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
- JAPAN ACTIVISM: Murakami-San Does a Rug-Pull on Pac Metals (5541)…. Again
- Get Your Pasona (2168 JP) Rump For Free
- Shofu (7979) – Marked Recovery QoQ and in Line with Expectations
- MonotaRO (3064 JP): Slowdown in the Price
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.
JAPAN ACTIVISM: Murakami-San Does a Rug-Pull on Pac Metals (5541)…. Again
- A couple of weeks ago I wrote here about noted activist Murakami-san and his new 5+% position in Pacific Metals (5541 JP). I warned it might be a rug pull.
- It turns out, from subsequent filings, that it may have been a rug pull. This isn’t the first time. It isn’t even the first time on this stock.
- That said, there are goings on here, and it pays to watch them.
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).
Shofu (7979) – Marked Recovery QoQ and in Line with Expectations
- Demonstrating dependable growth – Q1-3 FY3/2024 results were in line with company guidance, driven by a combination of demand recovery in the Americas, sustained growth for Shofu’s competitive Chemical Products (CAD/CAM resin materials and restorative filling materials), and a forex tailwind – overseas sales made up 57.4% of total sales, indicating stable progress towards the long-term target of 66.0%.
- Shofu’s focus on business investment in R&D, recruitment, and sales activities has resulted in a limited growth profile at the operating profit level for the period (+3.9% YoY), but we believe a boost in sales volume will drive a margin enhancement into Q4 FY3/2024 and beyond.
Americas and China gaining momentum – the highlight for Q1-3 FY3/2024 was sales growth in North America & Latin America growing 4.1% YoY versus a 4.5% decline in Q1-2 FY3/2024. China also maintained strong momentum with sales growth of 16.5% YoY, and Europe remained steady at 16.8% YoY
MonotaRO (3064 JP): Slowdown in the Price
- Annual sales growth has dropped from 20% or more in recent years to 12.5% in FY Dec-23. The operating margin ticked up last year, but is basically trending sideways.
- The share price has dropped by 35% since April 2023, bringing the projected P/E ratio down to the bottom of its 10-year range. Buy back in for the long term.
- Guidance, which is usually accurate, is for 12.7% sales growth this year and an operating margin of 12.5%. Growth should continue in future years with flat or better margins.
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