In today’s briefing:
- 7&I (3382) Possibility of YUUUUUGE Buyback?
- 7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
- Seven & I Holdings (3382 JP): Board’s Plan to Unlock Value Is a Stop-Gap Measure
- Nikkei 225 Sep25 Rebal: One ADD, One DELETE Probable – Less Interesting Than Before
- Sun Art (6808 HK): IFA Says MGO Is Not Fair. Rightfully So
- Makino Milling Machine (6135 JP): State of Play
- Trial a Top 10 Retailer After Seiyu Purchase from KKR (With Big Synergies)
- Insignia Financial (IFL AU): The Field Narrows As Bain And CC Capital Bump Terms
- ADIG Investment Trust: Potential Portfolio Sale Amidst Liquidation Offers 20% Upside
7&I (3382) Possibility of YUUUUUGE Buyback?
- Last Thurs the MBO died. Tuesday an article said the ACT deal had died. Then 7&i denied that. Yesterday an article said Bain’s York Holdings deal would be approved today.
- That meant a Board meeting which would approve receipt of ~¥700bn of cash. What to do with it?
- Just now, Bloomberg says Seven & I Holdings (3382 JP)‘s board will consider a massive buyback. THAT is the capital allocation news my last piece suggested necessary. It’s HUGE.
7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
- Today, partway through the day, we got a Bloomberg article suggesting a large-scale buyback was to come. Post-close, we got the full details.
- “Seven & i Holdings Announces Plan to Unlock Shareholder Value Through Leadership Changes and Transformational Capital and Business Initiatives”.
- Sale of York. Management change. Update on Special Committee work with ACT. Commitment to return ¥2trln to shareholders via buybacks by FY2030. Higher divs. IPO of 7-Eleven Inc (US).
Seven & I Holdings (3382 JP): Board’s Plan to Unlock Value Is a Stop-Gap Measure
- The Seven & I Holdings (3382 JP) Board announced a plan to unlock and distribute significant value to shareholders.
- The initial excitement focused on the positives of leadership changes, US Assets IPO, a higher-than-expected valuation for the Superstore Business and a considerable buyback.
- The negatives of a long-dated buyback, inevitable rejection of the Couche-Tard offer, an uncertain US Assets IPO and ongoing HoldCo discount suggest the initial excitement will fizzle out.
Nikkei 225 Sep25 Rebal: One ADD, One DELETE Probable – Less Interesting Than Before
- The March 2025 Nikkei 225 review came out with a sparse set of changes. That gives us hints for the September 2025 review.
- I see one ADD and one DELETE. Fast Retailing capping is right on the border. BayCurrent will see an upweight.
- The lack of effort to address sector imbalances within the rules suggests the rules are not as hard as people thought. Intra-review changes could be more interesting in years ahead.
Sun Art (6808 HK): IFA Says MGO Is Not Fair. Rightfully So
- Late December 2024, Alibaba (9988 HK) entered an SPA with DCP Capital to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
- The SPA completed on the 27th Feb, triggering an unconditional MGO, also at HK$1.38. FWIW, a deferred payment option raises the Offer Price to a maximum of HK$1.58/share.
- The Composite Document is now out, with a Closing Date for tendering on the 27th March. This won’t be extended. The IFA (Somerley) says NOT fair & reasonable.
Makino Milling Machine (6135 JP): State of Play
- On 27 December, Nidec Corp (6594 JP) announced a hostile preconditional tender offer for Makino Milling Machine Co (6135 JP) at JPY11,000 per share.
- The Board has raised several issues with the Nidec proposal through two questionnaires. Some assertions are valid, while others do not stand up to scrutiny.
- The Board has launched an ambitious MTM plan to thwart the offer and hinted at potential competing offers. Nidec’s offer increasingly needs a bump.
Trial a Top 10 Retailer After Seiyu Purchase from KKR (With Big Synergies)
- Trial was already one of Japan’s leading discount retailers with a strong network of stores down south in Japan although rather low margins.
- Buying Seiyu transforms this local retailer into a national champion and one of the top 10, with a highly complementary set of stores, product expertise, warehouses and tech.
- Together, the two will now be able to take on Aeon, Seven & I, PPI and other major retailers in building the first true national grocery chains in Japan.
Insignia Financial (IFL AU): The Field Narrows As Bain And CC Capital Bump Terms
- Bain Capital and CC Capital have both bumped indicative terms to $5/share, a 63% premium to Insignia Financial (IFL AU)’s undisturbed closing share price of $3.06 on December 11 2024.
- Both suitors have been granted four weeks of exclusivity. Confirmatory due diligence is expected to be completed within six weeks. IFL’s board is supportive at A$5/share or more.
- Where’s Brookfield on all this? A local media source previously reported that at least one suitor was losing interest.
ADIG Investment Trust: Potential Portfolio Sale Amidst Liquidation Offers 20% Upside
- ADIG, a £140m investment trust in liquidation, trades at a 30% discount to its estimated £0.68/share NAV.
- The trust is in exclusive talks to sell its entire portfolio, potentially accelerating the liquidation timeline.
- The portfolio comprises private market assets and cash, generating £10m annually, with £33m in undrawn commitments.
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