In today’s briefing:
- L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
- NTT (9432) – LDP Consideration of Full Sale Is Not Necessarily Overhang
- KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
- India – Potential Float Changes & Impact
- An Update on Medtronic’s Tender Offer of Eoflow
- LQ45 Index Rebalance: Two Changes in a Few Days
- KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor
- Quiddity Leaderboard SET50 Dec 23: DELTA Deletion Fears Unrealistic
- Strike Energy Yanks Its NBIO For Talon
- Apollo/Applus: Blocking Minorities
L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
- L’Occitane (973 HK) is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, according to Bloomberg. Mr Geiger has been exploring financing options for the potential deal.
- The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.
- L’Occitane released a solid 1QFY2024 update today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples.
NTT (9432) – LDP Consideration of Full Sale Is Not Necessarily Overhang
- Six weeks ago, LDP Policy Research Council chairman KAGIUDA led a discussion about full NTT privatisation to fund defence. Today he said serious deliberations begin in August. Shares fell today.
- The LDP wants non-tax resources to increase defence/social spending. Selling would require a change in NTT Law, but the argument is that communications have changed/internationalised.
- As discussed in NTT (9432 JP) – Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?, there are questions on overhang. BUT… presumably there are mitigants.
KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
- The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
- There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
- There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.
India – Potential Float Changes & Impact
- Over the last few weeks, companies in India have been disclosing their shareholding pattern as of end-June. There are a few companies with significant float changes from end-March and/or end-December.
- The changes in free float could be reflected in domestic and global indices over the next couple of months resulting in action from passive trackers.
- We see 6 stocks where there could be passive inflows and 2 stocks that could have passive outflows – but there are caveats.
An Update on Medtronic’s Tender Offer of Eoflow
- In this insight, we provide an update of Medtronic’s tender offer of Eoflow.
- The foreign ownership of Eoflow has surged in the past two months from 6.5% on 25 May to 33.2% as of 24 July.
- We continue to believe that there is 95%+ probability of this M&A getting completed at the tender offer price of 30,000 won and Eoflow eventually becoming delisted in 2H 2023.
LQ45 Index Rebalance: Two Changes in a Few Days
- Gudang Garam (GGRM IJ) and Mitra Adiperkasa (MAPI IJ) will replace Timah Persero (TINS IJ) and Japfa Comfeed Indonesia (JPFA IJ) in the LQ45 Index next week.
- There are some large changes to free float plus capping changes for Bank Central Asia (BBCA IJ) and Bank Rakyat Indonesia (BBRI IJ).
- There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.
KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor
- KRX stated in this press release that they have identified the suspected stocks involved in illegal trading and have reported them to the financial authorities (Korea FSC and Korea FSS).
- The primary concern in the short term seems to revolve around whether the battery stocks are among the ones suspected of illegal trading, as reported to the financial authorities.
- We must remain vigilant and ready for the potential recurrence of CFD-related price plunges, as seen in the recent two instances, affecting specific stocks in the short term.
Quiddity Leaderboard SET50 Dec 23: DELTA Deletion Fears Unrealistic
- In this insight, we take a look at the potential ADDs/DELs for Thailand’s SET50 index rebalance in December 2023.
- Delta Electronics Thai (DELTA TB) – one of the largest SET 50 members – has been in the Market Surveillance Measure list a couple of times already this year.
- Although this creates some doubts over the fate of DELTA’s SET50 membership, at present, I believe DELTA will escape deletion in December 2023.
Strike Energy Yanks Its NBIO For Talon
- O&G junior Talon Energy (TPD AU) announced it had received a non-binding Offer from Strike Energy (STX AU).
- The all-scrip bid – by way of a Scheme – entailed an implied A$0.20/share in Strike shares plus Talon shareholders retaining their holding in Talon’s Mongolia gas project.
- After Talon said it intended to undertake a process of evaluation of the Proposal before offering due diligence, Strike promptly withdrew its bid.
Apollo/Applus: Blocking Minorities
- The spread has been in positive territory since the announcement. Apollo only bid the minimum requested by the Board. Investors hope for a counteroffer or Apollo sweetening its offer.
- Exceeding the 75% threshold is key for Apollo to be able to quickly and effectively carry out the delisting of Applus+, the objective stated in the offer announcement.
- Risk arbitrageurs holding now over 25%, may give that gentle push, otherwise delisting will be in jeopardy. A sweetening/counteroffer in the range €10-10.5/share seems very likely.
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