In today’s briefing:
- Fuji Soft (9749): KKR To Launch at ¥9,451, Fuji Soft REJECTS Bain’s Bid – Governance in Shambles
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
- 7&I (3382) – What If… A Modest Proposal
- Xingda (1899 HK): A Surprising Result as Offer Declared Unconditional
- Merger Arb Mondays (18 Nov) – Henlius, GAPack, Xingda, Seven & I, Fuji Soft, NEC Networks, Macromill
- Malaysia Airports (MAHB MK): A Firm Offer (Finally)
- KLCI Index Rebalance Preview: One High Probability Change; One at the Cusp
- Ping An Healthcare and Technology (1833 HK) – Privatization Ahead?
- Taiwan Top 50 ETF Rebalance Preview: Shippers Sailing Back Into Indices
- Xingda (1899 HK): Go Figure As Offer Turns Unconditional
Fuji Soft (9749): KKR To Launch at ¥9,451, Fuji Soft REJECTS Bain’s Bid – Governance in Shambles
- On Friday 15 November, KKR announced it would launch KKR Tender2 to buy the rest of FujiSoft not purchased in KKR Tender1. Their new price is ¥1 higher than Bain’s.
- Fuji Soft Inc (9749 JP) announced (J) it supported the KKR2 Tender and rejected the Bain TOB Proposal. KKR1 shareholders are “made whole” at ¥9,451/share. Minimum is 53.22%.
- The document, however, is a Governance Disaster – an absolute shambles, effectively gaslighting investors at every turn. And now investors can see it was problematic from the start.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
- Using data from the close on 15 November, there could be 6 adds and 5 deletes for 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 16.9% and a one-way trade of TWD 57.5bn (US$1.77bn).
- Short interest is at the highs in most forecast deletes, while the trend is mixed among the potential inclusions.
7&I (3382) – What If… A Modest Proposal
- A lot of the talk around the news that Ito family scion Ito Junro had proposed to Seven & I Holdings (3382 JP) an MBO was about thwarting Alimentation Couche-Tard.
- Several mentioned that this bid – seemingly uncompetitive at the moment – would make ACT back down. I discussed the bid and its repercussions here.
- Here I suggest an alternate solution which might get everyone what they want.
Xingda (1899 HK): A Surprising Result as Offer Declared Unconditional
- On its first closing date on 15 November, Xingda International (1899 HK) declared the Chairman’s offer unconditional as the offeror and concert parties represented 60.76% of outstanding shares.
- The result was surprising. The IFA opined that the offer was not fair or reasonable, and the independent Board recommended that the shareholder not accept it.
- The CCASS movements suggest that the offer was declared unconditional mainly because friends and family supported the Chairman’s offer. The gross/annualised spread is 1.6%/92.6%.
Merger Arb Mondays (18 Nov) – Henlius, GAPack, Xingda, Seven & I, Fuji Soft, NEC Networks, Macromill
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Renewable Japan (9522 JP), Shanghai Henlius Biotech (2696 HK), Macromill, Inc (3978 JP), Seven & I Holdings (3382 JP), Canvest Environmental Protection Group (1381 HK).
- Lowest spreads: Nec Networks & System Integr (1973 JP), Net One Systems (7518 JP), Avarga Ltd (AVARGA SP), T Gaia Corp (3738 JP), Nishimoto (9260 JP), Elematec Corp (2715 JP).
Malaysia Airports (MAHB MK): A Firm Offer (Finally)
- Talk about cutting it fine. On the pre-conditional long stop date, the Gateway Development Alliance has now made a firm Offer for Malaysia Airports Holdings (MAHB MK) at RM11/share.
- The consortium, led by Khazanah Nasional’s subsidiary UEM Group Bhd and EPF, together with the Abu Dhabi Investment Authority and Global Infrastructure Partners, collectively hold 41.22%.
- This is a Tender Offer with a 90% acceptance threshold. “The Joint Offerors reserve the right to revise the level of the Acceptance Condition to a lower level“.
KLCI Index Rebalance Preview: One High Probability Change; One at the Cusp
- There is a high probability of Gamuda Bhd (GAM MK) replacing Genting Malaysia (GENM MK) in the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) in December.
- 99 Speed Mart Retail Holdings (99SPD MK) is a close add and needs small outperformance over the next week to be added. That could see Genting Bhd (GENT MK) deleted.
- Passive funds benchmarked to the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) will need to buy 0.3-0.75x ADV on the potential adds and sell 0.9-1.3x ADV on the potential deletes.
Ping An Healthcare and Technology (1833 HK) – Privatization Ahead?
- PAGD’s business model is problematic, leading to continuous shrinking revenue scale. As PAGD will entirely lose competitiveness in the future, the management wants to find a suitable way to “exit”.
- Privatizing PAGD at low price and integrating it into the Ping An Group’s system is a good choice. In other words, Ping An hopes other shareholders to choose cash dividends.
- Due to high tax, Hong Kong Stock Connect investors would prefer to sell in advance. Arbitrageurs can wait until stock price drops then make decisions based on new conversion price.
Taiwan Top 50 ETF Rebalance Preview: Shippers Sailing Back Into Indices
- Wan Hai Lines (2615 TT) and Yang Ming Marine Transport (2609 TT) are currently in contention to be added to the Yuanta/P-Shares Taiwan Top 50 ETF in December.
- Passive trackers will need to trade around 0.5x ADV in the inclusions while impact on the forecast deletes is between 0.36-2.2x ADV.
- Short interest has decreased and is near the lows for the forecast adds while short interest has been increasing in the forecast deletions.
Xingda (1899 HK): Go Figure As Offer Turns Unconditional
- Back on the 24 September, tyre component manufacturer Xingda International (1899 HK) announced a zero-premium $1.30/share cash Offer from Liu Jinlan, chairman and executive director.
- Liu and concert parties held 37.03%, and the Offer was conditional on a 50% acceptance hurdle. The IFA concluded the Offer was not fair.
- Surprisingly, 23.73% of shares out have tendered, and the Offer is now unconditional in all respects. The Offer will remain open to acceptances until the 29th November.
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