In today’s briefing:
- Exedy (7278) Huge Offering Resized – Watch the Dynamics Here
- Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
- Detailed Summary of Today’s Second Trial Ruling in Chey Tae-Won’s Divorce Case Involving SK Inc
- Kansai Paint (4613) – Going Hard with a BIG Buyback and More Capital Moves Beyond
- Zomato Placement Lockup Expiry – US$800m Overhang
- Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae
- Quiddity Leaderboard ES50 Sep 24: US$1.1bn Index Inflow for Engie if Nokia’s Rank Falls by ONE
- SET50 Index Rebalance Preview: 4 Changes as Review Period Ends Today
- Brookfield to Launch Mandatory Offer for Neoen
Exedy (7278) Huge Offering Resized – Watch the Dynamics Here
- On Monday 27 May, Aisin (7259 JP) announced an offering to sell ALL of its 36+% stake in equity affiliate Exedy Corp (7278 JP) for likely ¥40bn+.
- Exedy announced a big buyback to go with it. It bought back 30% of the total on Weds morning, and that reduced the size of the offer.
- I had expected “short-term games” but we haven’t really had them. Which is a bit weird. This update shows the details and dynamics (they differ).
Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
- The entire saga here of Teijin Ltd (3401 JP)‘s disposal of its 55.1% stake in Infocom Corp (4348 JP) is being played out in the non-generally-public press.
- There is reportedly a new piece of writing out late Thursday which suggests an approach.
- I wrote about the “meaning” of words in Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’ and now there is more nuance to parse.
Detailed Summary of Today’s Second Trial Ruling in Chey Tae-Won’s Divorce Case Involving SK Inc
- The first trial in December 2022 ordered Chey to pay 67.5 billion KRW; today’s ruling increased this to 1.38 trillion KRW plus 2 billion KRW, including splitting SK Inc. shares.
- The increased settlement and SK Inc. share split could spark a management rights battle, causing SK Inc.’s stock price to jump as investors and shareholders react.
- It may take a year for the final verdict, making a sustained stock price increase unlikely. Yet, differences between trial rulings could alter Chey’s SK Inc. stake, sustaining market interest.
Kansai Paint (4613) – Going Hard with a BIG Buyback and More Capital Moves Beyond
- 24mos ago, Kansai Paint (4613 JP) announced a new MTMP, a large buyback, and plans to unwind cross-holdings. Big. 15mos ago a large secondary offering kicked off the festivities.
- Key was Toyota sold. Then KP could sell its Toyota shares – two-thirds of its cross-holdings. The offering was one to buy. A buyback followed. KP vs Nippon Paint doubled.
- KP offered a CB recently with the delta hedge done by TN-3. Now there is a HUGE new buyback. Really big. This gets rid of more cross-holders. And there’s more.
Zomato Placement Lockup Expiry – US$800m Overhang
- Antfin will come out of its placement linked lockup for its remaining stake in Zomato soon.
- Ant Group had earlier sold some of its stake in Nov 2023 and Mar 2024. It still has over US$800m worth of shares left to sell.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework.
Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae
- Emart and Shinsegae are facing concerns about put options of nearly 1 trillion won on private equity investors’ investment in SSG.com nearly six years ago.
- From AEP and BRV’s point of views, they want to get their money back through put options since an IPO is not likely in the near term.
- The most probable result appears to be that this is likely to be dragged on for some time, which will cause continued concerns on both Emart and Shinsegae.
Quiddity Leaderboard ES50 Sep 24: US$1.1bn Index Inflow for Engie if Nokia’s Rank Falls by ONE
- The ES50 Index is one of the most highly-tracked and followed indices in Europe and the annual index review takes place in September every year.
- This annual index rebal event usually results in some of the most significant index flow events in Europe every year, typically amounting to billions of dollars of flows.
- In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2024.
SET50 Index Rebalance Preview: 4 Changes as Review Period Ends Today
- With one day left in the review period, we see 4 potential changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
- Berli Jucker (BJC TB) could be added to the index following the market consultation that lowered the inclusion thresholds for Average Daily Trading Values and Turnover ratios.
- An equally weighted basket of potential adds has outperformed the potential deletes but there has been a deterioration in performance over the last month.
Brookfield to Launch Mandatory Offer for Neoen
- Brookfield (BN CN) has entered exclusive negotiations with the top shareholders of Neoen (NEOEN FP) to acquire a 53.32% stake at €39.85/share, 26.9% premium, which will trigger a mandatory offer.
- The offer represents 15.1x EV/NTM Fwd EBITDA vs. the median of peers at 9.3x. My fair-value estimate (DCF-based) is €33.76/share, therefore the offer is generous, in my view.
- Expect the shares to close the spread tomorrow and trade around 3% gross spread and the convertibles to price higher (2% 06/25 at around €51.85, 2.875% 09/27 around 111.72%).
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