In today’s briefing:
- TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)
- NIO Secondary Listing (9866 HK): Index Entry & Flow; HSCEI 22/23 Div Steepener Catalyst
- BGH Ups The Ante For Control Of Virtus
- Chuo Gyorui to Take Out Hohsui – Done Deal Easy Peasy.
- Morinaga (2201) Mostly Exits Morinaga Milk (2264) – Big Buyback
- Singapore Press Holdings – Aiyoh, Cuscaden Scheme No Chiong Finish. Sian. Money in May Agak Agak!
- MergerTalk: Microsoft/Activision Blizzard-Why We Think This Transaction May Not Be Such A Gamble
- Zip To Merge With BNPL Rival Sezzle
- Zip Finally Lobs an Offer for Sezzle
- BGH’s Revised Higher Offer for Virtus
TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)
- The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
- For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
- Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade.
NIO Secondary Listing (9866 HK): Index Entry & Flow; HSCEI 22/23 Div Steepener Catalyst
- NIO Inc (NIO US) has applied to list in Hong Kong by way of Introduction. No new shares will be issued or sold in connection with the Secondary Listing.
- NIO Inc (9866 HK) will not get Fast Entry to the HSCEI INDEX and is unlikely to get Fast Entry to the Hang Seng Tech Index (HSTECH INDEX) either.
- NIO Inc (9866 HK) should be included in the HSTECH INDEX in June, while inclusion in the HSCEI INDEX in September will require the stock to trade higher.
BGH Ups The Ante For Control Of Virtus
- Fertility specialist Virtus Health (VRT AU) has received a revised non-binding takeover bid from BGH Capital of $7.65/share, less any dividends declared by Virtus. It had previously offered $7.10/share.
- BGH also said it would vote its 19.99% stake against CapVest Partners’ cash offer of $7.60/share.
- Back in CapVest’s court. A $0.05/share higher bid is unlikely to see the UK-based player fold its tent.
Chuo Gyorui to Take Out Hohsui – Done Deal Easy Peasy.
- This is an agreement between one fish merchant Chuo Gyorui (8030 JP) and another fish merchant Nissui (1332 JP) to take over a third fish merchant, Hohsui Corp (1352 JP).
- And the takeover PER and forecast PCFR are low. But there really is nothing fishy here. Hohsui has a lot of debt.
- This is a done deal and there is nothing anyone can do about it.
Morinaga (2201) Mostly Exits Morinaga Milk (2264) – Big Buyback
- Morinaga & Co is selling down a near-10% stake in Morinaga Milk in a ToSTNeT-3 buyback on 1 March.
- Morinaga Milk will see an EPS and ROE uplift. Eventually, there are a lot more cross-holdings to buy back.
- Near-, medium-, and longer-term there are different flow patterns worth understanding if you have a position or are looking for one. If you want to sell lots, you can tomorrow.
Singapore Press Holdings – Aiyoh, Cuscaden Scheme No Chiong Finish. Sian. Money in May Agak Agak!
- The Cuscaden Scheme Composite Document is out. Finally. No points for the own time own target completion to the own time own target restructuring.
- With the electronic despatch and an approximate timetable, last traded price gives 7.7% annualised agak agak.
- At S$2.33, shareholders can lepak this to the close pretty easily.
MergerTalk: Microsoft/Activision Blizzard-Why We Think This Transaction May Not Be Such A Gamble
- Microsoft’s all cash acquisition of video game publisher Activision Blizzard is the biggest in the former’s history and the largest ever transaction in the video gaming sector.
- While intense regulatory scrutiny of the deal is expected, the arguments favoring high odds for eventual deal approval are reasonable.
- We believe the 17% merger spread offers the prospect of double-digits annualized return over the next 12 to 18 months.
Zip To Merge With BNPL Rival Sezzle
- Zip (Z1P AU) is offering 0.98 Zip shares for every Sezzle (SZL AU) share, a 22% premium to last close. Zip is raising $148.7mn to fund the deal.
- Sezzle is incorporated in Delaware, therefore the merger is subject to those takeover rules, not ASX rules.
- Zip reported a $214.3mn today. As Quinlan Associates put it, the Asia Pacific BNPL industry is more like “Buy Now, Pray Later”.
Zip Finally Lobs an Offer for Sezzle
- Zip Co Ltd (Z1P AU) will offer a fixed exchange ratio of 0.98 Zip shares per Sezzle Inc (SZL AU) share, implying a 22% premium to Sezzle’s last close price.
- The completion conditions include Zip and Sezzle shareholder approval along with regulatory approval. The exchange ratio is fair compared to historical ranges, in our view.
- Considering the weak investor sentiment of the BNPL sector and ongoing sector consolidation, the proposed merger is a good solution for both sets of shareholders.
BGH’s Revised Higher Offer for Virtus
- BGH’s revised scheme offer will pay $7.65 per Virtus Health (VRT AU) share, which is 0.7% and 2.0% higher than CapVest’s rival scheme (A$7.60) and off-market takeover offer (A$7.50), respectively.
- BGH (19.99% stake) will vote against the CapVest scheme and will not accept any takeover offer from CapVest. Consequently, CapVest’s best option is an improved off-market takeover bid.
- As CapVest’s offer is marginally below BGH’s revised offer, CapVest retains the potential to lob an improved offer, in our view.
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