In today’s briefing:
- Dai-Ichi Life “Decides” Tender Offer Price and Buyback Price at ¥2,123 and ¥1,491/Share
- Benefit One (2412 JP): Dai-Ichi Life’s Tender Offer at JPY2,123
- Buy Pasona As Dai-Ichi Life Amends Benefit One’s Tender Offer & Buyback Price
- A Market with a Low Average ROE Favors Valuations for Companies with More Reliable Cash Flow
- 2Q Follow-Up – Japan System Techniques (4323 JP)
- 3Q FOLLOW-UP – Carta Holdings (3688 JP)
Dai-Ichi Life “Decides” Tender Offer Price and Buyback Price at ¥2,123 and ¥1,491/Share
- Today, Dai Ichi Life Insurance (8750 JP) came out with a cover letter and an amended Announcement of Intention to Commence a Tender Offer on Benefit One Inc (2412 JP).
- The cover letter says they have obtained information from Pasona Group (2168 JP) and Benefit One allowing them to calculate a Tender Offer of ¥2,123/share for minorities, and buyback at ¥1,491/share.
- Now we wait. Again. Dai-Ichi Life “intends” to start a tender in mid-Jan 2024 (19 Jan likely earliest start possible) but it is not clear timing will come that early.
Benefit One (2412 JP): Dai-Ichi Life’s Tender Offer at JPY2,123
- Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY2,123 per share, a 32.7% premium to M3 Inc (2413 JP)’s offer.
- The other terms are unchanged. The pre-conditions relate to board recommendation, Pasona Group (2168 JP) support, and the M3 offer not being completed. The tender offer starts in mid-January 2024.
- While M3 has extended its offer period to 17 January 2024, it will unlikely engage in a bidding war. Expect the Board and Pasona to support the Dai-ichi Life proposal.
Buy Pasona As Dai-Ichi Life Amends Benefit One’s Tender Offer & Buyback Price
- Earlier this month, Dai Ichi Life (8750 JP) countered M3 with an unsolicited ¥1,800/share Offer of Equity Value TOB; followed by a Benefit One buyback to mop up Pasona‘s stake.
- Dai-Ichi has now amended the TOB Price for minorities in Benefit One to ¥2,123/share, and the tax-equivalent price of ¥1,800/share for Pasona would be ¥1,491 on the Buyback Tender, post-squeezeout.
- That price appears a bit higher for Pasona than expected, and therefore a bit lower for Benefit One minorities. Terms can still be bumped.
A Market with a Low Average ROE Favors Valuations for Companies with More Reliable Cash Flow
- Since the ROE has been hovering around the 9% ceiling, the challenge is that few companies could present future outlook convincing enough to raise expectations of sustainable ROE growth.
- Since stable BPS has higher correlation with TOPIX than EPS, investors trust a company that accumulates cash flow in shareholders’ equity to sustainably increase profits than to temporarily increase profits.
- Since it’s been confirmed that Tobin’s Q of companies with more cash on hand is higher, the stock valuations of companies with higher cash flow margins tend to be higher.
2Q Follow-Up – Japan System Techniques (4323 JP)
- Fully independent DX provider: Japan System Techniques (JAST) is an independent system integrator that develops and sells software and systems, which celebrated its 50th anniversary.
- The company develops systems for customers in a variety of industries and sectors, including finance, manufacturing, distribution, services, public services, telecommunications, transportation, and science and technology.
- Furthermore, as a developer, the company has three main JAST-branded software offerings for its customers, namely GAKUEN for the education industry, BankNeo for the financial industry, and JMICS (JAST Medical Insurance Checking System) for the medical industry and the profitability of these own-brand businesses is very high.
3Q FOLLOW-UP – Carta Holdings (3688 JP)
- In 2023, the first year of CARTA Holdings’ new medium-term management plan, the company made a solid push to reform its business and organizational structure with the aim of executing a sharp recovery in business performance.
- It moved forward with narrowing its focus, integrating four direct sales subsidiaries in the digital marketing business, and withdrawing from the low-profit game and hometown tax payment business in the internet-related services business.
- In addition, the company announced and implemented additional measures to reduce fixed costs to the tune of ¥1 bn, including by calling for voluntary retirement during FY23/12, as its earnings may fall further than initially expected before bottoming out, mainly for reservation-based ads.
💡 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
