In today’s briefing:
- Sep24 S&P500 Index Rebal – Two Changes Expected; $6bn One-Way Flow and Two Spinoffs?
- Tohokushinsha (2329 JP) – 3D Investment Partners Proposes Take-Private
- FSS Orders Doosan Group to Resubmit the Merger Plan – “Merger Plan Is Not Illegal, But Is It Fair?”
- CPMC Holdings (906 HK): Decisions, Decisions as Changping Industrial’s Offer Set to Open
- Clarifications Regarding the FSS’s Unexpected Revision Request for the Doosan Mergers
- CPMC Holdings (906.HK) Privatization Update – The Story Behind the Delay of Offer Document Despatch
- Archimed Group Plans to Conduct a Second Tender Offer for Jeisys Medical
- Shinsung Tongsang: Tender Offer Fails and How to Take Away Customers From Uniqlo
- KOSPI Size Indices: Outperformance Slows on Momentum Stalls
- Hanwha Energy Acquires An Additional 5.2% of Hanwha Corp Through a Tender Offer
Sep24 S&P500 Index Rebal – Two Changes Expected; $6bn One-Way Flow and Two Spinoffs?
- The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
- In this insight, we take a look at the upcoming constituent changes in the run up to the September 2024 index rebal event.
- We expect two regular changes during September. More interestingly, a couple of SP500 members are working on spin-offs which could trigger some high-impact deletions over the next few months.
Tohokushinsha (2329 JP) – 3D Investment Partners Proposes Take-Private
- 3D Investment Partners, known to be activist-ish-y, purchased 18% of Tohokushinsha Film (2329 JP) in the 12 months to March 2024. They started a public activism campaign in February.
- The company has started down a better governance track, but now 3D has made a takeover proposal to Tohokushinsha, which will consider it under Special Committee.
- There are a couple of possible outcomes here which are interesting to consider. There are no other spoilers possible except those friendly to founders and management.
FSS Orders Doosan Group to Resubmit the Merger Plan – “Merger Plan Is Not Illegal, But Is It Fair?”
- On 24 July, the Financial Supervisory Service (FSS) ordered the Doosan Group to resubmit the merger plan.
- It is rare for FSS to reject companies’ merger reports but there has been an exception this time since this deal is egregiously negative to many minority investors.
- Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the Doosan Group companies will be considered withdrawn.
CPMC Holdings (906 HK): Decisions, Decisions as Changping Industrial’s Offer Set to Open
- On 15 July, the precondition for Changping Industrial’s HK$6.87 offer for CPMC Holdings (906 HK) was satisfied, but the despatch of the offer document was delayed until or before 30 July.
- Since ORG Technology Co., Ltd. A (002701 CH) announced its HK$7.21 offer on 7 June, the shares have traded above Changping Industrial’s offer on all but bar one trading day
- Changping Industrial has three options: launch at unchanged terms (low probability), match ORG’s offer (medium probability) or bump marginally higher than ORG’s offer (high probability).
Clarifications Regarding the FSS’s Unexpected Revision Request for the Doosan Mergers
- The FSS requested Doosan Robotics to revise the prospectuses for both the Share Swap with Doosan Bobcat and Merger with Doosan Enerbility.
- Although the FSS’s wording seems aggressive, it does not request the cancellation. Authorities are displeased but lack political momentum to derail Doosan’s restructuring.
- The FSS asks Doosan to clarify merger synergies, warn of Robotics’ overvalued stock price and potential decline, and highlight the collaborative robot market’s growth risks.
CPMC Holdings (906.HK) Privatization Update – The Story Behind the Delay of Offer Document Despatch
- Since all the Pre-Conditions have been fulfilled, Baosteel has taken a solid step towards the successful acquisition of CPMC. Comparatively, ORG could encounter resistance and uncertainties in the upcoming process.
- The acquisition of CPMC by ORG cannot be completed by ORG and Zhang Wei alone.Without the “nod” of COFCO/SASAC, what ORG’s going to do is equivalent to a “hostile takeover”.
- ORG’s acquisition of control of CPMC could go against the national strategy of “building strong alliances between SOEs”. In fact, what ORG wants is for Baosteel to raise its Offer.
Archimed Group Plans to Conduct a Second Tender Offer for Jeisys Medical
- In the first tender offer, 42.5 million shares of Jeisys Medical were purchased by Archimed Group. Post tender offer, Archimed now owns an 82.1% stake in Jeisys Medical.
- On 24 July, it was announced that Archimed will be conducting a second tender offer for Jeisys Medical. The second tender offer will be made for 17.2% of common shares.
- It could be difficult for Archimed to gain more than 95% stake at the end of the second tender offer. Rather, a third tender offer is likely in 2025.
Shinsung Tongsang: Tender Offer Fails and How to Take Away Customers From Uniqlo
- Shinsung Tongsang shares rose 10% to 2,510 won today after it was announced that the tender offer failed. Basically, the tender offer failed because the tender offer price was too low.
- Only 26% of the 31.664 million shares responded to the tender offer. Accordingly, the shareholding ratio of Chairman Yeom and his related parties increased from 77.98% to 83.88%.
- Top Ten has benefited from executing its strategy well (such as employing Lee Na-Young in advertisements to grab customers from Uniqlo). Overall, we remain positive on Shinsung Tongsang.
KOSPI Size Indices: Outperformance Slows on Momentum Stalls
- The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.
- We see 8 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 11 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
- There are a few stocks that are expected to have passive flows from global and local index trackers over the next few months and that will add to the impact.
Hanwha Energy Acquires An Additional 5.2% of Hanwha Corp Through a Tender Offer
- After the market close on 24 July, Hanwha Corporation (000880 KS) announced that Hanwha Energy secured an additional 5.2% stake in Hanwha Corp through a tender offer.
- A total of 3.9 million shares have been applied for the tender offer as of 24 July (65% of targeted amount).
- We believe that the Hanwha Group is likely to grab more shares in Hanwha Corp through an additional tender offer sometime in the next 6-12 months.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
