In today’s briefing:
- Clearing up Misunderstandings About LG Energy K200 Fast Entry & Likely Deletion Stock
- Recruit (6098) Buyback – Big, But Meh…
- Charter Hall (CHC AU)’s Offer for Irongate Group (IAP AU)
- JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Jan 2022
- Irongate: Charter Hall Stakes Its Claim
- Aristocrat/Playtech: Deal Uncertainty but the Shares Are Inexpensive
- Samsung Biologics: Rights Offering of 3 Trillion Won to Acquire Remaining Stake in Samsung Bioepsis
Clearing up Misunderstandings About LG Energy K200 Fast Entry & Likely Deletion Stock
- LG Energy has the second-largest market cap on KOSPI. For Fast Entry to fail, the price must lose 90% of its current value. So, Fast Entry is a foregone conclusion.
- The review period ends on February 21. The implementation date is March 11, and the announcement will likely be made public around February 24-25.
- The stock with the lowest market cap from May to October last year will leave the Index. The victim is Dongwon F&B, beating Nexen Tire by a very narrow margin.
Recruit (6098) Buyback – Big, But Meh…
- Recruit announced a buyback of up to 34 million shares in an own share tender offer to take place at a price below the current market price.
- This kind of tender offer is almost always meant for Japanese corporate holders as it rarely makes sense for others to participate.
- This is mildly EPS accretive, BVPS decretive, quite ROE accretive, but Recruit can’t really use this method for the rest of its cross-holdings.
Charter Hall (CHC AU)’s Offer for Irongate Group (IAP AU)
- Charter Hall (CHC AU) has come over the top to bid A$1.9/stapled security for Irongate Group (IAP AU). That’s 10.5% higher than the last bid from 360 Capital (TGP AU).
- Charter Hall (CHC AU) have also signed an MOU with 360 Capital (TGP AU) that takes 360 Capital out of any bidding war.
- At a 23.4% premium to pro forma NTA, we think the Irongate Group (IAP AU) Board will give the partnership due diligence access and the deal should complete.
JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Jan 2022
- JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-January 2022.
Irongate: Charter Hall Stakes Its Claim
- Irongate (IAP AU) has announced a non-binding proposal from Charter Hall (CHC AU) and Dutch pension fund PGGM at $1.90/security, by way of a Scheme, plus a possible $0.0467/security distribution.
- Importantly, the proposal contains a call option over 360 Capital’s 19.9% security holding in IAP.
- IAP is considering the Offer. Expect the board to grant due diligence. This proposal is a 10.5% premium to 360 Capital’s Offer, before taking into account the distribution.
Aristocrat/Playtech: Deal Uncertainty but the Shares Are Inexpensive
- Court and EGM meetings are scheduled 2 February. Aristocrat is the only suitor remaining. Some investors in Playtech who anticipated a bidding war aren’t too keen to support the deal.
- The Board threatens with a break-up and auction of both Snaitech and the B2B white label software division. Analysts believe that the business is worth more than the current offer.
- Reiterate long PTEC LN, TP 680/share (Aristocrat offer), with the potential upside risk of a sweetened offer to placate some investors, or a break-up.
Samsung Biologics: Rights Offering of 3 Trillion Won to Acquire Remaining Stake in Samsung Bioepsis
- We have a Negative view on this nearly 3 trillion won rights offering by Samsung Biologics.
- The expected price of the rights offering is 599,000 won which is 18.9% below current share price and would represent about 7% shares dilution.
- Despite the long-term positive prospects of consolidating results from Samsung Bioepsis, we believe the acquisition price was a bit too high at more than 100% higher than Biogen’s valuation multiples.
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