In today’s briefing:
- Brookfield Explores Sovereign Funds for Grifols Takeover Bid
- Kum Yang: A Major Capital Raise Possible in 4Q24 Which Is Likely to Dilute Existing Shareholders
- Potential Price Decline Amplification from NPS’s Appraisal Rights Exercise Against NCSoft
- End of Mandatory Lock-Up Periods for 49 Companies in Korea in September 2024
Brookfield Explores Sovereign Funds for Grifols Takeover Bid
- Press reports Brookfield is seeking support from sovereign wealth funds, including those from Abu Dhabi (ADQ) and Singapore (GIC), to back its bid, though discussions remain in the early stages.
- The news about the potential involvement of ADQ and GIC are positive as any support or addition of new investors increases the likelihood of a takeover bid for Grifols.
- The discount is closing accordingly, at mid-session August 30, the share-price spread has tightened to 15.4%, the lowest ever. I suggest maintaining the position long B (or ADR)/short A shares.
Kum Yang: A Major Capital Raise Possible in 4Q24 Which Is Likely to Dilute Existing Shareholders
- In the past week, there were numerous local news accounts about a rights offering of nearly 800 billion won by Kum Yang. This has not been confirmed by the company.
- Although Kum Yang has not committed to a rights offering, there is a high probability of such capital raise in 4Q24 which is likely to dilute existing shareholders.
- Kum Yang remains a highly speculative stock. The management has lost so much credibility in the past year. We would stay away from it as far as possible.
Potential Price Decline Amplification from NPS’s Appraisal Rights Exercise Against NCSoft
- During NCSoft’s exercise period starting August 14, the spread was tight, with NPS likely to exercise rights if it widens above 5% in the final days.
- NPS is unlikely to exercise its full 6.3% stake, but may sell 2% if the stock price drops below ₩180,000, widening the spread over 5%.
- This may increase NCSoft’s division costs and overhang risk, potentially amplifying stock price decline. Monitoring NCSoft’s stock early next week is crucial.
End of Mandatory Lock-Up Periods for 49 Companies in Korea in September 2024
- We discuss the end of the mandatory lock-up periods for 49 stocks in Korea in September 2024, among which 3 are in KOSPI and 46 are in KOSDAQ.
- These 49 stocks on average could be subject to further selling pressures in September and could underperform relative to the market.
- The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in September include LS Materials, CIS, and Kyobo Securities.
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