In today’s briefing:
- Couche-Tard Bid for 7&I (3382) – FEFTA and Economic Security
- NPS Will Vote Against the Merger Between SK Innovation and SK E&S
- Insulet Launches a Patent Lawsuit Against Eoflow in Europe
- A Tender Offer to Purchase a 17.5% Stake in Hanwha Galleria by Kim Dong-Sun
- NPS Effectively Decides to Exercise Appraisal Rights Against SK Innovation: Trading Considerations
- Korea’s New Retail Pool Borrow Fee Calculation & Disclosure Rules: Impacts on Flow Trading
- Both Hanwha Aerospace Spinoffs Remain in KOSPI 200: Trading Value Gap Between Trading Suspension
- Quiddity Leaderboard SET50 Dec 24: 4 Changes Possible; Reference Period Starts on 1st Sep
- Brookfield/Grifols: Update & Recap, Spread, Discount
Couche-Tard Bid for 7&I (3382) – FEFTA and Economic Security
- The largest potential inbound cross-border M&A in years – for a national champion no less – gets a lot of press coverage.
- This morning, a Nikkei article noted Alimentation Couche-Tard (ATD CN) was likely to need “prior approval” from Japanese regulatory authorities for its takeover “the Nikkei has learned.”
- It wasn’t difficult for the Nikkei to learn that. METI publishes a FEFTA List. 7&i has been on it for years as Type II Designated Business, requiring prior approval.
NPS Will Vote Against the Merger Between SK Innovation and SK E&S
- NPS will vote against the merger between SK Innovation and SK E&S, mainly due to significant concerns about destroying shareholder value (especially for SK Innovation shareholders).
- Sustinvest also recommended that institutional investors vote against this merger, citing that the merger ratio between SK Innovation and SK E&S is disadvantageous to SK Innovation’s general shareholders.
- If NPS exercises its appraisal rights, this could put a knife in the wheel of the M&A merger between SK Innovation and SK E&S.
Insulet Launches a Patent Lawsuit Against Eoflow in Europe
- Eoflow announced Insulet had filed an injunction on 3 July against Eoflow and Menarini requesting a ban on the manufacture, sale, distribution, and use of EOPatch in 17 European countries.
- Given that Eoflow should have reported this event earlier, this is likely to result in further loss of confidence on Eoflow by many investors in the near term.
- If Eoflow is able to complete its rights offering (albeit lower amount than proposed), this could boost its chances to become a formidable competitor to Insulet on a global basis.
A Tender Offer to Purchase a 17.5% Stake in Hanwha Galleria by Kim Dong-Sun
- It was announced that a tender offer to purchase a 17.54% stake in Hanwha Galleria has been launched by Kim Dong-Sun (Vice President at Hanwha Galleria).
- Tender offer price is 1,600 won per share, which is 22.8% higher than the closing price on 22 August. Tender offer amount is 54.4 billion won.
- On 23 August, Hanwha Galleria’s share price is likely to rise close to the tender offer price as many investors believe the tender offer is likely to be successful.
NPS Effectively Decides to Exercise Appraisal Rights Against SK Innovation: Trading Considerations
- NPS’s opposition suggests a likely vote against the merger, but if they plan to exercise appraisal rights, they might abstain to preserve that option.
- NPS typically exercises appraisal rights when the spread exceeds 5%, as seen in past mergers like Celltrion and Samsung. They didn’t act when the spread was below 5%.
- The key question is whether SK Innovation can boost its stock price to avoid NPS exercising rights. Otherwise, the merger may pass, but the stock could drop significantly.
Korea’s New Retail Pool Borrow Fee Calculation & Disclosure Rules: Impacts on Flow Trading
- The new rule mandates that retail pool fees be tied to the fees paid by institutional borrowers, and this information must be publicly disclosed.
- This rule ensures faster, more accurate market release of stock-specific borrow fees, which are now tied to actual fees received, replacing the arbitrarily set rates by brokerages.
- With short-selling resuming next April, this rule could drive new flow trading strategies and significantly influence target screening in the short-selling market.
Both Hanwha Aerospace Spinoffs Remain in KOSPI 200: Trading Value Gap Between Trading Suspension
- KRX announced that both Hanwha Aerospace and the new Hanwha Industrial Solutions will be added to the KOSPI 200.
- Since 2020, two K200 spinoffs had both companies remain: DL Holdings and DL E&C in January 2021, and SK Telecom and SK Square in November 2021, with notable value increases.
- This trade isn’t risk-free and requires a sophisticated hedge setup, but the trading opportunities from this flow situation are worth close attention.
Quiddity Leaderboard SET50 Dec 24: 4 Changes Possible; Reference Period Starts on 1st Sep
- The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
- In this insight, we take a look at the potential ADDs/DELs for SET 50 during the index rebal event in December 2024.
- Currently, we see 4 expected ADDs/DELs but the 3-month reference period used for average market cap rankings starts on 1st September and only after that the rankings will become stable.
Brookfield/Grifols: Update & Recap, Spread, Discount
- Bloomberg reported that Brookfield (BN CN) is seeking bank backing for up to €9.5 billion in debt to facilitate a potential take-private acquisition of Grifols SA (GRF SM).
- Considering a €10.18/share possible offer price (institutionals are seeking €12), the A shares are trading at a 7.3% gross spread and are pricing a 62.5% possibility of deal completion.
- The preferreds trading at 17.5% discount vs ordinary shares should be favored in case of takeover, with Long B shares/short A shares my preferred way to get involved.
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