In today’s briefing:
- Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Platinum (PTM AU): Regal’s Indicative Offer
- ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- TCM (570 HK): Inching Towards Regulatory Sign-Off
- Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
- NAV Valuation of Young Poong Precision and A Case Study for Future Tender Offers in Korea
- Platinum Investment Mgmt (PTM AU): Regal Partners’ Indicative Offer
- European Governments’ Bank Sell-Off: Boosting Confidence and Occasionally Free Float
- Liquid Universe of European Ordinary and Preferred Shares: September‘24 Report
Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one.
- But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
- Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.
Platinum (PTM AU): Regal’s Indicative Offer
- Platinum Asset Management (PTM AU) has confirmed, and is “considering the merits” of an unsolicited confidential, non-binding, indicative proposal from Regal Partners (RPL AU).
- Regal has offered, by way of a Scheme, 0.274 Regal shares for every Platinum share. A $0.24/share special dividend is permitted, and added. Regal holds an estimated 5.1% stake.
- With funds under management down 27% yoy, a merger with Regal is just the tonic for Platinum’s long-suffering investors. Founder Kerr Neilson, holding 21.7%, will have the final say.
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
- Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
- There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.
TCM (570 HK): Inching Towards Regulatory Sign-Off
- In its latest monthly update, China Traditional Chinese Medicine (570 HK) fleshes out the latest on the various PRC regulatory applications.
- Comparing the two most recent monthly updates side-by-side, apart from modifying the documentation for the MOC and NDRC process; the SAMR filing has been formally accepted, as previously flagged.
- The upshot? These regulatory approvals will be secured. The key question is whether this can take place before the 18th October pre-condition long stop date. Or an extension is required.
Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
- KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
- In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.
Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
- Trancom Co Ltd (9058 JP) recommended a Bain-sponsored MBO at JPY10,300, a 40.5% and 42.9% premium to the last close and undisturbed price, respectively.
- The offer represents an all-time high but is lower than the midpoint of the IFA’s DCF valuation range and implies multiples below precedent transaction multiples.
- While the Dalton irrevocable has a counteroffer clause, Mr Takebe (the largest shareholder) does not. Therefore, there is a low probability of a competing bidder emerging.
NAV Valuation of Young Poong Precision and A Case Study for Future Tender Offers in Korea
- Our NAV valuation of Young Poong Precision suggests NAV of 325 billion won or NAV per share of 20,657 won which is 70% higher than current price.
- Young Poong Precision tender offer could become one of the most important case studies for future tender offers in Korea.
- The biggest component of the NAV is Young Poong Precision’s 1.85% stake in Korea Zinc which is worth 255 billion won (133% of its current market cap).
Platinum Investment Mgmt (PTM AU): Regal Partners’ Indicative Offer
- Platinum Asset Management (PTM AU) confirmed it received a non-binding indicative proposal from Regal Partners (RPL AU) at 0.274 RPL shares per PTM share + special dividend of A$0.24.
- The implied offer price of A$1.14 per share based on Regal’s undisturbed price of A$3.30 per share is a 15.6% premium to the undisturbed price of A$0.99 (16 September).
- Despite the modest takeover premium, the offer is attractive compared to historical and peer multiples. Expect the Board to engage to facilitate an improved binding proposal.
European Governments’ Bank Sell-Off: Boosting Confidence and Occasionally Free Float
- AIB Group (AIBG IE) is expected to experience an increase in free float from 75% to 80% in November 2024 due to the Irish Government reducing its stake this month.
- Commerzbank AG (CBK GR) is forecasted to have a ~2% points free float decrease in Global and European Indices as UniCredit bought more than what the German Government sold.
- The UK Government continues slashing its stake in NatWest Group (NWG LN) with potential further free float increases coming in November and December 2024.
Liquid Universe of European Ordinary and Preferred Shares: September‘24 Report
- Since mid-August, share-price spreads have generally widened across our European liquid universe of ordinary and preferred shares (13 have tightened, 4 widened, 2 remained at same level).
- Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols SA, Media-for-Europe, Sixt.
- Recommended trades long ordinary / short preferred shares: Carlsberg, Henkel, SSAB Svenska Stal.
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