In today’s briefing:
- Benesse Holdings (9783 JP): EQT Backed Pre-Conditional MBO Tender Offer at JPY2,600
- Fujisoft Tender Offer for Listed Sub Cybernet (4312) – This Is Too Cheap
- Vinx Corp (3784) TOB by Parent Fujisoft (9749) – A Bit Cheap, Impossible To Block
- Index Rebalance & ETF Flow Recap: SSE50, Chinext/50, Renesas, Tencent, Amman Mineral
- Shidax Corporation (4837 JP): MBO Tender Offer at JPY800
- Last Week in Event SPACE: Korea’s Short Selling, Hollysys, Sankyo, Descente
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: CMIC, IRC, Allkem, Benesse, Southern Cross, EOFlow, Shidax
- Taisei Corp (1801) Partial Tender for PS Mitsubishi Construction (1871)
- TIGER Battery Material ETF Rebal in December: Notable Changes in Constituent Screening
- Benesse (9783) MBO – ¥2600/Share Is Up 40+% But It Is Still the Wrong Price
Benesse Holdings (9783 JP): EQT Backed Pre-Conditional MBO Tender Offer at JPY2,600
- Benesse Holdings (9783 JP) has recommended an EQT-backed pre-conditional MBO offer of JPY2,600 per share, a 45.1% and 36.3% premium to the undisturbed price and last close, respectively.
- The pre-conditions primarily relate to Japanese and Chinese approvals, which can be waived. Chinese SAMR approval should be forthcoming as education is not a geopolitical fraught sector.
- The offer is long-dated and opens in early February 2024. While not a knockout bid, the offer is fair in the context of Benesse’s muted outlook.
Fujisoft Tender Offer for Listed Sub Cybernet (4312) – This Is Too Cheap
- Fuji Soft Inc (9749 JP), as target of activist-ish investor 3D Investment Partners, launched a “Special Committee to Increase Corporate Value” in August 2022. They reported in Nov22 and Feb23.
- They also reported in Aug23, mentioning the four listed subs and synergies. Last week, Fujisoft announced it was buying them all out.
- Cybernet Systems Co (4312 JP) is one of the two larger ones. It is being done too cheaply. Waaay too cheaply. It would not be impossible to block.
Vinx Corp (3784) TOB by Parent Fujisoft (9749) – A Bit Cheap, Impossible To Block
- Fuji Soft Inc (9749 JP), as target of activist-ish investor 3D Investment Partners, launched a “Special Committee to Increase Corporate Value” in August 2022. They reported in Nov22 and Feb23.
- They also reported in Aug23, mentioning the four listed subs and synergies. Last week, Fujisoft announced it was buying them all out.
- Vinx Corp (3784 JP) is one of the two larger ones. It is being done too cheaply, but it would be nigh impossible to block. A safe deal.
Index Rebalance & ETF Flow Recap: SSE50, Chinext/50, Renesas, Tencent, Amman Mineral
- Wednesday will be a busy day as positions are put on and unwound following announcement of the changes to the MSC indices.
- Friday will end the review cutoff for the ASX indices and Hang Seng Indexes will announce the December changes for the HSI, HSCEI, HSTECH and HSCI post market close.
- Another week of large outflows for China focused ETFs with redemptions across all the major indices.
Shidax Corporation (4837 JP): MBO Tender Offer at JPY800
- Shidax Corp (4837 JP) has recommended an MBO tender offer of JPY800 per share, a 10.3% premium to the undisturbed price (9 November).
- After the settlement of the tender offer, Oisix ra daichi (3182 JP) will acquire a 66.0% stake in the offeror by way of third-party allotment at the tender offer price.
- Despite the skinny premium, the offer is just shy of the ten-year share price high. The minimum acceptance condition requires a 12.5% minority acceptance rate.
Last Week in Event SPACE: Korea’s Short Selling, Hollysys, Sankyo, Descente
- The Korean Financial Services Commission and the Financial Supervisory Service held a press briefing, unveiling the comprehensive prohibition of short selling from the 6th November, until June 30th next year.
- Recco or Ascendant for Hollysys (HOLI US)? Ascendant could easily get >50% of shares out, and spill the board. Recco, with no shares held, looks to have a weaker hand.
- Sankyo (6417 JP) is cheap. It will never trade at 20x expected PER because of the nature of the business; right now, on an ex-cash basis, it trades 1.6x ex-cash PER.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: CMIC, IRC, Allkem, Benesse, Southern Cross, EOFlow, Shidax
- I tally 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Four new deals were discussed on Smartkarma this week: Shidax (4837 JP)‘s and CMIC (2309 JP)‘s low-balled Offers; Benesse (9783 JP)‘s MBO/EQT Offer; and IRC (1029 HK)‘s MBO MGO.
- Key updates took place for: Allkem Ltd (AKE AU), Orecorp Ltd (ORR AU), Southern Cross Media (SXL AU), EOFlow (294090 KS), and Hollysys Automation Technologies (HOLI US)
Taisei Corp (1801) Partial Tender for PS Mitsubishi Construction (1871)
- Last week, as Ps Mitsubishi Construction (1871 JP) reported earnings, Taisei Corp (1801 JP) announced a Partial Offer for PS Mitsubishi, buying out Ube Cement & Taiheiyo Cement stakes.
- Partial offers have recently traded well before the close, and badly after the result. As we near year-end, this one could trade a bit softer, suggesting a lower back end.
- Shareholder Structure, Pro-ration analysis, and back end calculation grids below.
TIGER Battery Material ETF Rebal in December: Notable Changes in Constituent Screening
- Based on the latest closing prices, the potential INs/OUTs are as follows. INs: Soulbrain & Enchem / OUTs: Chunbo & Solus Advanced Materials
- While the overall market liquidity constraints due to the short-selling ban could exacerbate the price impact on the rebalancing day, it may reduce the flexibility of our Long-Short setup strategies.
- While Chunbo carries single-stock futures, its liquidity may not be sufficient. So, a more creative Long-Short approach is required, taking into account these factors.
Benesse (9783) MBO – ¥2600/Share Is Up 40+% But It Is Still the Wrong Price
- Just before the close Friday, the Nikkei reported Benesse Holdings (9783 JP) would be the subject of an MBO in order to restructure the flagging private shinken-zemi business. And grow.
- It turns out it is EQT and the Fukutake family at ¥2600/share – a 2-year high. Wow. It is also a ridiculously cheap price given the assets and money flows.
- I expect this may get some people upset as the valuation methodology is dodgy and the artful (hehehe) Balance Sheet has some easter eggs, and spotted pumpkins… or something.
💡 Before it’s here, it’s on Smartkarma
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