In today’s briefing:
- NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
- CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
- Boqi Env (2377 HK)’s Partial Offer
- Macromill (3978 JP): CVC’s Light Tender Offer at JPY1,150 Begs for Activism
- Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
- Renewable Japan (9522 JP): Tokyu Fudosan (3289 JP)-Sponsored MBO Set at a 132% Takeover Premium
- SBI Fintech Solutions: Tender Offer and Delisting
- NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update
- Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off
- Monte Dei Paschi Poised for Strategic Merger Opportunity
NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
- On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
- On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
- The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.
CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
- Today, CVC announced a deal to buy out Macromill, Inc (3978 JP). It is agreed and supported by management and the Board.
- The shareholder register on this stock is wide open. It is not burdened by crossholders. It IS burdened by 7 large active holders who have 55%.
- Those holders may complain about the process, the transparency, and the low price. This could be a target for an activist or a strategic overbidder.
Boqi Env (2377 HK)’s Partial Offer
- Back on the 23rd October, flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
- The upshot of the buyback lifts the stake of co-founder Zeng Zhijun and concert parties to 32.59% – up from 27.71% – before options. A whitewash waiver is required.
- A expected, the Offer Doc has now been delayed. It is now expected to be dispatched on or before the 29th November.
Macromill (3978 JP): CVC’s Light Tender Offer at JPY1,150 Begs for Activism
- Macromill, Inc (3978 JP) has recommended CVC’s tender offer at JPY1,150, a 40.1% premium to the last close.
- While the offer is attractive compared to historical trading ranges, it is 41% below the IPO price and 11% below the midpoint IFA DCF valuation range.
- The lack of an irrevocable, open shareholder register and large foreign institutions’ shareholding increases the odds of activism to force a bump.
Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
- A Democratic Party insider noted some proposals need legal tweaks, so the December 10 deadline may slip, but they’re set on passing the expanded director loyalty duty.
- FKI analyzed top conglomerates’ shareholder structures and found four of the top 10 facing substantial risks.
- We need more clarity before jumping in, but with MBK driving Korea’s hostile M&A scene and the Commercial Act amendments, local chaebols facing control battles are a key KOSPI theme.
Renewable Japan (9522 JP): Tokyu Fudosan (3289 JP)-Sponsored MBO Set at a 132% Takeover Premium
- Renewable Japan (9522 JP) has recommended a Tokyu Fudosan Holdings (3289 JP)-sponsored MBO at JPY1,250 per share, a 132.3% premium to the last close.
- The high takeover premium reflects the 55% YTD decline in the share price. While the timing is opportunistic, the offer is attractive compared to peer multiples.
- The irrevocables and low required minority acceptance rate ensure that this is a done deal. The tender runs from 15 November to 8 January 2025 (34 business days).
SBI Fintech Solutions: Tender Offer and Delisting
- After the market close on 14 November, SBI Fintech Solutions announced that the Japanese financial group SBI is pushing for a tender offer and delisting of SBI Fintech Solutions.
- The tender offer price is 5,000 won per share, which is 36% higher than the closing price on 14 November. The tender offer size amount is about 26 billion won.
- Given the relatively solid upside, we believe SBI Holdings is likely to successfully complete this tender offer and take the company private.
NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update
- It has been an eventful week for Naspers and Prosus – Tencent reported 3Q FY24 results yesterday after the HK close and Swiggy listed on the NSE and BSE.
- Prosus sold shares in Swiggy worth $500m and retains an interest of 25% (fully diluted basis).
- Since 2017, Naspers and Prosus invested $1.3bn to build a 31% stake. The group have created $2bn of value for shareholders following the listing.
Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off
- On the 6th October, Sihuan Pharmaceutical Hldgs (460 HK) announced a HK$500mn, 12-month buyback programme. Shares jumped 31% on the news, but have since given all that gain back.
- Sihuan Pharma has now announced an intention to spin-off non-wholly-owned subsidiary Xuanzhu Biopharm on the HKEx.
- Concurrent with the spin-off news. Sihuan Pharma acquired 6.9% in Xuanzhu Biopharm for RMB596mn, implying a full value of ~RMB8.5bn (~HK$9.2bn). This compares to Sihuan Pharma’s market cap of HK$6.6bn.
Monte Dei Paschi Poised for Strategic Merger Opportunity
- The Italian government sold a 15% stake in Banca Monte dei Paschi di Sien (BMPS IM), reducing its holding to 11.7%, signaling potential acquisition interest.
- Banco BPM SpA (BAMI IM) and Anima Holding (ANIM IM)’s recent share purchases in BMPS suggest strategic positioning for a potential future acquisition within the Italian banking sector.
- BMPS’s improved financial performance, attractive valuation (5.2x Fwd NTM P/E and 0.6x P/BVPS, and heightened investor interest create favorable conditions for a merger or acquisition.
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