In today’s briefing:
- 2023 JPX Nikkei 400 Rebal – 38 IN, 36 OUT, 4.2% One Way Flow
- Kenedix Merger: Big Passive Inflows on the Cards
- Toshiba (6502) Tender Offer – Kioxia Optionality
- Zomato Lock-Up – A US$650m+ Worth Acquisition Linked Lockup Release
- EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks
- KKR/OHB: Agreed Take-Private Offer
- What Is KDB’s Plan B for Asiana Airlines?
- InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share
2023 JPX Nikkei 400 Rebal – 38 IN, 36 OUT, 4.2% One Way Flow
- The Tenth Annual JPX Nikkei 400 Index Review was announced on Monday 7 August. There are 38 Inclusions, 36 Deletions. They are mostly in line with Janaghan Jeyakumar, CFA‘s predictions.
- The BIG SELL is T&D Holdings (8795 JP), which surprised me. The top BUY is ROHM Co Ltd (6963 JP) which was not on the Quiddity Leaderboard.
- Otherwise, the ADDs and DELETEs are 1.8-2.0 days of ADV, there are several NEW CAPs and some RECAPS among LARGE CAPS
Kenedix Merger: Big Passive Inflows on the Cards
- The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
- The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
- The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.
Toshiba (6502) Tender Offer – Kioxia Optionality
- Yesterday, JIP finally announced its Tender Offer for Toshiba Corp (6502 JP) as discussed in JIP Tender Offer for Toshiba (6502) Finally Here
- I got a few questions this morning on the earnings call comments from Chairman Watanabe regarding what might happen if a Kioxia Transaction were announced mid-JIP Tender.
- My assumption before, during, and after, is that the Board wants this deal done. And doesn’t really want to take any responsibility for pushing any more.
Zomato Lock-Up – A US$650m+ Worth Acquisition Linked Lockup Release
- In Aug 2022, Zomato completed the acquisition of Blinkit’s outstanding shares via issuing its own shares. These issued shares will come up for lockup release on 10th Aug 2023.
- Zomato is one of two leading food delivery app operators in India. Its acquisition of Blinkit marked its foray into the instant grocery segment.
- In this note, we will talk about the lock-up dynamics and recent updates.
EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks
- Insulet Corp (PODD US) filed with the United States District Court a complaint for patent infringement against Eoflow (294090 KS), Flex (FLEX US), Luis Malave, Steven DiIanni, and Ian Welsford.
- Insulet’s primary allegation is that Eoflow’s EOPatch device is built using Insulet’s proprietary trade secrets and infringes three Insulet US patents (‘741, ’883 and ‘950 patents).
- The most likely scenarios are that Medtronic Plc (MDT US) and Insulet sign a licensing agreement (resulting in a possible tender offer price cut) or Medtronic walks.
KKR/OHB: Agreed Take-Private Offer
- KKR’s launching a cash offer for space tech firm OHB SE (OHB GR) at €44/share, 37% premium, 8.1x EV/Fwd NTM EBITDA, 16.1x Fwd P/E for an implied equity value of c.€769 million.
- The Fuchs family will retain its majority shareholding. OHB’s strong balance sheet might be leveraged to further consolidate the industry. The offer price seems slightly cheap but not outrageous.
- I believe a price hike is unlikely. Gross spread is 3.75%. Considering a break of €32.2, the market is pricing an 86% probability of success. I’d be long the shares.
What Is KDB’s Plan B for Asiana Airlines?
- There have been increasing local news flows about KDB’s potential “Plan B” for Asiana Airlines in case the merger between Asiana Airlines and Korean Air Lines is finally cancelled.
- The final decisions by the European and US regulators on whether to pass/block this merger are likely to take place in 4Q 2023.
- The higher probability scenarios are for one or both of these regulators to block this deal. As such, KDB will need to come up with Plan B.
InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share
- Invocare has entered into a scheme implementation deed with TPG at A$12.7/share. This is higher than the initial offer of A$12.65/share but lower than the revised offer of A$13/share.
- There is an extra A$0.26/share in franking credits for Invocare Ltd (IVC AU) shareholders that can use them.
- Passives will need to sell nearly 11m shares of Invocare Ltd (IVC AU) on the last trading day and there will be an adhoc inclusion to the S&P/ASX 200 Index.
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