In today’s briefing:
- Cosmo Energy (5021) – Headed to an EGM Showdown for the Poison Pill
- EOFLOW/Medtronic Tender: Closing Date Extended to 3 January 2024
- Medtronic’s M&A of Eoflow Timeline Postponed
- HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running
- EOFlow Situation: Latest Disclosure, Market Speculations, & Key Short-Term Focus
- Azure (AZS AU): SQM The Likely Suitor
- Hollysys (HOLI US): MBO Proposal and Updates
- EOFlow/Medtronic: Signs of Life
- Yuanta/P-Shares Taiwan Div Plus ETF Rebalance Preview: In-The-Money; Turnover & Trade Remain High
- SIA Placement Lockup – Time for Another Trim of Its US$7bn Stake
Cosmo Energy (5021) – Headed to an EGM Showdown for the Poison Pill
- Japanese activist Murakami-san and Cosmo Energy Holdings (5021 JP) have been duking it out for 18 months. He now has 20%. Wants more. Management wants to exercise the poison pill.
- Cosmo’s efforts are not completely honest, but Murakami-san’s efforts are clearly designed to benefit Murakami-san over general shareholders, and Cosmo has finally explained the reasons publicly. Read the doc (Japanese).
- At 1.0x book, lower refining margins vs earlier in the year, and difficulty for Murakami-san to force the issue, one must take more care here than one did 40% ago.
EOFLOW/Medtronic Tender: Closing Date Extended to 3 January 2024
- The closing date of the Eoflow (294090 KS)/Medtronic Plc (MDT US) transaction has been extended from 25 October 2023 to 3 January 2024. All other terms are unchanged.
- The bull view is that despite the preliminary injunction and share suspension, Medtronic’s move underscores its commitment to the transaction on current terms.
- The bear view is that the extension was Medtronic’s best move as it retains option value should Insulet’s lawsuit start floundering in court and KRX reinstate trading in Eoflow shares.
Medtronic’s M&A of Eoflow Timeline Postponed
- On 25 October, Eoflow announced that the M&A of Eoflow by Medtronic has been postponed.
- The closing date for Eoflow’s stock transfer agreement with Medtronic has now been changed to 3 January 2024.
- Although we believe Medtronic will continue to pursue Eoflow, the M&A tender offer price could be lowered to about 26,000 won, which would be nearly 20% higher than current price.
HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running
- There were only 14 new listing on the Main Board of the HKEX (388 HK) in the third quarter. Half of the listings were in the last week of September.
- Of those stocks, only Tuhu Car (9690 HK) and Keep (3650 HK) have a chance of being added to the HSCI in December and then into Southbound Stock Connect.
- Keep Inc (3650 HK) could be added to Stock Connect in early December while Tuhu Car (9690 HK) will have to wait till April for inclusion to the link.
EOFlow Situation: Latest Disclosure, Market Speculations, & Key Short-Term Focus
- We must acknowledge that the acquisition contract has not been withdrawn, signifying that we have averted the worst-case scenario.
- During the shareholders’ meeting on November 15th, it is crucial for us to pay attention to whether personnel from Medtronic are included in the list of new board candidates.
- If that’s the case, we can infer that Medtronic intends to go through with this deal, regardless of the litigation issues in the United States.
Azure (AZS AU): SQM The Likely Suitor
- Lithium mining play Azure Minerals (AZS AU) went into a trading halt Monday (23 October) “regarding a potential change of control transaction“. That halt has been extended to Friday morning.
- The obvious suitor is Sociedad Quimica y Minera de C (SQM/B CI) with 19.9%, who approached Azure with a $2.31/share Offer in August but was rejected.
- Mark Creasy, a major shareholder in Azure and also a direct stakeholder in Azure’s flagship mine, is the key. Should a firm Offer unfold, expect a chunky premium.
Hollysys (HOLI US): MBO Proposal and Updates
- Hollysys Automation Technologies (HOLI US) update notes a new MBO proposal at US$25 per share, a bidders shortlist in several weeks and an update on the special meeting.
- The update suggests several potential bidders and enough shareholders with the required record date to convene the special meeting to appoint independent directors.
- The MBO proposal, while potentially a delaying tactic, suggests that the Board are under pressure for a solution and is aiming for a friendly takeover.
EOFlow/Medtronic: Signs of Life
- When EOFlow (294090 KS) was suspended on the 11th October, and ceased global sales, either the Medtronic (MDT US) deal was (largely) toast; or it was a tactical move.
- I’m firmly in the latter camp. Insulet‘s lawsuit was expected. And completing the transaction enables the more financially and legally resource-rich MDT to become the party to the litigation.
- The SPA between Jesse Kim and MDT was expected to complete on 25 October. That was not a hard date. It has now been pushed out to 3 January 2024.
Yuanta/P-Shares Taiwan Div Plus ETF Rebalance Preview: In-The-Money; Turnover & Trade Remain High
- Using data from the close on 25 October, there could be 6 adds and 5 deletes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
- There will also be capping and funding flows that will lead to a one-way turnover of 19.5% and a one-way trade of US$1.39bn.
- A long adds/ short deletes trade is up double digits over the last three weeks and there are a few trade adjustments based on the new rankings.
SIA Placement Lockup – Time for Another Trim of Its US$7bn Stake
- Temasek raised around US$300m via its secondary selldown in Singapore Airlines (SIA SP) in Jun 2023. The lockup from that placement will expire soon.
- Temasek still owns over 50% of SIA and hence, any selldown might not come before SIA reports its 1H23/24 results in mid-Nov 2023.
- In this note, we talk about the placement lockup dynamics.
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