In today’s briefing:
- Revised Couche-Tard Bid for 7&I and a Flurry of News Items Ahead of Earnings
- Haitong Securities (6837 HK)/GTJA (2611 HK) Merger Is a Done Deal
- MBK Rules Out Further Tender Price Hike for Korea Zinc, Game Plans Shift
- Seven & I Holdings (3382 JP): Pressure Mounts with a Couche-Tard Revised Offer
- Arcadium Lithium (ALTM US/LTM AU): Rio’s Binding Proposal
- KOSDAQ150 Index Rebalance Preview: 10 Changes in December
- HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week
- Quiddity Leaderboard NIFTY Mar 25: Four Changes Likely for NIFTY Next 50 + Hyundai Motor India IPO
- Concerns About Transferring Doosan Bobcat Shares Held by Doosan Enerbility to Doosan Robotics
- Shin Kong and Taishin – There’s a Good Value Swap Trade To Do Here
Revised Couche-Tard Bid for 7&I and a Flurry of News Items Ahead of Earnings
- This AM, partway through the morning session, Bloomberg carried an article saying Alimentation Couche-Tard (ATD CN) had upped its bid for Seven & I Holdings (3382 JP) to US$18.19/share.
- The stock popped, then faded sharply. Near and after the close we got more headlines. Some of these preview tomorrow’s earnings report. Some preview the restructuring announcements.
- The Nikkei comment regarding an earnings shortfall vs Plan suggests weaker US convenience store sales and consumer footfall are to blame. Details will matter. But I’d buy dips.
Haitong Securities (6837 HK)/GTJA (2611 HK) Merger Is a Done Deal
- Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) all-scrip merger is set at an exchange ratio of 0.62x.
- The merger is conditional on the GJTA/Haitong shareholder vote, which is low risk. Regulatory approvals are a formality as they involve two entities with SOE backgrounds.
- The share exchange ratio is attractive compared to historical price ratios and precedent transactions. The recent material re-rating of peers is irrelevant to the vote as the offer is all-scrip.
MBK Rules Out Further Tender Price Hike for Korea Zinc, Game Plans Shift
- MBK’s strategy is clear: they believe they have the upper hand with the current price level and are optimistic about a favorable ruling on the second injunction.
- All eyes are on Choi to raise the price by this Friday, the 11th, before the deadline, especially with the FSS’s scrutiny looming.
- If that happens, MBK will likely go all-in on the second injunction whose hearing is on the 18th. Choi raising the price this Friday won’t significantly boost Korea Zinc’s stock.
Seven & I Holdings (3382 JP): Pressure Mounts with a Couche-Tard Revised Offer
- In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a revised non-binding proposal from Alimentation Couche-Tard (ATD CN).
- The rumoured revised offer is US$18.19, a 22.4% premium to the initial US$14.86 offer. The revised terms are attractive vs precedent transactions and analyst price targets.
- The Board would cite regulatory concerns and the revised offer’s implied discount compared to peer multiples. At tomorrow’s results, the Board must present a credible alternative value generation path.
Arcadium Lithium (ALTM US/LTM AU): Rio’s Binding Proposal
- Arcadium Lithium (LTM AU) has disclosed a binding offer from Rio Tinto PLC (RIO LN) at US$5.85 per share, a 90% premium to the undisturbed price of US$3.08 (4 October).
- The offer is attractive compared to analyst price targets and peer multiples but unattractive compared to cyclical low timing and precedent transactions.
- The shareholder structure requires an activist to disrupt the vote. The long-dated offer provides optionality on a bump if lithium prices materially re-rates.
KOSDAQ150 Index Rebalance Preview: 10 Changes in December
- With over 85% of the review period complete, there could be 10 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
- Even with 10 potential changes, there is sector balance with half the changes in the Information Technology sector. Passive trading impact varies from 0.2-7.7x ADV.
- The potential adds have outperformed the potential deletes and the KOSDAQ150 Index since the start of the review period, though there has been a gentle drift lower since July.
HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week
- There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
- Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
- Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.
Quiddity Leaderboard NIFTY Mar 25: Four Changes Likely for NIFTY Next 50 + Hyundai Motor India IPO
- NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
- In this insight, we take a look at the names leading the race to become ADDs/DELs for these indices in the March 2025 index rebal event.
- There are no changes for NIFTY 50 but there could be four changes for NIFTY Next 50 according to current rankings.
Concerns About Transferring Doosan Bobcat Shares Held by Doosan Enerbility to Doosan Robotics
- In the process of transferring Doosan Bobcat shares held by Doosan Enerbility to Doosan Robotics, there are increasing concerns about negatively impacting minority shareholders of Doosan Enerbility.
- This current restructuring structure could potentially benefit the Park family/relatives which is the largest shareholder group of Doosan Corp but could negatively impact minority shareholders of Doosan Enerbility.
- On 25 September, Doosan Enerbility announced that 10 October will be the shareholder confirmation date (shareholder register closing date) for the spin-off NEWCO merger agreement with Doosan Robotics.
Shin Kong and Taishin – There’s a Good Value Swap Trade To Do Here
- Media reports indicate that the shareholder base of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) have approved their merger.
- Shin Kong meeting results were public just before the market closed. The results from Taishin were known earlier. The market and spread were un-moved. If anything, things widened a little.
- Next, the two companies try to get fair Trade Commission, FSC, and Exchange approval to join to become Taishin Shin Kong FHC. And there’s a good trade to do here.
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