In today’s briefing:
- Backstory on the Hanmi Science Showdown & KKR’s Likely Tender Offer
- Best World (BEST SP): Exit Stage Left
- Jastec (9717 JP): NTT Data (9613 JP)’s Tender Offer at JPY1,940
- Shockwave Medical Inc (SWAV US): Johnson & Johnson (JNJ US)’s Acquisition Offer
- Hanmi Science: If Talks With Mum and Sister Break Down, Then KKR May Provide a Partial Tender Offer
- Hanwha Aerospace: Spin Off of Semiconductor Equipment and Video Surveillance Units
- Ganz-Mavag/Talgo: Request for Offer Authorisation
- EQD | HSI Closed the Week Modestly Up: A Pullback Is Possible Next Week
Backstory on the Hanmi Science Showdown & KKR’s Likely Tender Offer
- The victorious brothers plan to join forces with KKR to secure over 51% ownership of Hanmi Science. They aim to persuade the mother and daughter to part with their shares.
- Should this negotiation fail, KKR is prepared to initiate a tender offer in the open market, intending to acquire an additional 10-15% of Hanmi Science’s shares.
- KKR can target a maximum of 16%. With 10-15% aimed for, this tender offer will cause significant price impact.
Best World (BEST SP): Exit Stage Left
- After flagging a proposed delisting exercise last month, direct seller Best World International (BEST SP) has announced an Exit Offer lead by Best World founders Dora Hoan and Doreen Tan.
- The Offer Price is S$2.50/share, a 42.86% premium to undisturbed. The Offer requires approval from 75% of disinterested shareholders. Hoan, Tan and concert parties holding 65.12%, are required to abstain.
- Best World shares resumed trading on November 2022 after 42 months of suspension, subsequent to media reports and a short seller raising regulatory concerns over its Chinese business model.
Jastec (9717 JP): NTT Data (9613 JP)’s Tender Offer at JPY1,940
- Jastec Co Ltd (9717 JP) has recommended a tender offer from NTT Data Corp (9613 JP) at JPY1,940 per share, a 37.6% premium to the undisturbed price (5 April).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.67% ownership ratio.
- Based on the irrevocables, the minimum acceptance condition requires a 56.4% minority acceptance rate. The acceptance condition is achievable as the offer represents a 22-year high.
Shockwave Medical Inc (SWAV US): Johnson & Johnson (JNJ US)’s Acquisition Offer
- Johnson & Johnson (JNJ US) entered into a definitive agreement to acquire Shockwave Medical Inc (SWAV US) for $335/share in cash or an enterprise value of $13.1B.
- Offer price represents 4.7% premium over yesterday’s closing price or around 19% premium over the undisturbed price. The deal is expected to close by mid-2024.
- With no product overlap and competition concern, the deal is expected to get regulatory approval. With reasonable deal valuation, shareholders approval is also expected.
Hanmi Science: If Talks With Mum and Sister Break Down, Then KKR May Provide a Partial Tender Offer
- The 2024 AGM of Hanmi Science is over and the two Lim brothers have control of the company. Nonetheless, the fight for the control of Hanmi Science is not over.
- There is an increasingly probable scenario where the KKR private equity firm gets involved, joining hands with the Lim brothers.
- If mum and sister do not sell their shares (which seems to be the higher likely scenario), then KKR may issue a tender offer to the remaining minority shareholders.
Hanwha Aerospace: Spin Off of Semiconductor Equipment and Video Surveillance Units
- On 5 April, Hanwha Aerospace (012450 KS) formally announced that it will spin off its semiconductor equipment and video surveillance units which contributed to about 16% of its revenue.
- We are Negative on Hanwha Aerospace mainly due to valuations. Its share price has risen so much in the past year that its valuations are no longer attractive.
- Hanwha Aerospace is trading at premium valuation to Lockheed Martin on an EV/EBITDA basis. Despite its recent strong growth, Hanwha Aerospace is no Lockheed Martin.
Ganz-Mavag/Talgo: Request for Offer Authorisation
- Ganz Mavag, a public/private consortium, requests authorisation for its €5/share offer for 100% of Talgo SA (TLGO SM). It needs approvals from Spain and seven other EMEA regulators.
- Yesterday’s close remains similar to the announcement date (7 March), gross spread of 11.3%, indicating uncertainty regarding timeline and development. The market is pricing a 48% probability of deal completion.
- The Spanish Government will delay the authorization process. Vs. comparables and considering uncertainties regarding backlog execution, investing in the company seems somewhat risky. The risk/reward ratio is not particularly attractive.
EQD | HSI Closed the Week Modestly Up: A Pullback Is Possible Next Week
- The Hang Seng Index has been rising for 2 weeks but the uptrend seems slow and weak. The rally may have stalled, a pullback may be behind the corner.
- Based on our MONTHLY seasonal studies for the HSI, the index has a extremely high chance to close April in negative territory.
- You can go SHORT now, or during this coming week if the index keeps rising, target the 17000 to 17300 areas.
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