In today’s briefing:
- Nikkei 225 Market Consultation: Stepwise Additions & Technical Listings
- Marubeni & Secom To Launch Tender Offer for Arteria Networks (4423)
- Allkem/Livent: Enlarged Charging Unit
- Arteria Networks (4423 JP): JPY1,980 Tender Offer from Marubeni and SECOM
- Greatview (468 HK): Bickering And Stalling
- Adani Enterprises, Green Energy, Transmission Boards to Consider Equity Raises
- KT Cloud Receives 600 Billion Investment from IMM at a Valuation of 4.6 Trillion Won
- St Barbara (SBM AU): Silver Lake and Genesis Minerals Brewing Battle Creates Option Value
- Toshiba – Earnings Preview 4QFY23
- Delving into the Nature of the Legal Risks that Ecopro Is Facing After Yesterday’s Court Verdict
Nikkei 225 Market Consultation: Stepwise Additions & Technical Listings
- Nikkei has started a market consultation on amendments to the methodology of the Nikkei 225 (NKY INDEX) focusing on the stepwise addition of lower liquidity stocks and on technical listings.
- Stocks that have relatively low ADTV compared to the expected index weight will be added at half the originally planned PAF with the full PAF implemented at the next review.
- If the proposed changes are implemented, some of the potential inclusions in September will be added at half their PAF with the increase to full PAF coming in March 2024.
Marubeni & Secom To Launch Tender Offer for Arteria Networks (4423)
- Marubeni (8002 JP) and Secom (9735 JP) today announced a Tender Offer to take private Marubeni’s subsidiary ARTERIA Networks Corp (4423 JP) at a 54% premium to the close.
- Listed 4.5yrs ago, the company hasn’t grown hugely. Revenue growth is slow. EBITDA growth is flat. The takeout is 3.6x book, 7x estimated EBITDA, and about mid-teens PER. Without synergies.
- The price is OK, not great. The Board rejected the final price because it was too low and didn’t include synergies, then accepted because the bidders wouldn’t go further? Hmmm…
Allkem/Livent: Enlarged Charging Unit
- Aussie lithium miner Allkem Ltd (AKE AU) has inked a $US10bn+ merger with Livent (LTHM US) to form the world’s fifth largest lithium producer.
- Travis Lundy tackled this “merger-of-equals” and the index implications in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises.
- The spoils of ongoing lithium demand for electric vehicle batteries will ostensibly go to the prevalent, low-cost producer. Yet Livent shareholders may question the lack of premium in the transaction.
Arteria Networks (4423 JP): JPY1,980 Tender Offer from Marubeni and SECOM
- ARTERIA Networks Corp (4423 JP) has recommended Marubeni Corp (8002 JP) and Secom Co Ltd (9735 JP)’s tender offer of JPY1,980 per share, a 54.1% premium to the undisturbed price.
- 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 16.61% ownership ratio.
- The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate. This is doable as the tender price is attractive.
Greatview (468 HK): Bickering And Stalling
- Back on the 1 January, Shandong Xinjufeng Technology Packaging (301296 CH) sought to acquire Jardine Matheson Holdings (JM SP)‘s 28.22% stake in Greatview Aseptic Packaging (468 HK) at HK$2.65/share.
- It was hardly a knockout price. However, Mathson had been itching to exit. Even if it involved selling its stake to one of Greatview’s competitor.
- Greatview’s board is unimpressed, and now reckons Matheson’s initial buy-in may be in breach of PRC anti-monopoly laws.
Adani Enterprises, Green Energy, Transmission Boards to Consider Equity Raises
- Late Wednesday, the boards of Adani Enterprises, Adani Green Energy, and Adani Transmission announced they would meet Saturday to consider fund-raising proposals.
- They will consider issuance of equity shares or other eligible securities through a private placement, a qualified institutions placement, or a preferential issue, among other methods.
- Earnings just out were generally good/up. They still need/want to raise equity. SEBI is still conducting its investigation but hints are there’s trouble. A set of private placements looks likelier.
KT Cloud Receives 600 Billion Investment from IMM at a Valuation of 4.6 Trillion Won
- On 11 May, it was announced that KT Cloud received a 600 billion investment from IMM, valuing KT Cloud at 4.6 trillion won.
- Given that KT Cloud is valued at 4.6 trillion won, an 86.6% stake would be worth 4 trillion won which would be 49% of KT’s current market.
- The investment in KT Cloud is likely to have a positive impact on KT Corp. Plus, KT Corp is a likely candidate for MSCI Korea Standard inclusion in May 2023.
St Barbara (SBM AU): Silver Lake and Genesis Minerals Brewing Battle Creates Option Value
- A battle is brewing between Genesis Minerals (GMD AU) and Silver Lake Resources (SLR AU) for St Barbara Ltd (SBM AU)’s Leonora assets. SLR’s revised proposal addresses some Board’s concerns.
- SLR’s revised offer which shortens the completion timeline, is fully funded and higher than GMD’s offer, pressures the Board to engage to create a bidding war.
- Irrespective of the winning bidder, SBM is attractive, and the shares offer a free option on realising value from its remaining assets and investment portfolio.
Toshiba – Earnings Preview 4QFY23
- We believe Toshiba guidance could be meaningfully lower than consensus estimates project.
- While we expect some conservatism across industrial segments this could easily be offset by prolonged stagnation on the tech side.
- Given concerning signs for NAND we believe weak guidance could shake confidence in deal funding.
Delving into the Nature of the Legal Risks that Ecopro Is Facing After Yesterday’s Court Verdict
- The severity of yesterday’s ruling has caught the market’s attention as it may provide insight into an ongoing investigation into insider trading based on undisclosed internal information.
- This matter is not limited to the operational risk caused by the imprisonment of Lee Dong-chae. There is a possibility that it could lead to delisting, depending on the circumstances.
- The substantial legal risk that could lead to delisting will further amplify price volatility. Adopting a more segmented approach appears crucial, like specific setups in each tighter interval.
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