In today’s briefing:
- Softbank (9984 JP): This Time, It’s Different
- TOPIX Inclusions: Who Is Ready (June 2024)
- Affinity Equity Partners Seeking Delisting of Lock & Lock Through Comprehensive Stock Exchange
- Altium (ALU AU): Scheme Vote on 12 July
- MV Australia Equal Weight Index Rebalance Preview: Close Deletions in June
- Sidara/John Wood: 4th Proposal at 230p
- Altium (ALU AU)’s 12th July Scheme Vote. Renesas’ Done Deal
Softbank (9984 JP): This Time, It’s Different
- Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
- Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
- Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount
TOPIX Inclusions: Who Is Ready (June 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- There have been no TOPIX Inclusions in 2024 so far although dozens of companies have been able to meet the key Section Transfer requirements on paper for several months.
- However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.
Affinity Equity Partners Seeking Delisting of Lock & Lock Through Comprehensive Stock Exchange
- On 5 June, Affinity Equity Partners (AEP) announced that it is seeking a delisting of Lock&Lock (115390 KS) shares through a comprehensive stock exchange.
- It has been reported that the second tender offer failed. Only 1.5% of the outstanding shares participated in the second tender offer, falling short of the 9.5% participation required.
- Affinity plans to transfer the shares of Lock&Lock held by an overseas corporation to a domestic corporation (investment-in-kind) and then go through a comprehensive stock exchange procedure.
Altium (ALU AU): Scheme Vote on 12 July
- The Altium Ltd (ALU AU) IE considers Renesas Electronics (6723 JP)’ A$68.50 scheme offer fair and reasonable as it is above the midpoint of the A$62.37 to A$70.27 valuation range.
- The offer is conditional on remaining regulatory approvals (FIRB, CFIUS) and shareholder approval.
- The offer price is attractive and 31% above the all-time high. At the last close and for the 1 August payment, the gross/annualised spread was 1.7%/11.6%.
MV Australia Equal Weight Index Rebalance Preview: Close Deletions in June
- With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the June rebalance.
- Even if there are no constituent changes, capping changes will lead to one-way turnover of 3.6% and a one-way trade of A$83m.
- There are 6 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.
Sidara/John Wood: 4th Proposal at 230p
- Sidara has submitted a fourth and final 230p/share cash proposal. Wood’s Board has changed tack and will grant due diligence. PUSU has been extended to 3 July.
- This proposal represents 39.4% premium, implied equity value of £1,591 million ($2,033 million) and implied EV of £2,983 million ($3,122 million), and (still good value) 6.4x EV/NTM Fwd EBITDA.
- The market is cautious (gross spread 12.5%). There’s potential for a “best & final” firm offer. However, if Sidara withdraws a significant sell-off in Wood’s shares is expected.
Altium (ALU AU)’s 12th July Scheme Vote. Renesas’ Done Deal
- Back on the 15th Feb, Renesas Electronics (6723 JP), a supplier of advanced semiconductors, entered into a Scheme with Altium Ltd (ALU AU).
- Altium shareholders are being offered A$68.50/share, in cash, a lifetime high.
- The Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th July. Expected implementation on the 1 August. The IE says fair & reasonable.
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