In this briefing:
- Hitachi Tender for Yungtay Engineering Launches
- Autohome (ATHM): Commission Conflict with Dealers, as Auto Industry Suffers First Decline Since 1990
1. Hitachi Tender for Yungtay Engineering Launches
Hitachi Ltd (6501 JP)announced today after the close that it had received approvals from the relevant government organs for its proposed Tender Offer for Yungtay Engineering (1507 TT) and that the Tender Offer would be launched through Hitachi Elevator Taiwan Co. Ltd at TWD 60/share starting tomorrow. The statement filed by Yungtay on the TWSE website is linked here.
The Tender Offer will go through March 7th 2019 with the target of reaching 100% ownership. Son of the founder, former CEO, and Honorary Chairman Hsu Tso-Li (Chou-Li) of Yungtay has agreed to tender his 4.27% holding. The main difference is a minimum threshold for success of reaching just over one-third of the shares outstanding, with a minimum to buy of 88,504,328 shares (21.66%, including the 4.27% to be tendered by Hsu Tso-Li).
This one detail is different from the original announcement in October, which had set a minimum of 50.1% holding after the tender.
The other details of the Tender Offer are the same as described in Going Up! Hitachi Tender for Yungtay Engineering (1507 TT) from when the deal was announced last October.
Since the announcement of a deal at a 22% premium, the stock has risen gently from about TWD 56 to just below the TWD 60 Tender Offer price in ever-decreasing volume.
![](https://static-prod.smartkarma.com/images/media/000/075/734/original/Screenshot%202019-01-16%20at%207.04.50%20PM.png?1547636724)
There has been little to no news on the stock regarding the deal in English, and only limited news in Chinese since the announcement of the deal.
The price evolution makes it look like a pretty straightforward deal. The lowered threshold for success obviously increases the likelihood of success. Weaker markets may also contribute.
But there is a reason why the threshold was lowered.
2. Autohome (ATHM): Commission Conflict with Dealers, as Auto Industry Suffers First Decline Since 1990
- China vehicle sales volume declined in 2018, which was the first time since 1990.
- Car dealers are negotiating commission rate with Autohome.
- We believe Autohome has more bargaining power than dealers, but will compromise to some extent.
- Our previous financial assumptions had already integrate the potential weakness in automobile industry.
- The stock price has been fully reflected the impact of the negotiation.
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