In today’s briefing:
- Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender
- Why Samsung Fire Is Shaping Up to Be the Hottest Dividend Play Ahead of the Value-Up Disclosure
- M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)
- StubWorld: Swire Trading “Cheap” As Cathay Squares Government Debt
- Elan Corporation (6099 JP): M3 (2413 JP)’s Partial Tender Offer
- GAPack (468 HK): SAMR Rests On XJF’s Filing
- Korea Investment Securities to Step up as the White Knight for Choi Family at Korea Zinc
- Digging into the News Flow on KIS Jumping in as the White Knight for Choi in the Korea Zinc Deal
- Main Takeaways from Today’s MBK Press Briefing About the Korea Zinc Tender
- Quiddity Leaderboard CSI 300/500 Dec 24: Massive Increase in AUMs Causes Flow Expectations to Soar
Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender
- KKR has rejigged its Fuji Soft Inc (9749 JP) tender offer into a two-stage offer at an unchanged JPY8,800 price. The first stage has no minimum acceptance condition.
- The first stage is designed to facilitate KKR’s acquisition of 3D and Farallon shares, which have tendered and will not withdraw their tenders without KKR’s consent.
- By securing 3D/Farallon’s shares, KKR has effectively blocked a Bain tender offer. Bain could launch a partial offer but it would be constrained by the tradeable share ratio criteria.
Why Samsung Fire Is Shaping Up to Be the Hottest Dividend Play Ahead of the Value-Up Disclosure
- With the 15% ownership cap complicating buybacks, Samsung Fire’s more likely to roll out a dividend-focused value-up play instead.
- They’ve flagged a mix of shareholder returns and investments, but the big question is how much will be funneled into returns this year.
- If Samsung Fire hits a 50% shareholder return this year, DPS could jump to ₩23,000–₩25,000 with a 6.5% yield, potentially boosting the stock price by 20–30%.
M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)
- M3 Inc (2413 JP) will buy 50.1-55.0% of Elan Corp (6099 JP). Three principals+family have agreed to tender 50.1%. The premium is not huge. This is not an ATH.
- There will be synergies. I am a little surprised by the deal+price (CEO is young, why sell so cheaply so early?) but it should be good for the TargetCo.
- There are possible post-tender complications on a high participation rate. I expect those can be cured relatively easily.
StubWorld: Swire Trading “Cheap” As Cathay Squares Government Debt
- Swire Pacific (19 HK) is coming up “cheap” on my monitor vs. Swire Properties (1972 HK) and Cathay Pacific (293 HK), after Cathay settles its Hong Kong government tab.
- Preceding my comments on Swire and Cathay are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Elan Corporation (6099 JP): M3 (2413 JP)’s Partial Tender Offer
- Elan Corp (6099 JP) announced a partial tender offer and capital and business agreement with M3 Inc (2413 JP). M3 aims to make Elan a consolidated subsidiary.
- The offer is for a minimum of 30.4 million (50.10% ownership ratio) and a maximum of 33.3 million shares (55.00% ownership ratio) at JPY1,040, 24.0% premium to the undisturbed price.
- Irrevocable from tendering shareholders will satisfy the minimum acceptance condition. The offer is unremarkable, suggesting a final proration materially above the minimum of 56.07%.
GAPack (468 HK): SAMR Rests On XJF’s Filing
- China’s State Administration for Market Regulation has formally accepted Shandong Xinjufeng Technology (301296 CH) (XJF)’s filing. That’s positive. SAMR previously okayed XJF’s initial 28.22% stake from Jardine Matheson (JM SP).
- No new update on co-founders Jeff Bi and Gang Hong’s non-binding Offer.
- Separately, the EGM requisitioned by XJF to appoint two XJF-friendly directors progresses.
Korea Investment Securities to Step up as the White Knight for Choi Family at Korea Zinc
- Hankyung Business Daily reported that Korea Investment Securities (KIS) is in a serious discussion with the Choi family of Korea Zinc to step up as a white knight.
- KIS/Choi family are considering a plan to launch a counterbid against Jang family and MBK by investing around 2 trillion won+ along with other private equity funds.
- It is probable that tender offer price of Korea Zinc could be raised by 15-25% due to a likely counterbid and current price trading 7% higher than tender offer price.
Digging into the News Flow on KIS Jumping in as the White Knight for Choi in the Korea Zinc Deal
- The key issue is if KIS can form a consortium. PEFs are saying the timeline is too tight and are concerned about the unclear exit strategy.
- To make this work, PEFs need Choi’s 15.65% Korea Zinc stake as collateral, but much of it is already tied up, limiting cash-raising potential.
- They’ll likely continue to leak news to boost the price and buy time. But this will also push MBK to sweeten their offer sooner.
Main Takeaways from Today’s MBK Press Briefing About the Korea Zinc Tender
- MBK’s funding plan for Korea Zinc involves using ₩1T from their 6th Buyout Fund and the rest via debt. This setup leaves room to potentially increase the tender price.
- The key question is if there’s enough upside at this price. MBK’s silence on abandoning Youngpoong suggests they’re unlikely to fully bail on Korea Zinc even if the tender fails.
- With MBK’s strategy leaked, institutions may hesitate, fearing less price drop risk, suggesting a proxy battle could heat up. We should consider spread trading and post-tender price moves.
Quiddity Leaderboard CSI 300/500 Dec 24: Massive Increase in AUMs Causes Flow Expectations to Soar
- CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
- In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
- Since our last insight in August, there has been a sharp increase in reported AUMs tracking CSI 300 and CSI 500. This has caused our flow expectations to rise sharply.
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