In today’s briefing:
- 7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign
- Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind
- Terumo (4543 JP): The Current Playbook
- Seven & I Says Not Enough to Alimentation Couche-Tard, Warns of US FTC Barriers
- Advantest (6857 JP): High Valuation, Low Visibility
7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign
- Late last week, the Nikkei reported Seven & I Holdings (3382 JP) would send a letter to Couche-Tard saying they reviewed ACT’s Proposal and deemed it “inadequate.” Indeed it was.
- 7&i then published the Board’s letter, saying 7&i remained open to discussions but ACT’s Offer “grossly undervalued” 7&i’s intrinsic value and lacked in other areas. ACT responded with a “letter.”
- But ACT’s “letter” was a press release aimed not at 7&i but the public. 7&i released a terse response today. ACT is the suitor. It needs to act like it.
Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind
- A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 JP).
- We have covered the background of the deal in our earlier note, Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics.
- In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.
Terumo (4543 JP): The Current Playbook
- Since the US$1.4 billion secondary placement announcement, Terumo Corp (4543 JP)’s shares are down 3.5% from the undisturbed price of JPY2,771 per share (29 August).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Terumo’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 10 September. Despite Kokusai and Honda’s disappointing performance, the average large Japanese placement tends to generate positive returns.
Seven & I Says Not Enough to Alimentation Couche-Tard, Warns of US FTC Barriers
- Last Friday, Seven & I Holdings (3382 JP) issued a response to Alimentation Couche-Tard (ATD CN)’s non-binding acquisition proposal.
- At $14.86 per share, Seven & I’s special committee stated that the offer significantly undervalues the company.
- The response also highlighted that the proposal fails to address the numerous and substantial regulatory challenges the transaction would encounter from U.S. competition authorities.
Advantest (6857 JP): High Valuation, Low Visibility
- Visibility is poor. Following excellent 1Q results, management raised FY Mar-25 sales guidance by 14%, operating profit guidance by 53% and net profit guidance by 57%.
- Strong demand for AI processors and memory should support more than 35% growth in IC tester revenues and a doubling of operating profit in the two years to Mar-26.
- The shares have dropped to the bottom of their recent trading range, but are still selling at more than 30x our EPS estimate for next fiscal year.
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