In today’s briefing:
- Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks
- Carlyle 86% Premium ¥4460 TOB on Iwasaki Elec – Probably Light, and Interesting Shareholder Register
- Toshiba – Good News?
- Toyo Construction (1890 JP): YFO and the Board Trading Half-Truths
- EQD | HSI Index: Buying the Dip Using Options
Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks
- On 31 January, the expected “deadline” for a bank loan agreement with the JIP Consortium bidding for Toshiba, we got news that commitment confirmation would be extended to 3 February.
- Every other time we got a deadline extension, we got an article. On 3-6 Feb, we got no article, suggesting we were close. Today, a Bloomberg article says terms agreed.
- That gets us over the biggest hump. Now we have to look at possible next steps and timing.
Carlyle 86% Premium ¥4460 TOB on Iwasaki Elec – Probably Light, and Interesting Shareholder Register
- Carlyle has agreed to do an MBO on Iwasaki Electric (6924 JP) where the existing CEO who is 65yrs old will take a 0.5% stake.
- As a purveyor of specialist industrial lighting, including transition to LED lighting for public space use, the company’s place in the ecosystem is not undesirable. But it isn’t hugely profitable.
- This smallcap takeout at an 86% premium is probably still too light. And the Shareholder Structure is interesting.
Toshiba – Good News?
- So JIP appears to have finally secured funding for its tortured Toshiba bid.
- The market is reacting positively and we think this is reasonable but the real question is whether Toshiba management will be amenable to the new terms of JIP’s deal.
- In our view, there are certain quirks regarding recent news flow which point to a potential answer to that question.
Toyo Construction (1890 JP): YFO and the Board Trading Half-Truths
- YFO’s latest press release outlines the key objectives of a revamped Toyo Construction (1890 JP) Board, should its recommended directors get elected at the June AGM.
- YFO’s strategy is to revamp the Board, which should pave the way for its tender offer. YFO’s standstill agreement expires on 24 May and the tender offer starts in late-September.
- The Board could allege that YFO has breached its NDA agreement and re-introduce a poison pill. The Board could look to garner enough support to block YFO’s nominations.
EQD | HSI Index: Buying the Dip Using Options
- HSI Index has paused for breath this month underperforming most other global indices
- The outlook for the region remains strong as reopening strength gains momentum and the Government continue to announce new supportive measures
- We favour a buy the dip strategy and suggest using derivatives to play it
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