In today’s briefing:
- Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated
- ENN Energy (2688 HK): This Is An Avoid
- HKBN (1310 HK): I Squared Inches Closer to a Competing Offer
- Makino Milling Machine (6135 JP): Nidec Launches Its Offer
- Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer
- NZME Limited (NZM NZ/AU): Board Pushes Back On Board Spill
- Selected European HoldCos and DLC: March 2025 Report, Adding Vivendi
- [Alert] Buy Havas
Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated
- For weeks, if not months, the world has been wondering what the “reciprocal tariffs” would be, and what the logic would be behind them.
- There is talk of VAT, and NTBs, and huge tariff step-ups after quotas are exceeded (US exports of milk and cheese to Canada – high tariffs, but quotas not exceeded).
- But a quick check of the math on the Trump Executive Order and Annex I tells you the logic is different than what everyone expected.
ENN Energy (2688 HK): This Is An Avoid
- Back on the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH), its largest shareholder.
- Investors hoping for a clean (er) exit, or one where the back-end terms were clearly defined, will be disappointed. And minorities are active in this name.
- The Offer pivots on where the newly-listed H-shares trade. The IFA’s assessment on the theoretical value of these H-shares is unrealistic.
HKBN (1310 HK): I Squared Inches Closer to a Competing Offer
- Today’s HKBN Ltd (1310 HK) monthly update notes that I Squared has completed due diligence and is finalising the terms of a possible preconditional offer.
- The I Squared bid will likely be a modest premium to the China Mobile offer with a 50% minimum tendering condition. The key unknown is securing regulatory approvals.
- China Mobile (941 HK) will first react to an I Squared offer by maintaining terms. However, regardless of whether I Squared secures regulatory approvals, it is likely to match terms.
Makino Milling Machine (6135 JP): Nidec Launches Its Offer
- Nidec Corp (6594 JP) has launched its offer for Makino Milling Machine Co (6135 JP) at an unchanged JPY11,000. The offer is open from 4 April to 21 May.
- The offer was launched despite securing all regulatory approvals and the Board’s postponement request. The launch could also be an attempt to thwart a competing proposal.
- Despite the launch, Nidec’s offer at current terms has a low chance of success, necessitating revised terms. There remains a medium-to-high probability of a competing proposal.
Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer
- Back on the 27th January, Dada Nexus (DADA US), a Chinese on-demand retail and delivery platform, announced a preliminary non-binding proposal from JD.com (9618 HK).
- JD.com, a 63.2% shareholder, was offering US$0.50/share (US$2.00/ADS), a 42% premium to last close. Those terms are now firm and a definitive agreement entered into.
- The merger is expected to close in the third quarter. Trading at 4.7%/15%, gross/annualised spread, assuming a four month off-ramp.
NZME Limited (NZM NZ/AU): Board Pushes Back On Board Spill
- Back in January, New Zealand’s largest private sector union called for the government to step in after NZME Limited (NZM AU/NZ), publisher of the NZ Herald, announced sweeping job cuts,
- After a flurry of rumours, James Grenon, a Canadian-born but New Zealand-based investor, has proposed sacking the board. Allegedly 37% of shares out, including Genon’s stake, support the board spill.
- The AGM has been pushed out to the 3 June. In a detailed PPT, NZME questions whether Grenon’s motives are in the best interest of the company and its shareholders.
Selected European HoldCos and DLC: March 2025 Report, Adding Vivendi
- Discounts to NAV of covered holdcos didn’t show a clear trend during March. Discounts: C.F.Alba, 14.9% as of 31 March (vs 14.1% as of 28 February); GBL, 37.6% (vs. 38.7%);
- Heineken Holding, 11.2% (vs. 13%); Industrivärden C, 2.9% (vs. 5.1%); Investor B, 4.2% (vs. 2.3%); Porsche Automobile Holding, 31.9% (vs. 38.1%); Rio DLC 21.7% (vs. 17%). Vivendi 40.1% (vs. 38.7%).
- What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).
[Alert] Buy Havas
- Havas is a recent spin-off from Vivendi.
- Havas delivered record financial results in 2024, with net revenue of €2,736 million (+1.5% y/y) and all-time high adjusted EBIT of €338 million (12.4% margin).
- The company exited 2024 in a net cash position of €211 million, providing a strong balance sheet to fund growth and shareholder returns.
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