In today’s briefing:
- [Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share
- Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road
- Korea Short Selling: Off to the Races
- Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?
- Vesync (2148 HK): Scheme Vote on 23 April
- Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road
- Vesync (2148 HK): 23rd April Scheme Vote. Done Deal
- The Reject Shop: Dollarama’s Done Deal
- MFE Tunes In to ProSieben for a Pan-European Broadcast Power Play
[Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share
- The difference between an LBO (Leveraged Buy Out) and an MBO (Management Buy Out) is that an MBO is usually just an LBO where the buyers don’t replace the CEO.
- After 4+mos of speculation/noise since a Bloomberg article said Topcon was weighing takeover bids, we have a deal. KKR and JIC will buy out Topcon in an “MBO” at ¥3,300/share.
- Unusually, the lower limit is 50.1%. This is an OK exit for the “Bad Cops” but not a great one. It should be higher. Start delayed for 4 months.
Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: DN Solutions (298440 KS) seeks to raise US$1.1 billion in a KRX IPO.
- Event-Driven developments: Seven & I Holdings (3382 JP), Topcon Corp (7732 JP), ENN Energy (2688 HK), Jinke Smart Services (9666 HK), Sinarmas Land (SML SP), Gold Road Resources (GOR AU).
Korea Short Selling: Off to the Races
- Short selling in Korea resumes in a couple of hours. Expect heightened volatility for a few days before things settle down.
- Foreign investors have increased their holdings over the last five weeks and there could be further buying in select stocks on stock price drops.
- The KOSPI 200 INDEX has outperformed the KOSDAQ 150 Index, and the forecast index deletes have underperformed the indices indicating that there will be positioning for the short-sell resumption.
Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?
- Jinke Smart Services (9666 HK) is in a trading halt “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information.”
- It is likely that Boyu, the largest shareholder, is seeking to privatise Jinke. The privatisation of PRC-incorporated entities is usually done through a merger by absorption.
- I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45% premium to the last close.
Vesync (2148 HK): Scheme Vote on 23 April
- Vesync (2148 HK)’s IFA opines that the Yang family’s HK$5.60 cash offer is fair and reasonable. The IFA does not recommend the scrip option. The vote is on 23 April.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). The offer price is final.
- The vote is low-risk due to a lack of opposition. At the last close and for the 15 May payment, the gross/annualised spread is 2.9%/28.7%.
Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road
- 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: ENN Energy (2688 HK), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Insignia Financial (IFL AU), Smart Share Global (EM US), Soundwill Holdings (878 HK).
- Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), PointsBet Holdings (PBH AU), Millennium & Copthorne Hotels Nz (MCK NZ), Tonami Holdings (9070 JP).
Vesync (2148 HK): 23rd April Scheme Vote. Done Deal
- On the 27th December, Vesync (2148 HK), a manufacturer of small home appliances, announced an Offer, by way of a Scheme, from the Yang family controlling ~69.04% of Vesync.
- The Cancellation Price of $5.60/share – declared final – was a 33.3% premium to undisturbed, and above the 2020 IPO price of HK$5.52/share.
- The Scheme Doc is now out, with a Court Meeting on the 23rd April, and expected payment on or before the 15th May. The IFA (Somerley) says “fair & reasonable”.
The Reject Shop: Dollarama’s Done Deal
- Reject Shop (TRS AU), a discount variety store, has entered into a Scheme Implementation Deed with Canadian outfit Dollarama (DOL CN).
- Dollarama is offering A$6.68/share, a 112% premium to last close. The Offer does NOT require FIRB signing off. The Offer has the unanimous backing of both boards.
- The Offer also has the backing of TRS’ largest shareholder, Kin Group (20.8%). Implementation is expected July 2025. This is done.
MFE Tunes In to ProSieben for a Pan-European Broadcast Power Play
- MFE’s €5.70/share offer reflects strategic aims, not a traditional control premium, and values ProSieben near peer multiples amid industry disruption and weak organic growth prospects.
- The deal structure and German takeover law enable MFE to carry out a creeping takeover strategy, allowing it to gradually increase its stake post-settlement without launching a new public offer.
- Estimated net synergies of €1.00–1.39 per share, boosting the deal’s potential strategic return.Market skepticism is visible in the -10.2% gross spread.
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