In today’s briefing:
- JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?
- JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder
- TOPIX Inclusions: Who Is Ready (Apr 2024)
- IntelliCentrics (6819 HK): 18th April “Scheme” Vote
- What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene
- Sciclone Pharmaceuticals (6600.HK) – The Privatization Offers a Good Exit Opportunity
- Hyundai Motor Group Becomes the Largest Shareholder of KT Corp
- Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter
- Keysight/Spirent: Recommended Competing Offer
JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?
- In what is a surprising move to me, Murakami-san has gone substantial on JSR Corp (4185 JP) with the vast majority of his stake purchased at a spread of <0.05%.
- As suggested in JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh, the deal price was not overwhelming. It got less so as the market rose.
- But this is an odd target. High float. No competition. Would take a lot to block or force the bumpitrage, which suggests appraisal rights or a “technicality.”
JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder
- Murakami’s City Index Eleventh entity reported a 5.11% position in JSR Corp (4185 JP). The share purchases started on 19 March, the day of the tender start.
- Murakami’s average buy-in price of JPY4,346.22 per share is broadly in line with the JPY4,350 tender offer.
- Murakami’s disclosure suggests two possibilities: starting an activist campaign for a bump or pursuing the appraisal process to determine a fair value. We think the latter is likely.
TOPIX Inclusions: Who Is Ready (Apr 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- There were no Section Transfers announced in the last 3 months so currently there are no live TOPIX Inclusion events at present.
- There are currently 79 names capable of satisfying all the key section transfer requirements. Our long-term pre-event candidate CELSYS (3663 JP) is one of them.
IntelliCentrics (6819 HK): 18th April “Scheme” Vote
- Soon-To-Be ex-healthcare technology platform play IntelliCentrics Global Holding (6819 HK) is a pseudo risk arb.
- IntelliCentrics is selling its key ops, declaring a special dividend from the sale proceeds, subsequently being wound up, then delisted.
- Shareholders have the option of voting on a raft of resolutions on the 18th April. Irrevocables total 72.1%. This is done. Just the final dividend amount needs to be confirmed.
What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene
- Hanwha received counsel indicating foreign regulators won’t oppose Austal’s acquisition. They admit it’s restricted to AUKUS countries but argue Korea’s ties ease opposition.
- Hence, Hanwha Ocean is dropping some heavy hints that even though Austal has turned down the acquisition offer for now, there’s still a chance the deal could go through.
- The pivotal factor lies in whether Hanwha Ocean can secure approval from the AUKUS countries. Should they succeed, it is anticipated that Austal would be inclined to accept the deal.
Sciclone Pharmaceuticals (6600.HK) – The Privatization Offers a Good Exit Opportunity
- Zadaxin is the biggest performance driver of SciClone. However, due to the challenge of generic drugs/VBP, sales of Zadaxin wouldn’t maintain strong growth momentum. SciClone’s revenue/profit would face a significant decline.
- The capital participating the IPO had reduced their holdings or exit entirely. Considering the low valuation/poor liquidity in HKEX, we think this privatization provides investors with a great exit opportunity.
- For arbitrage investors, the annualized return depends on the time it takes to complete the privatization (e.g. about 5%-10%). If the privatization fails, share price could fall back to HK$14.
Hyundai Motor Group Becomes the Largest Shareholder of KT Corp
- Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%.
- Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT.
- Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.
Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter
- Perth-Based shipbuilder Austal Ltd (ASB AU) has confirmed a A$2.825/share non-binding indicative proposal, by way of a Scheme, from Hanwha Ocean (042660 KS). That’s a 28.4% premium to last close.
- Austal designs and builds defence vessels for the Australian and US navies. Austal believes Hanwha is unlikely to secure necessary approvals from the Australian and US governments.
- Hanwha considers this view to be baseless, that it is a credible buyer, and its capabilities and investment are aligned with government objectives in Australia, the US and South Korea.
Keysight/Spirent: Recommended Competing Offer
- Keysight Technologies In (KEYS US) and Spirent Communications (SPT LN) have agreed a recommended 201.5p/share cash acquisition via Scheme of Arrangement, an increase of 26.5p (15.1%) relative to Viavi Solutions (VIAV US)‘s Offer.
- Spirent, with some scarcity value, should be able to improve its cyclicality as part of Keysight. A counteroffer from Viavi looks unlikely unless Silver Lake significantly increases its stake.
- Gross spread is 1.99%. Using Keysight’s forecast s about completion, at best, estimated annual return would be 3.51% while at worst, 1.88%. This suggests there may be better opportunities elsewhere.
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