In today’s briefing:
- T&K TOKA (4636) Gets More Interesting – A Bump Is Now A Distinct Possibility
- Nidec (6594) Turns Vinegar to Wine as Takisawa Machine Tool (6121) Agrees To Takeover
- T&K Toka (4636 JP): Possible Offer Scenarios as Dalton Ups Its Stake
- SK Innovation: Update on Its Rights Offering Subscription Allocation
- A Fresh Short-Selling Target in Korea: Youlchon Chemical
- Pact Group (PGH AU): Raphael Geminder’s Opportunistic Proposal
- Mellby Gård/Duni: Start of Mandatory Offer Period
- STAR50 Index Rebalance Preview: Bigger Tracking AUM = Bigger Impact
T&K TOKA (4636) Gets More Interesting – A Bump Is Now A Distinct Possibility
- Last year, 20% owner Dalton approached T&K Toka Co Ltd (4636 JP) for an MBO, but walked when questioned. Then in January bid ¥1300 to double their stake to 44%.
- They were not successful. The firm held a beauty contest. Bain won at ¥1400 despite ¥1300 getting no response and markets up big since. It’s possible not everyone was invited.
- Since the Bain deal announcement, the stock has mostly traded at/through terms. Now we find out Dalton has been buying (now 23.77%). This increases the chances of a bump.
Nidec (6594) Turns Vinegar to Wine as Takisawa Machine Tool (6121) Agrees To Takeover
- Nidec Corp (6594 JP) has had ambitions in machine tool space. They wanted to buy Takisawa Machine Tool (6121 JP) but Takisawa wouldn’t give them the time of day.
- So Nidec announced hostile intentions and a 60-day period to negotiate. That’s done, and today they announced a now-friendly deal.
- This looks like an easy done deal. There is one major risk factor remaining, then another consideration when thinking about path.
T&K Toka (4636 JP): Possible Offer Scenarios as Dalton Ups Its Stake
- Nippon Active Value Fund/Michael 1925/Dalton has increased their T&K Toka Co Ltd (4636 JP) shareholding from 22.23% to 23.77% of outstanding shares (22.25% to 23.79% of ownership ratio including share options).
- T&K Toka shares have traded above Bain’s JPY1,400 pre-conditional offer, fuelling speculation of a bump. A rival proposal at least 5% above triggers the “Counter Tender Offer” clause.
- The four possible scenarios with declining probabilities are: Bain calls Dalton’s bluff, Bain marginally bumps, Dalton launches a rival offer or Dalton rollovers its stake into a privatised T&K Toka.
SK Innovation: Update on Its Rights Offering Subscription Allocation
- On 13 September, SK Innovation announced that the subscription rate for the rights offering allocated to ESOA and existing shareholders was 87.66%.
- The rights offering price is 139,600 won, which is 12.7% lower than current price of 159,900 won.
- There is likely to be a strong demand for the subscription of rights offering forfeited shares for the general investors scheduled to take place on 14 to 15 September.
A Fresh Short-Selling Target in Korea: Youlchon Chemical
- Youlchon Chemical’s CFD balance accounts for 3.54% of SO, with approximately 2x leverage trading. It is one of the few in the top CFD balance list that can be short-sold.
- Our primary concern should lie with the upcoming December rebalancing of the KOSPI 200 index. Youlchon Chemical finds itself perilously close to the borderline within the Materials sector.
- When proactive flow trading targeting KOSPI 200 is set to influence prices early October, we must remain vigilant regarding the potential trades aimed at exploiting a CFD balance squeeze.
Pact Group (PGH AU): Raphael Geminder’s Opportunistic Proposal
- Pact Group Holdings (PGH AU) has disclosed an unconditional takeover proposal from Raphael Geminder at A$0.68 per share, a 0.7% premium to the undisturbed price (12 September).
- Mr. Geminder’s justification for a little-to-no premium offer is based on the premise that minorities are clambering for a liquidity event to exit a no-hope situation.
- The offer price is unattractive on any reasonable metric. A successful privatisation would require a bump. The shares closed 6.6% higher than the offer.
Mellby Gård/Duni: Start of Mandatory Offer Period
- On 14 August, Mellby Gård crossed the 30% threshold and announced a mandatory offer for all shares of Duni AB (DUNI SS) at SEK 98.6/share. The offer period started 12 September.
- The offer represents 0.41% premium to prior day to threshold crossing. Mellby Gård doesn’t seem interested in completing a takeover, rather being able to increase its stake after offer completion.
- The offer represents 0.41% premium, 6.8x EV/Fwd EBITDA, 11.1 Fwd P/E (vs. 5-year averages of 8.8x and 15.4x). Gross spread is 2.1%, I wouldn’t get involved above SEK 95.
STAR50 Index Rebalance Preview: Bigger Tracking AUM = Bigger Impact
- The review period for the December rebalance ends 31 October. We expect the changes to be announced 24 November with the implementation taking place after the close on 8 December.
- We expect the index committee to continue using a 6-month minimum listing history resulting in one change to the index.
- One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 2,259m. The impact on the deletion will be much larger than that on the inclusion.
💡 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
