In today’s briefing:
- [JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run
- Fuji Soft (9749 JP): Bain’s Rumoured Counteroffer
- Fuji Soft (9749 JP) – Bain Bids More, The Market Goes Even Higher
- Nextage (3186): One Analyst, Two Valuations, Both Wrong
- D. Western Therapeutics Institute (DWTI) (4576 Jp) – 2Q Follow-Up
[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run
- In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP) . The market dropped. But that was the opportunity.
- On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.” It’s up 21.5% since (the day after). Peers are down 15-20%.
- The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There’s LOTS of cash left.
Fuji Soft (9749 JP): Bain’s Rumoured Counteroffer
- Nikkei reports that Bain will launch a competing tender offer for Fuji Soft Inc (9749 JP) around JPY9,200-9,300 per share, around 5% higher than KKR’s offer.
- The Board responded that Bain submitted a non-binding proposal on 26 July. The special committee will consider its feasibility if a binding proposal is submitted.
- KKR has three options to respond to a higher Bain offer: revise it, launch a hostile offer at unchanged terms, or walk away. The first option is the most likely.
Fuji Soft (9749 JP) – Bain Bids More, The Market Goes Even Higher
- The original Target Opinion Statement for KKR’s bid at ¥8,800/share offered a glimpse at a non-binding, questionably feasible offer at a slightly higher price, which 3DIP might have rejected.
- That was apparently Bain, and now we know Bain has consistently had the higher price. Fuji Soft Inc (9749 JP) handled this whole process badly, perhaps cowed by 3DIP.
- Now the cat is amongst the pigeons. This is less hostile than it looks IMO. The market thinks it will be a bun fight.
Nextage (3186): One Analyst, Two Valuations, Both Wrong
- Simply Wall Street published an article on Aug 20, 2024, suggesting the fair value of Nextage was ¥1,772 or 16% below the previous day’s closing price.
- Yet, on the Simply Wall Street website’s stock page for Nextage, updated on August 26, they calculate the fair value at ¥5,726, or 189% above the close on Aug 19.
- Both cannot be right. Here’s an interesting window into how markets mis-price stocks.
D. Western Therapeutics Institute (DWTI) (4576 Jp) – 2Q Follow-Up
- DWTI held a 1H results briefing via ZOOM webinar on Friday 8/23 at 13:30, hosted by President Hidaka.
- Several important points came up in his answers to questions from analysts during Q&A at the end of the briefing.
- 1) Dosing in H-1337 PIIb trials in the US has been completed, and in the year-end publication of top-line results, the key expectation is to show non-inferiority of ROCK inhibitor H-1337 (1.0% once daily) versus existing beta blocker Timolol (0.5% twice daily).
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