In today’s briefing:
- Hitachi Transport (9086 JP): Trading Too Wide
- MCB Goes Big To Thwart AGL Energy De-Merger
- BGH Stonewalls As Virtus Rejects Offer
- CSI300 Index Rebalance Preview: 30 Potential Changes as Sector Rotation Continues
- LG Energy/LG Chem Flow Trading on Solactive Lithium Index Rebalancing
- AGL Energy’s Demerger Vote in the Balance with Grok Ventures’ Move
- Suchuang Gas (1430 HK): 10th June Court Meeting As Shares Remain Suspended
Hitachi Transport (9086 JP): Trading Too Wide
- The Hitachi Transport System (9086 JP) deal announced last week was a big win for minorities, discussed in Hitachi Transport System (9086) Shareholders Get the BIG Win in This VLBO.
- Market ructions and the Hitachi Metals saga have this trading wide.
- This deal looks different in terms of approval risk and timing risk than Hitachi Metals and is worth a closer look now.
MCB Goes Big To Thwart AGL Energy De-Merger
- In mid-February, Brookfield and Mike Cannon-Brookes had teamed up to propose anA$7.50/share bid for AGL Energy Ltd (AGL AU).The bid was rejected by the Board, discussed here.
- Weeks later, the pair came back nearly 10% higher, discussed in Second Brookfield-MCB Bid for AGL Energy Rejected. MCB’s big dreams of massive solar and massive customer base were thwarted.
- Brookfield walked but MCB has come back now to buy 11.3% of AGL through a loan+collar transaction and a total return swap. He aims at scuppering the June demerger vote.
BGH Stonewalls As Virtus Rejects Offer
- In its Target Statement, Virtus Health (VRT AU)‘s board unanimously determined BGH’s Offer is inferior to CapVest’s and recommends shareholders to not accept BGH’s Offer.
- Separately, Virtus is seeking interim orders from the Takeovers Panel, such that BGH amends its bidder’s statement and also provides withdrawal rights.
- A Supreme Court of New South Wales hearing will be held on 4 May 2022 to convene the Scheme meeting in relation to the CapVest Transaction.
CSI300 Index Rebalance Preview: 30 Potential Changes as Sector Rotation Continues
- We expect the maximum permitted 30 changes at a single review to take place at the June rebalance. Most changes are high probability.
- We estimate a one-way turnover of 4.25% at the rebalance leading to a one-way trade of CNY 10.677bn.
- Industrials, Information Technology and Materials sectors are expected to have the most net inclusions, while Health Care and Financials are expected to have the most net deletions.
LG Energy/LG Chem Flow Trading on Solactive Lithium Index Rebalancing
- We cannot completely rule out the possibility that Solactive will announce a correction disclosure for the LG Energy Inclusion/LG Chem Exclusion 2 to 3 trading days before May 11th.
- LG Energy can expect an inflow of 0.85x ADTV (0.16% of SO). On the other hand, LG Chem will face an outflow of -1.76x ADTV (0.52% of SO).
- Considering the correction disclosure uncertainty and the passive flow size, we should approach this as a day trading event after watching the results by this Friday (or the following Monday).
AGL Energy’s Demerger Vote in the Balance with Grok Ventures’ Move
- Mike Cannon-Brookes (Grok Ventures) has become the largest AGL Energy Ltd (AGL AU) shareholder, by acquiring an 11.28% interest through derivatives transactions.
- Mr Cannon-Brookes will vote against the demerger scheme (vote on 15 June) and has launched an online campaign to influence the retail heavy share register.
- The rationale for the demerger remains unconvincing. Our SoTP points to upside absent a demerger. If the demerger fails, the long-term play could still be to revisit the privatisation plan.
Suchuang Gas (1430 HK): 10th June Court Meeting As Shares Remain Suspended
- Suchuang Gas Corp (1430 HK)‘s Scheme Document is now out. The Scheme Meeting will be held on the 10th June with expected payment on or before the 21 June.
- The Independent Financial Advisor (Essence International) has concluded the offer by CR Gas (1193 HK) is fair and reasonable.
- The pain is almost over for shareholders. This is as good a deal one can expect under the circumstances. Shareholders should vote through the Offer resolutions and pocket the cash.
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