In today’s briefing:
- MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- Toshiba (6502) – Whoop! There It Is!
- TOPIX Inclusions: Who Is Ready (Feb 2023)
- KOSPI 200 Ad-Hoc Change: Hyundai Greenfood Out & Samyang Foods Fresh Buy-In on April 10
- AGC (5201 JP) – A Big Buyback
- Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.
- Nitro Software (NTO AU): Potentia Finally Secures Due Diligence
- Ihara Science (5999 JP): JPY2,980 MBO Tender Offer
- Nitro Software: Potentia Still In The Mix As DD Granted
MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- In an unprecedent step, MSCI will reassess the float and likely lower the FIF of the Adani Group companies at the February QCIR. There will be BIG passive selling.
- The affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May QCIR. There could be some index deletions and BIGGER passive selling.
- Expect active selling before the passive selling and the rally in the Adani Group stocks over the last couple of days should come to a grinding halt today.
Toshiba (6502) – Whoop! There It Is!
- As mentioned yesterday here and more clearly by Mio Kato in Toshiba – Good News?, the Nikkei was strangely silent over the fact that loan details were agreed.
- The Nikkei comes out with a surprise article this morning saying they hear the Commitment Letter has been handed over. It also says the “Final Bid” is “about ¥2trln.”
- Toshiba shares quickly reacted badly quickly. The article deserves parsing and I try to clarify the arguments.
TOPIX Inclusions: Who Is Ready (Feb 2023)
- 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.
- This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Jan 2023)
- Our top pick from the last insight CELSYS (3663 JP) (previously known as Artspark) has gained ~14% in roughly a month.
KOSPI 200 Ad-Hoc Change: Hyundai Greenfood Out & Samyang Foods Fresh Buy-In on April 10
- From a trading perspective, we should pay attention to the KOSPI 200 corporate actions in Hyundai Department Group’s demerger events, as both companies are KOSPI 200 constituents.
- Hyundai Green Food’s surviving company won’t beat the cutoff, resulting in a KOSPI 200 constituent change on April 10. Samyang Foods will be a new addition.
- Even the size of KOSPI 200 ETFs that will likely go into mechanical trading on April 10 will cause a significant price impact from a day trading perspective.
AGC (5201 JP) – A Big Buyback
- AGC Inc (5201 JP) today announced Q4 earnings where revenues were great, OP was slightly disappointing, and Net Profits were awful because of significant impairments.
- The company, however, announced a large buyback – its first in 5 years and equivalent to all the buybacks in the previous five years.
- The buyback should have impact on what is an interesting name with broad institutional ownership and not overwhelming liquidity.
Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.
- Ihara Science (5999 JP) announced an MBO by the chairman.
- It’s at an all-time high, but it is not especially attractive. The register is also really interesting.
- This is a smallcap but i would not be surprised to see a bumpitrage effort. In fact, I’d be surprised if we didn’t.
Nitro Software (NTO AU): Potentia Finally Secures Due Diligence
- Nitro Software Ltd (NTO AU) has finally granted Potentia due diligence access until 22 February. Subject to satisfactory due diligence, Potentia could increase its offer from A$2.00 to A$2.20-2.30 per share.
- Alludo’s A$2.15 off-market takeover offer is its best and final offer. Alludo’s offer is subject to a 50.1% minimum acceptance condition (currently at 12.53%) and closes on 3 March.
- Potentia’s dogged pursuit despite the Board’s stonewalling suggests a desire to get a deal done. At the last close, the gross spread to Potentia’s potential offer is 2.3% to 7.0%.
Ihara Science (5999 JP): JPY2,980 MBO Tender Offer
- Ihara Science (5999 JP) has recommended an MBO tender offer (Chairman and Toku Corporation) of JPY2,980 per share, a 31.3% premium to the undisturbed price (7 February).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.25% ownership ratio.
- While the tender price represents an all-time share price, it is light in comparison to peer and historical multiples. This suggests deal risk. The offer runs from 9 Feb-24 Mar.
Nitro Software: Potentia Still In The Mix As DD Granted
- Adobe rival Nitro Software Ltd (NTO AU) has granted Potentia Capital due diligence through to the 22 February on the possibility it sweetens its Offer to A$2.20-A$2.30/share.
- Alludo’s hands are tied to its A$2.15/share Offer price, which it has declared ‘best and final’ and will not be increased – even if a superior proposal emerges.
- But Potentia pitching an Offer A$0.01/share above Alludo’s Offer won’t be sufficient for Alludo and other shareholders to tender.
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