In today’s briefing:
- KWEB Index Rebalance: Few Changes at the Close Today
- Trading Plays for the Unexpected Tender Offer to Lutronic Corp Shareholders
- StubWorld: Tian An In AGL’s Crosshairs
- Details of the Lutronic Tender Offer M&A by Hahn & Company
- Concordia/Rothschild: Simplified Offer Filing
- Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair
KWEB Index Rebalance: Few Changes at the Close Today
- The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading today.
- There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.
- The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.
Trading Plays for the Unexpected Tender Offer to Lutronic Corp Shareholders
- Retail investors hold the majority of shares at 60%, and they may be interested in participating in the second tender offer based on their accumulated learning effect.
- Based on the observed behavior of Hahn & Co, it’s unlikely that they will walk away from the delisting plan.
- We need to consider going long on the potential upward adjustment of the second tendering price. This play can be viewed as a call option with a floor at ₩36,700.
StubWorld: Tian An In AGL’s Crosshairs
- Allied (373 HK) took Allied Properties (H.K.) (56 HK) private in 2020, followed by SHK Hong Kong Industries (666 HK) in 2021. Now it’s Tian An China (28 HK)‘s turn.
- Preceding my comments on Tian An and AGL are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Details of the Lutronic Tender Offer M&A by Hahn & Company
- In this insight, we provide details of the Lutronic tender offer M&A by Hahn & Company.
- We believe that Hahn & Co is likely to successfully complete this M&A tender offer of Lutronic.
- In our view, most of the shareholders of Lutronic are likely to tender their shares, given the sharp share price appreciation and reasonable tender offer premium.
Concordia/Rothschild: Simplified Offer Filing
- Concordia has filed the draft offer memorandum and started acquiring Rothschild & Co (ROTH FP) shares in the market (limit c.8.2 million) to ensure success. All regulatory approvals have been obtained.
- The adjusted offer price is €46.6/share, or €38.6/share (ex-extraordinary distribution, 7.6x NTM Fwd P/E, rather cheap, in my view), which will enable the concert to partly finance the offer.
- For comparison, Greenhill is being taken at 18.5x Fwd P/E. Nevertheless, I believe the offer will be accepted. Spread is 0.75%/2.78% (gross/annualised).
Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair
- The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos
- This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management
- BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell
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