Daily Brief Industrials: Halcyon Agri, Selamat Sempurna, Somfy SA and more

In today’s briefing:

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro
Selamat Sempurna (SMSM IJ) – Filters and Radiators Leading the Recovery
Despature Family/Somfy: Lowball Simplified Takeout, Timetable

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro

Selamat Sempurna (SMSM IJ) remains one of the best quality Indonesian industrial companies, as the leading auto and heavy equipment filter producers for both OEM and the aftermarket.
The company booked a strong set of 9M2022 results, with sales up +21% YoY and net profit increasing +30% YoY, driven by both domestic and export markets.
Selamat Sempurna (SMSM IJ) maintains it FY2022 target for 15% sales and profits growth for FY2022, which looks conservative after the performance at 9M stage despite potential global headwinds.

Majority shareholders Despatures (73.9%) plan to use the abundant cash holdings of Somfy to finance a simplified cash offer at €143/share (16.8x EV/23e EBIT, 21.1x P/23e E, 20.6% premium).
In case of squeeze-out, Somfy intends to distribute afterwards an extraordinary dividend up to €620m (source: draft memo). The market believes the offer is low (gross spread is +0.98%).
I believe there are grounds for an offer sweetening (base-case valuation throws €150.98/share) and the risk-reward seems favorable considering a very motivated (and opportunistic) buyer. Long.

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