In today’s briefing:
- Hollysys (HOLI US): Ascendent Finally Obtains Regulatory Approvals
- Berkshire’s Bullish Bet on Occidental Fails to Sway Market Sentiments
- Boeing/Spirit AeroSystems: All-Stock Deal
- Elon Wins $56B Package Re-Vote and Shift to Texas. Now What for Tesla?
- IMMR: Previewing the Gains of Q2
- Crypto Crisp: A Trump Win Is A Win For Crypto
Hollysys (HOLI US): Ascendent Finally Obtains Regulatory Approvals
- Six months after announcing a binding proposal, Ascendent has obtained all the Chinese regulatory approvals for its US$26.50 Hollysys Automation Technologies (HOLI US) offer.
- The gross spread was wide due to the information vacuum, which has resulted in various conspiracy theories and rumours circulating.
- The two remaining conditions required for close are the maximum dissenting cap (should be waived) and minimum net cash condition (satisfied). At the last close, the gross spread was 22.5%.
Berkshire’s Bullish Bet on Occidental Fails to Sway Market Sentiments
- Occidental trades at higher PE and PB valuations than Exxon Mobil, Chevron, Shell, TotalEnergies, and BP. European oil majors are cheaper than American peers.
- Occidental has been the Permian Basin’s leading oil and gas producer for the past five years.
- Occidental expects to close the USD 12 billion CrownRock acquisition by August. The deal is anticipated to boost its oil output by 170k bpd.
Boeing/Spirit AeroSystems: All-Stock Deal
- On July 1, Boeing Co (BA US) announced a definitive agreement to acquire Spirit Aerosystems Holdings, Inc (SPR US) in an expected all-share deal valued at c.$4.7 billion, or $37.25/share.
- Consideration is calculated using a floating exchange ratio ($37.25 divided by 15-day VWAP) with a collar. 0.20466 using Boeing’s last closing share price, which implies 3.9% dilution for Boeing’s shareholders.
- The offer price is 6.4% above consensus price target median ($35), and reasonable, reflecting some control premium. The valuation represents 10.1x EV/2025 EBITDA based on IBES estimates. Long spread.
Elon Wins $56B Package Re-Vote and Shift to Texas. Now What for Tesla?
- Despite achieving significant milestones, Elon Musk’s $56 billion compensation package was voided in January 2024 due to a flawed approval process, ruled a Delaware judge.
- Tesla’s shareholders voted to reinstate Musk’s package in June 2024, but the lawsuit continues, and the contract’s future remains uncertain.
- Tesla faces challenges with slow EV sales growth, rising competition, and the need for lower-cost models, which may impact stock performance despite Musk’s ongoing leadership.
IMMR: Previewing the Gains of Q2
- Q2 is seasonally a slow period for licensing revenue at IMMR. This year, IMMR has made investments in BNED and UEIC could result in a materially significant earnings report.
- IMMR’s investment portfolio could sway quarterly performance. In Q2 it would be, by our estimate, to the upside. We are raising our estimates for the second quarter and full year.
- Our price target remains $11 ahead of quarterly results even though there is clearly an opportunity for IMMR to surpass our earnings estimate to support a higher stock price.
Crypto Crisp: A Trump Win Is A Win For Crypto
- As we step into July, anticipation surrounds the distribution of 141,686 bitcoins from the defunct Mt. Gox exchange to its creditors, most of whom are former clients.
- Despite the looming release of these bitcoins, which have been locked away for over a decade, the crypto market saw an uptick over the weekend.
- This rise occurred even after the German government transferred an additional $94 million worth of bitcoins to exchanges this morning.
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