In today’s briefing:
- Snow Peak (7816) – Bain Deal at ¥1,250 – 46% Premium Is Nice, Not A Home Run
- Quiddity Leaderboard MV J-Gold Miners Mar 24: One High-Conviction DEL and More Low-Conviction Cases
- Monitoring LG Display’s Stock Rights Trading
- CIMC (1839 HK): Justification For Unjust Offer Price?
- HSCEI Dividend Futures: Shrinking OI; Fair Value Estimates Show Upside
- Snow Peak (7816 JP): Bain-Backed MBO at JPY1,250
- JSE Mar ’24 Rebalance: No T40 or T40 SWIX Changes Expected
- China Traditional Chinese Medicine (570.HK) – New Information on Privatization
- Dow Jones Industrials (INDU) Index Rebalance: Amazon (AMZN) Replaces Walgreen Boots (WBA)
- EQD | NIFTY’s Rally Resistance Targets Approaching: Reversal?
Snow Peak (7816) – Bain Deal at ¥1,250 – 46% Premium Is Nice, Not A Home Run
- The possibility/likelihood of a “¥50bn MBO” for Snow Peak Inc (7816 JP) was leaked in a Nikkei article last Friday. It went limit up two days in a row.
- That TOB price is more than 70% off its three-year high. That will certainly disappoint some. Separately, the price seems a bit low given growth.
- The family and friends own ~42% so if someone gets upset, or uppity, there could be a challenge. Just because an MBO exists doesn’t mean people have to tender in.
Quiddity Leaderboard MV J-Gold Miners Mar 24: One High-Conviction DEL and More Low-Conviction Cases
- The MV J-Gold Miners index represents the performance small-cap gold and silver mining companies listed around the world.
- This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
- In this insight, we take a look at the potential ADDs and DELs and our flow expectations for the index rebal event in March 2024.
Monitoring LG Display’s Stock Rights Trading
- LG Display’s tight stock rights trading prompts a need to assess potential trading opportunities. Taihan Electric Wire’s concurrent capital increase warrants close observation.
- Watch for a potentially wider spread in Taihan Electric Wire’s stock rights trading from the 22nd, given local institutional demand focus on LG Display may create a buying vacuum.
- Observers speculate on a CJ CGV-like pattern at LG Display. With no current market movements, predicting such a scenario is difficult. Nonetheless, I’ll monitor closely and share any developments.
CIMC (1839 HK): Justification For Unjust Offer Price?
- On the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a forgettable 8.6% premium to last close.
- This Voluntary Offer followed by a Merger by Absorption requires shareholder approval and SAFE signing off. The SAFE condition was satisfied on the 26th Jan.
- Last night, CIMC announced the CBP investigation into the evasion of U.S. anti-dumping and countervailing duties was extended. There is no mentioned in interim accounts or HKEx of this investigation.
HSCEI Dividend Futures: Shrinking OI; Fair Value Estimates Show Upside
- The open interest of the HSCEI 2024 dividend futures is less than half that of the HSCEI 2023 and HSCEI 2022 open interest at the same time of the year.
- Market volatility and the fallout of the losses faced by Korean investors (and the scrutiny of Korean ELS-issuing banks) are among the primary reasons for the low open interest.
- Our fair value for the HSCEI 2024 dividend futures is higher than the current market but there is a lot of sensitivity to bank dividends and special dividends.
Snow Peak (7816 JP): Bain-Backed MBO at JPY1,250
- Snow Peak Inc (7816 JP) has recommended a Bain Capital-sponsored MBO tender offer at JPY1,250 per share, a 58.0% premium to the undisturbed price (15 February).
- 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 38.13% ownership ratio.
- Based on the irrevocables, the minimum acceptance condition requires a 52.8% minority acceptance rate. While not a knockout offer, the acceptance condition is achievable.
JSE Mar ’24 Rebalance: No T40 or T40 SWIX Changes Expected
- Last night the price snapshot was taken for the March 2024 rebalance.
- We do not expect there to be any changes to the Top 40, Top 40 SWIX, FINI, FINDI or INDI.
- EXX is expected to enter the RESI with NPH falling out.
China Traditional Chinese Medicine (570.HK) – New Information on Privatization
- Since China TCM doesn’t deny the rumors so far after the trading halt, privatization is becoming likely this time.Rumor said formal negotiations may not begin until after the Lantern Festival.
- CNPGC may not want to pay high prices on privatization.Weak sentiment/share price may help with the negotiations.But the key is to obtain the consent of other shareholders, especially Ping An.
- There’s underlying logic for Taiji Group to drive this privatization. A price of higher than HKD5.1 is possible. If the price could reach HKD6 (or higher), it has exceeded expectations.
Dow Jones Industrials (INDU) Index Rebalance: Amazon (AMZN) Replaces Walgreen Boots (WBA)
- Amazon.com Inc (AMZN US) will replace Walgreens Boots Alliance (WBA US) in the Dow Jones Industrial Average (INDU INDEX) at the close on 23 February.
- Passives will need to sell a lot of Walmart (WMT US) following the 3:1 stock split and buy a lot of Amazon.com Inc (AMZN US).
- Given the ad hoc nature of the rebalances and the short timeline between announcement and implementation, the stocks could move over the rest of the week.
EQD | NIFTY’s Rally Resistance Targets Approaching: Reversal?
- The NIFTY Index has been rising for 5 days in a row, this is the second week up (CC=+2), there is a good chance it will pullback soon.
- The index is going towards the Q3 resistance level at 22354, that would be a good area from where to start to prepare for a pullback.
- Going SHORT may not be worth it, the right trade is to wait for the pullback and go LONG again at better prices.
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