In today’s briefing:
- Guotai Junan (2611 HK)/Haitong (6837 HK)’s Merger: A Win For H-Shareholders
- 7&I Results and Plans – The Good, The Bad, The Ugly, The Respectable, Unfortunate, and Encouraging
- 7-Eleven Corporation: A Clear Strategy for Long-Term Value, Founding Family Return to Super-Stores
- Digging into Today’s Potential T’way Air Tender Offer Saga
- Rigaku Holdings (268A JP): Low, Slow and Steady in Global Indices
- Quiddity Leaderboard BSE/SENSEX Dec 24: Some Changes to Expectations + Zomato Question Mark
- Rio Tinto/Arcadium: More Brine To Compliment Rocks
- T’Way Air: Increasing Possibility of an M&A Fight Between Yearimdang and Daemyung Sono Group
- Shiyue Daotian US$480m Lockup Expiry – Would Need Some Selling to Improve Its Liquidity
Guotai Junan (2611 HK)/Haitong (6837 HK)’s Merger: A Win For H-Shareholders
- A month after China’s leading state-backed brokerages, Guotai Junan Securities (2611 HK) and Haitong Securities (H) (6837 HK), announced an intention to merge, we have a firm deal.
- Via a share swap, each Haitong H share may be exchanged for 0.62 H shares of GJS. A similar ratio is in place for the As. Cash options are afforded
- Conditions include GJS and Haitong shareholder approval; plus the usual suspects on the regulatory front. The key risk, as with TCM (570 HK)‘s Offer, is one of timing.
7&I Results and Plans – The Good, The Bad, The Ugly, The Respectable, Unfortunate, and Encouraging
- H1 sales were GOOD. H1 earnings were BAD. New forecasts are UGLY. The CVS initiatives are RESPECTABLE, but US CVS market environment UNFORTUNATE. The creation of the new Holdco ENCOURAGING.
- The Couche-Tard Bid? That’s SEPARATE. Confidential. But three weeks after receiving the new proposal, it hasn’t been publicly rejected. So that’s a thing.
- 7&i is progressing with its Standalone Plan, as it should, because ACT’s bid is more a show of faith for discussions. The York Holdings structure is INTERESTING.
7-Eleven Corporation: A Clear Strategy for Long-Term Value, Founding Family Return to Super-Stores
- Seven & I released 1H24 earnings today as well as details on planned restructuring of its business. Results included some one-off items hitting operating profit as well as lower footfall.
- The bigger news was the plan to hive off the non-CVS retail operations into a new company, York Holdings, leaving a newly named 7-Eleven Corporation running CVS globally.
- Unusually, Seven also mentioned the possibility of new strategic partners investing in York, including even the “original founding families”, suggesting one way of holding on to control.
Digging into Today’s Potential T’way Air Tender Offer Saga
- It’s unclear if this will turn into a tender offer battle like Korea Zinc, and we need to assess both sides’ financial strength carefully.
- Today’s reports suggest Sono has more financial flexibility than T’way Holdings, but we should be cautious. T’way Air might also consider buying back shares with borrowed funds.
- T’way Air has fewer institutional investors and more available float than Korea Zinc, suggesting significant price swings and an attractive trading setup, as seen in today’s volume spike.
Rigaku Holdings (268A JP): Low, Slow and Steady in Global Indices
- Rigaku Holdings (268A JP) is scheduled to be listed at the Tokyo Stock Exchange on 25 October 2024 at a valuation of ~$1.9bn.
- The company’s modest market capitalization fails fast-entry but easily surpasses the quarterly small cap thresholds of both main global indices.
- Rigaku Holdings (268A JP) is expected to be added at the May and June 2025 quarterly reviews with the potential greenshoe exercise increasing the passive fund demand upon inclusion.
Quiddity Leaderboard BSE/SENSEX Dec 24: Some Changes to Expectations + Zomato Question Mark
- In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 indices in the December 2024 index rebal event.
- We expect six ADDs/DELs for BSE 100 and six ADDs/DELs for BSE 200.
- Zomato is one of the six BSE 100 expected DELs but its fate will depend on when its expected F&O list inclusion takes place and the index provider’s discretionary choices.
Rio Tinto/Arcadium: More Brine To Compliment Rocks
- Rio Tinto Ltd (RIO AU) has reached an agreement to buy Arcadium Lithium (LTM AU)/(ALTM US) for US$5.85/share (~A$8.70/share), a ~90% premium to the October 4th closing price of $US3.08/share.
- Terms remain below where Arcadium was trading back in January of this year. But it is perhaps disingenuous to call the Offer Price opportunistic. More a counter-cyclical move.
- The Scheme Offer is subject to a 75% shareholder vote and minimal regulatory approvals. The transaction is expected to close in mid-2025. The long stop is the 9th October 2025.
T’Way Air: Increasing Possibility of an M&A Fight Between Yearimdang and Daemyung Sono Group
- In the past several days, there have been an increased speculation in the local media about a potential M&A fight for T’Way Air between Yearimdang Publishing and Daemyung Sono Group.
- The difference in ownership of T’Way Air by Daemyung Sono Group and Yearimdang Group is only 3.2%, which could lead to an intensified management rights dispute.
- According to local sources, Daemyung Sono Group has recently contacted several law firms to review plans to potentially conduct a tender offer on T’Way Air.
Shiyue Daotian US$480m Lockup Expiry – Would Need Some Selling to Improve Its Liquidity
- Shiyue Daotian (1892269D CH) was listed in Hong Kong on 12th Oct 2023 after raising US$105m close to the top end of its indicative IPO price range.
- Shiyue Daotian is a pantry staple food company in China, providing consumers with pre-packaged premium rice, whole grain, bean, and dried food products.
- The firm’s one-year lockup will expire on 12th Oct 2024. In this note, we will talk about the lock-up dynamics and updates since our last note.
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