In today’s briefing:
- Link Admin/D&D Deal Appears Toast As The Woodford Shoe Drops
- Frasers Hospitality Trust Scheme Vote Fail – Minority Apathy Meets Vocal Minority. Units Drop Hard.
- Giordano’s VGO Lapses
- PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes
- VNET’s Opportunistic US$8.20 Bid from the Founder
- Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program
- Link’s Scheme on Life Support as the FCA Lands a Heavy Blow
- Arb Carnage As Giordano’s Offer Also Fails
- 111 Inc’s Low-Balled Homecoming Is A Done Deal
- Teniralc/Cary Group: Final Offer
Link Admin/D&D Deal Appears Toast As The Woodford Shoe Drops
- The UK Financial Conduct Authority will approve Dye & Durham’s Offer for Link Administration (LNK AU) provided it backstops restitution and/or redress payments that the FCA may levy on …
- … Link Fund Solutions Limited (LFSL) in relation to its management of the Woodford Fund. The amount? Up to a maximum ~A$523mn.
- The FCA decision is not final. LFSL does not agree with its view. If D&D does not accept this commitment then a condition under the Scheme may not be satisfied.
Frasers Hospitality Trust Scheme Vote Fail – Minority Apathy Meets Vocal Minority. Units Drop Hard.
- In a somewhat extraordinary turn of events, the Scheme Meeting for the Frasers Hospitality Trust (FHT SP) takeover did not garner enough votes to get to YES.
- About 3% of units (about 8% of minorities) came out against. But only 18.8% of minorities actually voted. The deal has failed. The bidders can’t come back for a while.
- The units are trading down nearly 25% today as a result. This is cheap against both hospitality and major S-REIT peers. Inside, I discuss Overhang and Divs.
Giordano’s VGO Lapses
- The offeror and acceptances reached 46.04%, just short of the 50% minimum acceptance condition. The offeror has decided to let the Giordano International (709 HK) offer lapse.
- The offer fell short of the 50% threshold as the Cheng family mistakenly assumed that shareholders behind Halycon’s stake were friendly shares, which would support the offer.
- The downside will be muted as the shares are trading in line with the 1-year average forward P/E, minorities thought the offer was low, and David Webb is a buyer.
PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes
- From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
- This could result in three deletions from the index which will result in three stocks being added to the index. Passive trackers selling the deletes will push the stocks lower.
- The three current constituents could remain in the index if they sell stock to increase the free float. That would in turn put downward pressure on the stocks.
VNET’s Opportunistic US$8.20 Bid from the Founder
- 21Vianet Group (VNET US) disclosed a privatisation proposal from the founder at US$8.20 per ADS, a 2.5% premium to The Hina Group/Industrial Bank’s offer of US$8.00 (disclosed on 11 April).
- The data centre industry continues to be a hotbed for M&A. Bloomberg reported on 27 July that MBK Partners is mulling an offer for VNET.
- The offer is unattractive, and Mr Cheng, with 28.79% of voting rights, will need the support of other substantial shareholders. This latest offer underlines the current mispricing of the shares
Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program
- Canon Inc (7751 JP) has announced two buyback programs this year of ¥50bn each. Ricoh Company Ltd (7752 JP) announced one in May for ¥30bn.
- The result is 2.9% bought back vs 4.4%. The accretion nod goes to Ricoh. But so does the overhang nod going forward. Effissimo+Crossholders is 40% for Ricoh. Mid20s for Canon.
- Buyback impact-related trade timing has worked for Canon. Ricoh’s buyback ends imminently. There may be a trade to do here.
Link’s Scheme on Life Support as the FCA Lands a Heavy Blow
- FCA approval, a condition precedent, will be granted subject to a condition that Link Administration (LNK AU) makes funds available to cover any redress payments related to the Woodford matters.
- The FCA’s maximum redress payment is £306 million. The timeline and amount of the final FCA fine remain unknown. Dye&Durham/DND and Link will struggle to find a resolution.
- With a 30 September end date, the deal is teetering on collapse. The share price may prove attractive for long-term value investors as it reflects a sizeable FCA fine.
Arb Carnage As Giordano’s Offer Also Fails
- Utter carnage in arb-world this week, as Frasers Hospitality Trust (FHT SP) fails, Link Administration (LNK AU) and Ramsay Health (RHC AU) are potentially next, and now Giordano (709 HK).
- 46.04%. That’s the only number that matters, which represents the total shares owned by the Cheng family plus shares tendered.
- The Chengs are restricted from launching another Offer for 12 months. Giordano will be sold off today, however, this is a buy if it retraces to around the undisturbed levels.
111 Inc’s Low-Balled Homecoming Is A Done Deal
- 111 Inc (YI US), an online healthcare platform operator in China, announced an unsolicited preliminary non-binding proposal from Gang Yu and Junling Liu – both co-founders and co-chairmans.
- Yu and Liu are offering US$3.66/ADS, a 20% premium to the undisturbed price.
- Yu and Liu control 92.1% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.
Teniralc/Cary Group: Final Offer
- In light of low acceptances and a cold statement from the independent bid committee, Teniralc increased the offer by 7.7% to SEK 70/share (same as IPO, 17.2x EV/EBITDA).
- The increased offer is final, represents a 72% premium and has been unanimously recommended. The acceptance period now runs until 22 September.
- As of 12 September closing share price, gross spread is 4.2%, an interesting level, in my view, considering settlement will take place “on or about 30 September”. Reiterate Long CARY SS.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
