In today’s briefing:
- Nidec (6594 JP): Reconsider Strategy & Management
- Cobham/Ultra Electronics: UK Government Approval
- MergerTalk: Over To You, JetBlue!
- Sadbhav Engineering Ltd – Liquidity Issues at Peak, Asset Monetization Key to Survival
Nidec (6594 JP): Reconsider Strategy & Management
- Nidec’s share price jumped 6.5% on Friday, June 24, suggesting support near ¥8,000.
- Reconsider the company’s future as CEO Nagamori leads the turnaround of OKK and makes machine tools and industrial robots into a new product division.
- Nagamori, who will turn 78 in August, is still the Key Man at Nidec.
Cobham/Ultra Electronics: UK Government Approval
- The £2.55 billion takeover of Ultra by Advent looks set to be waved on by the UK government after the Business Secretary said he was minded to accept the deal.
- Cobham was itself taken over and broken up by Advent over the course of 2019 and 2020, amidst some controversy. As in that case, Advent will bag its prey.
- The 3500p offer price represents 15.4x EV/Fwd EBITDA (same as at the time of deal announcement). Gross spread is 1.49%, estimated annual return is 8.8% (assuming settlement by 30 August).
MergerTalk: Over To You, JetBlue!
- Frontier Airlines (ULCC US)’s improved terms for Spirit Airlines (SAVE US) still falls well short of the Jetblue Airways (JBLU US) offer
- ULCC’s enhanced downside protection matching JBLU’s reverse termination fee and bettering its prepayment proposal is the key swing factor where the regulatory path to approval is challenging for either transaction
- Given its vigorous pursuit of SAVE so far, we expect JBLU will quickly respond with another counter offer in order to regain the initiative which should keep arbs interested
Sadbhav Engineering Ltd – Liquidity Issues at Peak, Asset Monetization Key to Survival
- Execution remains weak in FY22: SADE reported weak numbers for FY22 as revenue at Rs12.26bn declined by 25% YoY.
- Orderbook value uncertain, extended delays in execution: As on 3QFY22, SADE had an order book of Rs85bn, reflecting 7x TTM book to bill ratio.
- Leverage still remains high, liquidity issues persist: Net debt to EBITDA as on FY22 stood at 7x.
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