allocation rate won’t plummet dangerously below 1.
- Additionally, the likelihood of OCI Holdings’ swap price plummeting to completely nullify the 5.6% spread immediately after its determination appears to be low based on the current context.
Dow Inc.: New Partnership with New Energy Blue to Pioneer Sustainable Bio-Based Plastics & Other Developments
- Dow delivered a positive result and managed an all-around beat in the last quarter.
- The last quarter was challenging for Dow, with lower year-over-year sales and earnings due to the slow global economic growth.
- Despite these headwinds, the company demonstrated resilience by executing its financial and operational strategies, resulting in sequential earnings improvement.
Nucor Corporation: What Is Its Competitive Advantage? – Key Drivers
- Nucor delivered mixed results for the quarter, with revenues falling short of Wall Street expectations but managed earnings beat.
- The company’s three reporting segments saw higher earnings in the quarter, with the largest gains arriving from steel mill segments that saw higher realized pricing.
- In the company’s sheet mill group, Nucor continues its ramp-up in the Nucor Steel Gallatin.
Atomic Aspirations
- Just a few weeks ago, Oklo, a startup focused on advanced nuclear fission micro-reactor technology, made a significant splash with the announcement of its intention to go public through a SPAC backed by entrepreneur Sam Altman.
- Altman, the founder of OpenAI, has become a high-profile figure in the tech industry, with ambitions stretching beyond terrestrial concerns and reaching the very potential of global artificial intelligence.
- To realize this bold vision, Altman asserts that the world requires an exponential increase in our energy production—a demand he anticipates being fulfilled by the nuclear sector.
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