In today’s briefing:
- Perpetual (PPT AU): Shareholders Divided Over Carve Out
- KKR Deal for Alps Logistics (9055) Appears Imminent
- China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks
- Nippon Yusen (9101) – Another Big Buyback Announced, But Details Matter
- Naver: Under Pressure from the Japanese Government To Sell Its Stake in LINE
- HD Hyundai Marine Solution (443060 KS): Nearing KOSPI200 Index Inclusion in June
- Qantm IP (QIP AU): IPH Enters the Fray with a Competing Offer
- QANTM (QIP AU): IPH Wades In As Adamantem Tarries
- Local Institutional Flows Towards Overweighting Samsung SDS in Samsung Group Context
Perpetual (PPT AU): Shareholders Divided Over Carve Out
- Back in December last year, Aussie-listed equities manager Perpetual Ltd (PPT AU) rejected Washington H. Soul Pattinson (SOL AU)‘s $3bn all-scrip non-binding indicative proposal.
- Yet Soul Patt’s proposal was in sync with Perpetual’s previously flagged intentions to explore a potential separation of its corporate trust and wealth management businesses, from its asset management business.
- Perpetual has now entered a Scheme, to carve out the corporate trust and wealth management businesses to KKR for A$2.175bn. A lack of clarity on net proceeds saw shares rollover.
KKR Deal for Alps Logistics (9055) Appears Imminent
- There was a news article I missed in late February saying Alps Alpine (6770 JP), parent of Alps Logistics (9055 JP) was in the process of selling the logistics unit.
- A deal made sense for a strategic given the upcoming “2024 Problem”. Pre-close, headlines blared, the stock popped 12%, now we’re at double the end-February price.
- Late in the evening,Alps Logistics said it had received a bid from Logisteed but nothing had been decided. This morning we have a few more details, but nothing concrete
China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks
- On 21 February, China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
- The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake.
- The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.
Nippon Yusen (9101) – Another Big Buyback Announced, But Details Matter
- Last May, Nippon Yusen Kk (9101 JP) announced buybacks of ¥200bn over 2 years. In August, they changed it to say ¥200bn in the next nine months.
- That helped support the stock through early March. It was big, and a decent percentage of ADV. Today, they announced earnings and guidance and another ¥100bn buyback through April 2025.
- Earnings were OK. Guidance is a little low vs the Street. The stock popped 5% from where it was trading. Lower impact vs 2023. More cross-holder overhang consideration.
Naver: Under Pressure from the Japanese Government To Sell Its Stake in LINE
- On 8 May, it was mentioned in numerous local media that Naver is under pressure from the Japanese government to sell its stake in LINE.
- One of the reasons behind Japanese government’s efforts to force Naver to sell its stake in LINE is due a major data breach incident in November 2023.
- Based on our current understanding of this situation, the most likely scenario is for Naver to sell about 20-30% stake in A Holdings (the controlling shareholder of LINE) to SoftBank.
HD Hyundai Marine Solution (443060 KS): Nearing KOSPI200 Index Inclusion in June
- After a 96.5% gain on listing day, HD Hyundai Marine Solution (443060 KS) is very close to levels needed for Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion in June.
- HD Hyundai Marine Solution needs to outperform the 50th ranked stock in the KOSPI2 INDEX by 11.4% on average over the next 15 trading days to be added to the index.
- Retail investors sold 25% of their allocation on listing day while foreign investors sold 22% of their IPO allocation with local institutions mopping up the shares.
Qantm IP (QIP AU): IPH Enters the Fray with a Competing Offer
- Qantm Intellectual Property (QIP AU)‘s non-binding proposal from IPH Ltd (IPH AU) is at A$0.11 cash + 0.291 IPH shares per QIP share, a 4.5% premium to Adamantem’s A$1.817 offer.
- Since announcing the Adamantem non-binding proposal on 14 March, the IPH offer has been 4.3% higher than the Adamantem offer on average.
- The IPH proposal also requires approval from the ACCC and NZCC. The presence of two bidders increases the probability of a binding proposal (with a bump).
QANTM (QIP AU): IPH Wades In As Adamantem Tarries
- It always seemed like a question of when, not if, IPH (IPH AU) would make an Offer for QANTM (QIP AU). IPH previously approached QANTM in 2018, but was spurned.
- Capitalising on ongoing extensions to Adamantem’s exclusivity, as it relates to its all-cash A$1.817/share Offer by way of a Scheme, IPH has now tabled an all-scrip, plus A$0.11/share dividend NBIO.
- IPH’s implied Scheme value of A$1.90/share is a premium to Adamantem’s proposal. The catch: apart from terms being indicative, IPH’s Offer requires ACCC and NZCC clearance.
Local Institutional Flows Towards Overweighting Samsung SDS in Samsung Group Context
- Local institutions, notably pension funds, are increasingly investing in Samsung SDS, coinciding with the company’s more active investor engagement. This has sparked speculation about Samsung’s strategic motives.
- Timing-Wise, as AI infra demands rise in Samsung Group, conditions for boosting SDS’s performance improve. They monitor Samsung’s moves to drive SDS’s stock upward, considering its reliance on Samsung’s revenue.
- Local pension funds actively adopting overweight positions in Samsung SDS underscore the importance of crafting strategies tailored to overweighting SDS within the broader Samsung Group context.
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