In today’s briefing:
- Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
- Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data
- Canvest (1381 HK): Evaluating A Privatisation
- [JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
- Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat
- Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges
- Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!
- Glencore (GLEN): Green Light from Canada for $6.9bn Acquisition of EVR. Demerger on the Table.
- Jollibee’s (JFC PM) Risky Bet: Compose Coffee Acquisition in a Competitive Market
- Henlius (2696): Here Comes The Scrip Option
Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
- The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
- The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
- Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.
Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data
- Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
- Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact.
- New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.
Canvest (1381 HK): Evaluating A Privatisation
- Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%.
- There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
- But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.
[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
- A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
- But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
- I expect the ask needs to change, and the agenda item needs to be difficult to be against.
Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat
- This block deal has an unusual PSR (price swap return) contract at ₩58,200, the July 10th closing price, likely preventing Netmarble’s typical stock price correction today.
- In 2022, a similar-sized local PSR transaction involved Doosan Bobcat Inc, with 9.9 million shares and a PSR swap price of ₩37,500.
- As for Doosan Bobcat, the stock initially dropped but rebounded near the PSR swap price, prompting local brokerages, focused on PSR fee income, to sell rather than realize capital gains.
Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges
- Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion.
- Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
- The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC.
Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!
- After what appeared indecisiveness from Genesis Capital, Crescent Capital’s National Dental Care snuck in on the 29th April and entered into a Scheme with Pacific Smiles (PSQ AU) at A$1.90/share.
- The Scheme Meeting is the 1st August with expected implementation on the 19th August. The IE (Deloitte) reckoned terms are fair & reasonable. All good right? Not quite.
- The Takeovers Panel has concluded Genesis Capital, with 19.9% of shares out, is free to vote. Assuming Genesis votes against the Scheme, Crescent Capital’s Offer is effectively dead.
Glencore (GLEN): Green Light from Canada for $6.9bn Acquisition of EVR. Demerger on the Table.
- Following the regulatory approval from the Government of Canada, Glencore’s cash acquisition of 77% stake in Teck’s Elk Valley Resources (EVR) is expected to close on 11 July 2024.
- The cash acquisition is forecasted not to cause any passive fund flows based on the deal structure.
- The potential demerger introduces the risk for Glencore approaching the exit threshold of STOXX Europe 50. This is yet undetermined due to the long time horizon.
Jollibee’s (JFC PM) Risky Bet: Compose Coffee Acquisition in a Competitive Market
- Jollibee Foods (JFC PM) recently acquired Compose Coffee, the second-largest take-out chain in South Korea’s competitive value coffee retail segment.
- While the acquisition presents growth opportunities for Jollibee, the intense competition and inherent challenges of the value coffee retail segment warrant caution.
- With Jollibee’s Coffee & Tea business vertical now growing into a meaningful size, we recommend listing it separately to enhance visibility, accountability and unlock shareholder value.
Henlius (2696): Here Comes The Scrip Option
- Shanghai Fosun Pharmaceutical (Group) (2196 HK)‘s (SFP) “Merger by Absorption” HK$24.60/share cash Offer for H-shares not held in Shanghai Henlius Biotech (2696 HK), tentatively includes a scrip alternative.
- The first hurdle for the share option – valid letters of interest from those shareholders wishing to rollover – was secured yesterday. SCP still has the discretion on providing scrip.
- But if SFP had any lingering doubts whether to offer scrip, that was answered earlier this week with the emergence of a substantial shareholder who is typically a pre-IPO investor.
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