In today’s briefing:
- Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small
- Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San
- Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer
- Welbe (6556 JP): Polaris Capital-Backed MBO Tender Offer at JPY1,089
- Get Your Pasona (2168 JP) Rump For Free
- Qantas – 1H24 to Provide Evidence of Margin Control
- Spirit Airlines – Summer 2024 a Critical Test of Organic Recovery Prospects
- United Parcel Service (UPS): Accelerated digitization and e-commerce demand could propel them forward? – Major Drivers
- Otis Worldwide Corporation: A Story Of New Equipment Sales and Margin Expansion! – Major Drivers
- Roper Technologies: Acquisition Of Procare Solutions & Improving M&A Pipeline! – Major Drivers
Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small
- Post-Close, the Nikkei carried a breathless headline that Dai Ichi Life Insurance (8750 JP) had agreed a deal for Pasona Group (2168 JP)‘s stake in Benefit One Inc (2412 JP).
- Not long afterwards, TDNet Filings provided Benefit One results, a change to BeneOne’s Opinion on the M3 Offer, and Board Resolution to Support/Recommend DIL’s TOB, now at ¥2,173 and ¥1,526/share.
- Looks like a done deal. And this will also likely delay the start of the DIL Bid to 26-28 February timeframe.
Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San
- Today, Dai Ichi Life Insurance (8750 JP) announced a TOB for Benefit One Inc (2412 JP) having agreed a deal with Pasona Group (2168 JP) to sell into a buyback.
- Pasona will get ¥1,526/share, and having agreed, it announced the expected special profit to be booked in the FY to 31 May 2024.
- At ¥113.6bn on a consolidated basis (¥122.3bn on parent), less ¥1.165bn of associated costs, that’s ¥112.4bn at the lower end. That’s ¥2,870/share. Then there’s the rest of the business.
Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer
- Benefit One Inc (2412 JP) has recommended Dai Ichi Life Insurance (8750 JP)’s revised offer of JPY2,173, a 2.4% and 90.1% premium to the previous offer and undisturbed price, respectively.
- The Board and Pasona Group (2168 JP) secured the highest price. M3 Inc (2413 JP) tabled an alternative proposal but Pasona had concerns about the plan’s tax treatment.
- Based on the irrevocables, the minimum acceptance condition requires a 31.6% minority acceptance rate, achievable due to the high premium and the competitive bidding process.
Welbe (6556 JP): Polaris Capital-Backed MBO Tender Offer at JPY1,089
- Welbe Inc (6556 JP) has recommended a Polaris Capital-sponsored MBO tender offer of JPY1,089 per share, a 30.0% premium to the undisturbed price (8 February).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 46.67% ownership ratio.
- Based on the irrevocables, the minimum acceptance condition requires a 30.1% minority acceptance rate. While a knockout offer, the acceptance condition is achievable.
Get Your Pasona (2168 JP) Rump For Free
- Dai Ichi (8750 JP) agreed with Pasona (2168 JP) for Pasona to sell its shares back to Benefit One (2412 JP) in a buyback after Dai-Ichi’s Tender Offer for Benefit.
- This process gives Pasona a tax advantage versus selling into a Tender Offer at the same price.
- What does Pasona take home? ~¥2,822/share versus its last price of ¥2,733/share. Then you have stubs ops (conservatively worth up to ~¥1,960/share) and Pasona’s stake in Bewith (9216 JP) (~¥360/share).
Qantas – 1H24 to Provide Evidence of Margin Control
- For 1H24 we model EBITDAR of A$2,396m, ahead of Visible Alpha consensus of A$2,273m, which represents an EBITDAR/ASK 35% higher than 1H19.
- 1H24 will be important to help us better understand “normalised” unit cost levels, with inflation high to date, in part due to a 17% capacity deficit in 2H23.
- Qantas has seen comparable inflation to the US majors but considerably higher profitability. This should enable it to invest in product, operational and customer service improvements while protecting margins.
Spirit Airlines – Summer 2024 a Critical Test of Organic Recovery Prospects
- Spirit Airlines finished 2023 as expected and highlights improving pricing momentum in early 2024 which should drive some margin recovery.
- However, we still expect EBITDAR/ASM to finish 2024 down 72% on 2019, with a maximum 50% deficit required to avoid escalating debt. This drives a focus on Chapter 11 risk.
- Management is adamant liquidity is sufficient to allow it to recover but significant margin gains, led by pricing expansion despite aggressive growth plans, are required for financial sustainability.
United Parcel Service (UPS): Accelerated digitization and e-commerce demand could propel them forward? – Major Drivers
- United Parcel Service, Inc.
- (UPS) shared its latest quarterly earnings results in a recent Investor Relations Fourth Quarter call.
- In Q4 of 2023, the company’s average daily volume (ADV) dropped 7.5% from the previous year, a considerable improvement from the reported third-quarter performance.
Otis Worldwide Corporation: A Story Of New Equipment Sales and Margin Expansion! – Major Drivers
- Otis Worldwide Corporation, a leading manufacturer and service provider for elevators, escalators, and moving walkways, is entering 2024 with confidence attributed to its strong full-year performance in 2023.
- Their service-driven business model facilitated a total organic sales growth of 5.6%, driven by Service, which saw a growth of 7.7%.
- The growth in the industry-leading maintenance portfolio reached a record high of 4.2% for the year.
Roper Technologies: Acquisition Of Procare Solutions & Improving M&A Pipeline! – Major Drivers
- Roper Technologies had a strong 2023 performance with key takeaways revolving around 15% revenue growth, 16% EBITDA growth, and 32% free cash flow growth with free cash flow margins at 32%.
- Organic revenue growth was 8%, setting up positive momentum for 2024.
- The company deployed $2.1 billion in high-quality vertical software acquisitions in the past year, including Syntellis and Replicon.
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