In today’s briefing:
- JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh.
- [UPDATE] Tax-Loss Selling in Australia – Time To Unwind the Basket
- JSR Corporation (4185 JP): JIC’s Pre-Conditional Tender Offer at JPY4,350
- LQ45 Index Rebalance Preview (July): Review Period Nearly Complete
- DDH1 To Merge With Perenti
- MUFG Seeks A Majority Stake In Mandala
- Quiddity Leaderboard-DAX Jun 23: A SHORT Sartorius LONG Merck Trade Might Be Interesting
- Silk Laser Firms Offer With Wesfarmers
- Silk Laser Australia (SLA AU): Wesfarmers Binding Offer, Next Move EC Healthcare
- DDH1 (DDH AU): Binding Offer from Perenti (PRN AU)
JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh.
- Japan Investment Corp (JIC) has launched a Tender Offer on top photoresist maker JSR Corp (4185 JP), at ¥4,350/share.
- That is a decent price, but it is not overwhelming. Furthermore, process for determining (and understanding) “fair” remains inadequate.
- Significant foreign ownership, a high price, Japanese equity excitement, etc, all make this a situation where we likely see a pop (the last bit), a fade, then a re-drift better.
[UPDATE] Tax-Loss Selling in Australia – Time To Unwind the Basket
- In Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket at the start of June I proposed a basket.
- We are getting to the end of June. Time to unwind that short basket. The named ticker was -26%. The 70-name basket underperformed ASX200 by 4.4%.
- One can now go long the basket into end-June as historically it outperforms S&P-ASX200 over two months. If one did not short, one can still go long. Basket below.
JSR Corporation (4185 JP): JIC’s Pre-Conditional Tender Offer at JPY4,350
- JSR Corp (4185 JP) has recommended JIC’s pre-conditional tender offer of JPY4,350 per share, a 34.5% and 10.6% premium to the undisturbed price and last close, respectively.
- The pre-conditions relate to various country approvals. China’s approval should be challenging due to Japan’s recent curbs on Chinese exports of chipmaking equipment.
- The offer is long-dated and opens in late December. The offer price is attractive compared to peer multiples and just a touch below the all-time share price high.
LQ45 Index Rebalance Preview (July): Review Period Nearly Complete
- The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
- Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
- The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.
DDH1 To Merge With Perenti
- Specialty mining driller DDH1 (DDH AU) has announced a merger, by way of a Scheme, with Perenti Global (PRN AU).
- Under the proposed terms, DDH1 shareholders will receive for each DDH1 share held $0.1238 cash plus 0.7111 Perenti shares, for an implied value of A$1.01/share, or a 17.4% premium.
- Directors and shareholders with a combined 38% of DDH1 shares have indicated an intention to vote in favour of the transaction. Scheme implementation is expected in early October 2023.
MUFG Seeks A Majority Stake In Mandala
- Mitsubishi UFJ Financial (MUFG US) and 92.7%-held Adira Dinamika Multi Finance (ADMF IJ) have entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
- MUFG and Adira appear to be paying IDR 3,297/share or IDR 7tn all-in. The SPAs are subject to regulatory approvals with completion expected in early 2024.
- Upon completion, MUFG will hold 70.6% in Mandala and Adira 10% in the Indo car/motorcycle loan lender. This will trigger a Mandatory Tender Offer for the remaining 19.4%.
Quiddity Leaderboard-DAX Jun 23: A SHORT Sartorius LONG Merck Trade Might Be Interesting
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices in the September 2023 Rebalance.
- Software AG (SOW GR)‘s takeover situation could result in intra-review index changes prior to the September 2023 rebalance.
- Fresenius Medical Care (FME GR) and Deutsche Lufthansa AG (LHA GR) are close to becoming DAX ADDs as they require very small price gains to trigger Fast Entry additions.
Silk Laser Firms Offer With Wesfarmers
- On the 19 April, Silk Laser Australia (SLA AU), an operator of specialist clinic networks across Australia, announced a $3.15/share NBIO from Wesfarmers Ltd (WES AU)
- Ahead of the expiry of Wesfarmers’ due diligence, EC Healthcare (2138 HK) snuck in a $3.35/share NBIO. Wesfarmers opted out of its matching rights. Although due diligence remained ongoing.
- SLA has now announced a binding implementation agreement with Wesfarmers at A$3.35/share. No word, as yet, from EC Healthcare. Nor is one expected.
Silk Laser Australia (SLA AU): Wesfarmers Binding Offer, Next Move EC Healthcare
- Silk Laser Australia (SLA AU)‘s binding offer from Wesfarmers Ltd (WES AU) is at A$3.35 per share which is in line with EC Healthcare (2138 HK)’s non-binding proposal.
- While EC Healthcare is a relative minnow, it secured HK$1 billion (A$191 million) financing in May, which suggests a chance of returning with a higher offer.
- If EC Healthcare deployed the HK$1.0 billion loan for the acquisition, it would imply a price of A$3.60 per share, 7.6% above Wesfarmers’ offer.
DDH1 (DDH AU): Binding Offer from Perenti (PRN AU)
- DDH1 (DDH AU) has entered a SID with Perenti Global (PRN AU) at A$0.1238 cash plus 0.7111 PRN shares for each DDH share, a 17.4% premium to DDH’s 5-day VWAP.
- The key conditions are shareholder scheme approval and ACCC clearance. Shareholders representing 38.0% of outstanding shares will vote in favour of the scheme.
- The offer is attractive compared to peer multiples, and the net exchange ratio is fair on a 1-year basis. A critical risk is volatility risk around PRN shares.
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