In today’s briefing:
- Offensively Low-Priced MBO for Teraoka Seisakusho (4987) – Yet Another SmallCap Governance Disaster
- Nihon M&A: Earnings Show Some Recovery; but Could Miss Full-Year OP Guidance
- TRS: Scaled for Free Cash Flow
- Aliaxis Condedes Defeat
Offensively Low-Priced MBO for Teraoka Seisakusho (4987) – Yet Another SmallCap Governance Disaster
- A small specialty adhesives maker – Teraoka Seisakusho (4987 JP) has had an MBO proposed and approved. At 0.54x book. NetCash+securities+2.5mos of net A/R+inventory = 99% of Takeover Market Cap.
- Borrow 2x EBITDA, pay out the cash and securities, and this is being done at <0.3x remaining book. The takeover is 100+% bank funded. It’s ridiculous.
- For this to get stopped, however, someone has to go activist on a smallcap where retail owns the entire float and friends and family own 55% to start.
Nihon M&A: Earnings Show Some Recovery; but Could Miss Full-Year OP Guidance
- Nihon M&A Center (2127 JP) ’s 2Q revenues decreased YoY while OP remained flat. However, both revenue and OP beat consensus estimates driven by improvement in revenue per M&A transaction.
- There was strong improvement in revenue per transaction driven by enhanced efforts and growth in no. of large deals, however, M&A revenues declined due to drop in no. of deals.
- Nihon has so far achieved only 36% of its OP target and it seems unlikely for the company to reach its full-year OP guidance, suggesting there is further downside.
TRS: Scaled for Free Cash Flow
- TRS reported third quarter results where the packaging business continues to stabilize from inventory destocking while the aerospace segment continues to grow as fast as possible
- The packaging business has gone through restructuring that should lead to higher profit margin as customers begin to increase their order activity
- Improved supply chains are aiding the sales growth in aerospace. The growth in aerospace should help push cash flow higher and offset the softness in packaging
Aliaxis Condedes Defeat
- The offer period for white-knight Georg Fischer AG (FI/N SW)‘s acquisition of Uponor OYJ (UNR1V FH) will end, unless extended, on 31 October. Aliaxis, which put Uponor in play, concedes defeat.
- The waiting game has ended. Aliaxis will tender its 20% stake with €90 million capital gains (pre-tax) as consolation. GF will obtain at least 53.9% acceptances, possibly a lot more.
- The spread has been positive for most days since mid-July, on expectations of an offer sweetening. That won’t happen now. Gross spread is +0.14%. Recommendation is tender.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
