In today’s briefing:
- LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
- 111 (YI US): The Privatisation Offer Gets a Reboot
- Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods
- Fortescue: Twiggy’s Share Separation
- EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback
- Inflexion/DWF: Deal Announcement
- EQD | NIFTY Index WEEKLY: Topping (In The) Tails
LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
- Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
- The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
- Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.
111 (YI US): The Privatisation Offer Gets a Reboot
- 111 Inc (YI US), China’s largest virtual pharmacy network, amended an SC 13D filing on 13 July, which belatedly updated the consortium’s privatisation offer of US$3.66 per ADS.
- The consortium has been revamped such that the lead investors (Dr Gang Yu, Dr Junling Liu and Shanghai Guosheng Capital Management) are joined with 13 additional investors.
- The development facilitates the signing of a definite agreement. The consortium represents 95.27% of the voting power, which ensures a successful vote. At last close, the gross spread is 9.6%.
Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods
- 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 – Chindata Group (CD US), Estia Health (EHE AU), 111 Inc (YI US), ENM Holdings (128 HK), JSR Corp (4185 JP), Costa Group Holdings (CGC AU).
- Lowest spreads Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Penguin International (PBS SP), ARTERIA Networks Corp (4423 JP), Inner Mongolia Yitai Coal Company Ltd (3948 HK).
Fortescue: Twiggy’s Share Separation
- Prior to recent developments, Andrew Forrest held a 36.25% stake in Fortescue Metals (FMG AU).
- An ASIC shareholder disclosure into the giant iron-ore miner earlier this year fuelled speculation, culminating in an ASX notice Andrew was separating from his wife after 31 years of marriage.
- A private statement assures there will be no impact on the control of FMG. But that won’t put a stop to the rumour mill.
EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback
- The KOSPI 200 (KOSPI2 INDEX EQUITY) last week closed the week down (CC=-1) after a strong rise the previous week. Could be getting ready to rise higher.
- The index last week tested supports in the Market Reversal Matrix’s Q2/Median support area (around 335).
- Valid support levels for the coming week (if CC=-2) are between 333 (Q2) and 324 (Q3).
Inflexion/DWF: Deal Announcement
- There were no surprises and Inflexion launched the offer for DWF Group (DWF LN) well ahead of the 7 August PUSU deadline. DWF shares increased by c. 15%.
- The final proposal maintains what was announced: 97p in cash plus a 3p dividend,8.0x EV/Fwd NTM EBIT and 8.2x Fwd P/E, and an 18% discount to the IPO price.
- The closing share price pre-first announcement was 56.5p, taking it as break, the market is pricing a 94% chance to complete the deal. Spread is 2.6%/6.2% (gross/annualised). Long.
EQD | NIFTY Index WEEKLY: Topping (In The) Tails
- The NIFTY Index has been in a strong rally since early April 2023, returning almost +17% as of last Friday’s Close. The MRM tool shows the index is OVERBOUGHT WEEKLY .
- The NIFTY Index has reached a “Tails” area of the current pattern: forecasts in these price areas are less reliable, but the MRM tool indicates the index is topping.
- SHORT trades can be implemented at prices > Last Close (19745). Higher prices are possible, it could take +1/+2 weeks for the index to complete its topping process.
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