In today’s briefing:
- Itochu To Take Over Itochu Techno Solutions (CTC (4739 JP)) Just As Growth Jumps
- ITOCHU Techno-Solutions (4739 JP): ITOCHU’s JPY4,325 Tender Offer
- KLINE (9107) Ups Shareholder Return – Fun & Games May Ensue
- E-Guardian (6050 JP): CHANGE Holdings’ Partial Tender Offer
- ANA (9202) | How Much Will It Cost to Capture Carbon Emissions?
- 2 Rakuten Subsidiaries’ Listings Run Counter to the Dissolution of Parent-Subsidiary Listings
- SBI Affiliate To Buy 45-49% of E-Guardian (6050) In Partial Tender Offer
Itochu To Take Over Itochu Techno Solutions (CTC (4739 JP)) Just As Growth Jumps
- Itochu Corp (8001 JP) today announced it had agreed with 61%-owned Itochu Techno Solutions (4739 JP) sub to take over CTC and squeeze out minorities.
- The stock released earnings mid-day, somehow, but not on TDNet until post-close. The stock jumped in the last two hours. The Tender Offer is at a 10% premium to close.
- Growth will be up, and there are lots of financial assets and net receivables so this is 8+x March 2025. Itochu is not overpaying. But there will be no counter.
ITOCHU Techno-Solutions (4739 JP): ITOCHU’s JPY4,325 Tender Offer
- Itochu Techno Solutions (4739 JP) has recommended Itochu Corp (8001 JP)’s tender offer of JPY4,325 per share, an 18.7% premium to the undisturbed price (1 August).
- 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 5.43% ownership ratio.
- The minimum acceptance condition requires a 14% minority acceptance rate. This is doable as the tender price is attractive and equals the 20-year share price high.
KLINE (9107) Ups Shareholder Return – Fun & Games May Ensue
- Today, Kawasaki Kisen Kaisha (9107 JP) announced Q1 earnings. As expected, net was WAY down on weak container business. But the company revised up H1 and Full-Year.
- KLINE increased its FY2023 payout, upping its expected buyback plan from ¥50bn to ¥60bn. This is still cheap at 8.5x and 0.7x book, and there is non-container growth.
- The structure of the buyback deserves attention. It may deserve a very short-term trade. The buyback construct has the possibility of “fun and games.”
E-Guardian (6050 JP): CHANGE Holdings’ Partial Tender Offer
- E Guardian Inc (6050 JP) has announced a partial tender offer and third-party allotment with Change Inc (3962 JP). CHANGE will subscribe for 1.5 million shares at JPY2,099 per share.
- The tender offer is for a minimum of 3.7 million and a maximum of 4.3 million shares at JPY3,000 per share, a 42.9% premium to the undisturbed price.
- The tender offer is reasonable. The minimum acceptance condition requires a 37% minority acceptance rate. A 100% minority participation rate implies a minimum proration is 42.39%.
ANA (9202) | How Much Will It Cost to Capture Carbon Emissions?
- ANA has just announced that it will purchase carbon removal credits underpinned by Direct Air Capture (DAC)
- The purchase of 30,000 credits over 3 years is virtually nothing compared to the company’s annual CO2 emissions over 12 million tons
- Assuming that DAC is expected to remove just 10% of emissions, we estimate that it could wipe out over 70% of operating profit
2 Rakuten Subsidiaries’ Listings Run Counter to the Dissolution of Parent-Subsidiary Listings
- Cash generation through the subsidiaries’ IPOs will only buy time, and investors are likely to focus on when Rakuten will move to solve the problems in its cell phone business.
- In recent years, TSE’s market reorganization has focused attention on parent-subsidiary listings, and there’ve been moves to convert listed subsidiaries into wholly owned subsidiaries or sell subsidiaries to other companies.
- For Rakuten, subsidiary IPOs are an essential means of raising cash, but TSE’s recognition of the governance issues involved in parent-subsidiary listings raises questions about Rakuten’s two parent-subsidiary listings.
SBI Affiliate To Buy 45-49% of E-Guardian (6050) In Partial Tender Offer
- Today, Change Inc (3962 JP) (30%-owned by SBI Holdings (8473 JP)) announced a Tender Offer to buy 32-36.9% of E-Guardian, followed by a third-party placement to get them to 45-49%.
- Small cap E-Guardian does internet services support, ad processing, cyber security (their fastest growing segment) and top line has been growing.
- The partial offer is big enough to matter, and up 50%. It is worth a look for people who like small cap special sits.
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