In today’s briefing:
- Toshiba (6502) Update – Shares Down Since Last Look, “News” Isn’t Really. IRR Grid.
- Toshiba – The Bidders Emerge
- Perpetual Needs To Pay Up For Pendal
- Understanding DB HiTek Shorting Event Amid DB’s Holdco Conversion
- FTSE TWSE Quiddity Leaderboard Sep 2022 (2.0): Two ADDs/DELs Expected & Dividend+ Index Implications
- Tassal: Cooke Increases Its Stake to 10.49%
- KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows
- Cocoaland’s Court Meeting on 18 August, IA’s Opinion
- Uni President Enterprises: Positive Catalyst from Additional Stake Purchase of Carrefour Taiwan
- Philip Morris/Swedish Match: Trading Tight to Terms
Toshiba (6502) Update – Shares Down Since Last Look, “News” Isn’t Really. IRR Grid.
- Overnight, Toshiba Corp (6502 JP) has released an update “Progress Report on Discussions with Potential Investors and Sponsors. Four advance to the second round, including both PE and strategic investors.
- Nikkei reported those advancing were Bain, CVC, Brookfield, and JIP-JIC. Blackstone did not advance. Yesterday, Reuters reported that KKR had declined to bid, but might join another bid.
- Now parties will start due diligence, and Toshiba will examine bids for “measures to enhance corporate value” and certainty of execution (given national security-sensitive issues, and funding).
Toshiba – The Bidders Emerge
- The Nikkei reported yesterday that Toshiba had winnowed the pool of potential partners down to four candidates.
- All four names (Bain, CVC, Brookfield and Japan Industrial Partners/Japan Investment Corp) have been connected to Toshiba previously.
- We wonder whether this pool of candidates points to a higher likelihood of a strategic partnership rather than a full buyout.
Perpetual Needs To Pay Up For Pendal
- Back on the 4 April, asset manager Pendal Group (PDL AU) announced a non-binding proposal from investment firm Perpetual Ltd (PPT AU).
- As widely expected, Pendal’s board unanimously determined that the indicative cash/scrip Offer significantly undervalued the current and future value of the company.
- Pendal said yesterday that it is still in discussions with Perpetual regarding a potential transition. Using yesterday’s close, and applying the same terms, backs out an indicative price of A$5.67/share.
Understanding DB HiTek Shorting Event Amid DB’s Holdco Conversion
- DB was notified of the conversion to a holding company by the Korea FTC. DB must complete the conversion to a holding company by January 1, 2024.
- DB has no option but to ECO DB HiTek, the same trick employed for LG Energy Solution, to meet the 30% stake obligation for DB HiTek.
- There are still opportunities for outright shorting on DB HiTek as DB will likely announce DB HiTek split before August 12.
FTSE TWSE Quiddity Leaderboard Sep 2022 (2.0): Two ADDs/DELs Expected & Dividend+ Index Implications
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the Taiwan 50 and Taiwan Mid-Cap 100 Indices for the September 2022 Rebalance.
- In addition to the Indices specified above, I have also discussed the upcoming index change expectations for the FTSE TWSE Taiwan Dividend+ Index.
- I also discussed some interesting LONG-SHORT trades involving some potential ADDs and DELs.
Tassal: Cooke Increases Its Stake to 10.49%
- On 19 July, Cooke, the spurned suitor, increased its stake in Tassal (TGR AU) to 10.49%. The average price to build the 10.49% stake is A$4.14 per share.
- Cooke also hired Phil Wiese, the former CEO of Huon Aquaculture (HUO AU), as a MD in Canada. Mr Wiese is well qualified to run Tassal should Cooke acquire it.
- With shareholders happy to sell to Cooke despite the Board’s assertions that the previous bid undervalued Tassal, a new offer will force the Board to engage.
KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows
- The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
- Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
- Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.
Cocoaland’s Court Meeting on 18 August, IA’s Opinion
- The independent advisor considers Fraser & Neave Holdings (FNH MK)‘s RM1.50 offer for Cocoaland Holdings (COLA MK) fair as it falls within its valuation range of RM1.21-1.66 per share.
- The key conditions are the headcount test and <10% rejection from all disinterested shareholders. The shareholder with a blocking stake has provided an irrevocable.
- We continue to think that offer is attractive. At the last close and for the end of October payment date, the gross and annualised spread is 1.4% and 4.8%, respectively.
Uni President Enterprises: Positive Catalyst from Additional Stake Purchase of Carrefour Taiwan
- Uni President Enterprises and President Chain Store Corp (an affiliate of Uni-President Group) have agreed to acquire a controlling 60% stake ownership of Carrefour Taiwan from Carrefour SA (CA FP).
- We believe the acquisition of the additional 49.5% stake in Carrefour Taiwan is likely to have a positive impact on Uni President Enterprises (1216 TT).
- Uni President Enterprises is trading at P/S multiple of 0.77x so the acquisition multiple of 0.6x would be slightly lower than Uni President Enterprises’ current valuation multiple.
Philip Morris/Swedish Match: Trading Tight to Terms
- Since Bloomberg reported that Elliot is amassing a stake, the shares have traded tight to terms, even rebasing the offer price. Uncertainty is growing around the deal.
- The squeeze-out threshold is 90%, and reaching it seems increasingly difficult, in spite of a generous premium. Philip Morris could lower the acceptance threshold and/or extend the offer period.
- My DCF valuation is SEK 113.17, potentially a 13% upside, although it would be difficult to twist Philip Morris’s arm. I’d still be long just under the offer price.
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