In today’s briefing:
- Furukawa Battery (6937) – Ugly Process in Virtual Take-Under Take-Private
- Furukawa Battery (6937 JP): Long-Dated Pre-Conditional Offer at JPY1,400
- Sun Corporation (6736 JP): The Uphill Struggle for True Wind’s Revised Partial Offer
- Quiddity Leaderboard ASX Sep 24 Rebal: The Strong Returns of ASX 300 LONG-SHORT Trade Could Continue
- EQD | The HSI Is Ripe For A Rally In August (IF July’s Close Is Negative)
- FXI Rebalance Preview: One High Probability Change; One More Possible
- Midea Group (000333 CH): CSRC Approval ✓; IPO Size Will Depend on H-Share Discount
Furukawa Battery (6937) – Ugly Process in Virtual Take-Under Take-Private
- Today after the close, Advantage Partners announced the intention to launch a TOB to take over Furukawa Battery (6937 JP) at ¥1,400 – a 26% premium to last.
- This will require substantial time to obtain regulatory and foreign investment clearances so it is anticipated the Tender Offer will be launched at end-March 2025. I expect that is conservative.
- The price paid to minorities is a premium. But the price paid by the buyer is actually a takeunder. And it gets worse from there.
Furukawa Battery (6937 JP): Long-Dated Pre-Conditional Offer at JPY1,400
- Furukawa Battery (6937 JP) recommended a pre-conditional tender offer from Advantage Partners, Tokyo Century Corp (8439 JP) and Furukawa Electric (5801 JP) consortium at JPY1,400, 22.6% premium to the undisturbed price.
- The precondition is approval under the competition laws of Japan and Thailand. The offer is long-dated and anticipated to commence in March 2025.
- While not a knockout bid, the required minority acceptance rate is not onerous. A long-dated offer presents a free option on a bump due to earnings upside or a counteroffer.
Sun Corporation (6736 JP): The Uphill Struggle for True Wind’s Revised Partial Offer
- True Wind has increased its partial offer for Sun Corp (6736 JP) by 8.0% to JPY4,750 and lowered the minimum number of shares to be purchased from 3.8 to 3.3m.
- True Wind’s offer has inadvertently spotlighted the valuation disparity vs the Cellebrite DI (CLBT US) stake, resulting in the shares trading through terms.
- True Wind’s revised offer will struggle to succeed as the 8% price uplift is materially lower than the 19% value increase in the Cellebrite stake (since the offer announcement).
Quiddity Leaderboard ASX Sep 24 Rebal: The Strong Returns of ASX 300 LONG-SHORT Trade Could Continue
- In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the September 2024 index rebal event.
- We see one ASX 100 change and two ASX 200 changes but there are a couple of names lurking just outside the border which have to be monitored carefully.
- For ASX 300, we see 13 ADDs and 6 DELs. Many of these expected ADDs and DELs could have more than 10 days of volume to trade.
EQD | The HSI Is Ripe For A Rally In August (IF July’s Close Is Negative)
- The Hang Seng Index has been falling in June and July, but our MONTHLY seasonal pattern model indicates the index has a very good chance to close August up.
- The condition we need, to forecast that August will be closing up, is to have July closing down, i.e. <17718.61.
- The index is WEEKLY OVERSOLD, so the timing to buy will be critical, because you want to get in early, but not too early (and July must close down).
FXI Rebalance Preview: One High Probability Change; One More Possible
- A month out from cutoff for the September rebalance, we see one potential change for the iShares China Large-Cap (FXI) (FXI US).
- China Tower (788 HK) is a potential inclusion while China International Capital Corporation (3908 HK) should be deleted from the ETF.
- Shorts have been dropping in China Tower (788 HK) and are near their lows while increasing in China International Capital Corporation (3908 HK).
Midea Group (000333 CH): CSRC Approval ✓; IPO Size Will Depend on H-Share Discount
- The CSRC has approved Midea Group Co Ltd A (000333 CH)‘s application to issue H-shares to be listed on the HKEX (388 HK).
- Under the approval, Midea Group Co Ltd A (000333 CH) can issue up to 650.85m shares. Depending on the H-share discount, that could raise up to HK$43.6bn (US$5.6bn).
- The IPO is likely to be smaller and will depend on market conditions and the discount demanded on the H-shares. That in turn will determine index inclusion for the H-shares.
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