In this briefing:
- Pioneer Shareholders Approve Deal
- 31 January TOPIX & JPX Nikkei 400 Major Index Changes
- Japan: Consistency Scores – Steady Eddies V. Rollercoaster Rides
- Last Week in Event SPACE: Renault/Nissan, Bank Danamon, Kabu, Celgene, Intouch
- Also in the News: Updates from Japanese Retail Markets
1. Pioneer Shareholders Approve Deal
On Friday 25 January 2019, shareholders of Pioneer Corp (6773 JP) voted to implement a self-imposed (self-inflicted?) equity “cramdown” of sorts.
In September, Pioneer and BPAE signed a memorandum of understanding whereby Baring Private Equity Asia would lend money to Pioneer and subsequently inject equity capital and keep the company listed. In December, BPAE and Pioneer management decided that the equity injection would push out then-existing shareholders at a steep discount to the lowest share price the stock had theretofore seen in the company’s 50-year-plus history of being listed.
Now that’s done.
The situation now looks quite a bit like a regular “risk arb” or “wind up” situation, though investors do not have exact understanding of the payment date.
What comes next is outlined below.
2. 31 January TOPIX & JPX Nikkei 400 Major Index Changes
On December 17th 2018, the TSE announced a somewhat strange and unexpected treatment of the TSE-calculated indices for two companies where shares were issued to shareholders of a foreign company where the Japanese company had acquired the foreign company through a Scheme of Arrangement under foreign jurisdiction.
The two companies were LIFULL (2120 JP) and Takeda Pharmaceutical (4502 JP).
The announcements for TOPIX and JPX Nikkei 400 were made then, and despite the events being entirely similar in construct, but different in month of Scheme Effective Date, they were put in the same month for Mitula and the first tranche of the Takeda inclusion, which was split between two months because of its large impact.
The large IPO last month of Softbank Corp (9434 JP) means there is another large inclusion going effective as of the open of trading on 31 January.
Wednesday is going to be a big day.
If everyone trades their required index amount on the day, it should be a trillion yen plus of flows.
3. Japan: Consistency Scores – Steady Eddies V. Rollercoaster Rides
![](https://static-prod.smartkarma.com/images/media/000/076/722/original/2019-01-26_16-21-53.png?1548487323)
Source: Japan Analytics
CONSISTENCY PAYS – In troubled markets, investors often seek out companies with greater earnings stability and a history of consistent stock outperformance. Conversely, companies that offer investors more of a rollercoaster ride (Chiyoda Corp (6366 JP) being an excellent recent example) are less rewarding, especially when adjusted for volatility. In an attempt to sort the ‘Steady Eddies’ from the Rollercoaster Rides’, we have created a Consistency Score – a composite based on our Results Score, Forecast/Revision Score, Relative Price Score and Volume Score – which measures the variability, consistency, correlation, and range of each of these scores for every company. Cap-weighted aggregate Consistency Scores are then derived for 321 Peer Groups and 29 Sectors – REITs are excluded from this analysis. Over 3 million data points have been reviewed in creating this analysis. As the old slogan goes – “we do the work, so you don’t have to’.
‘CARP = CONSISTENCY-AT-A-REASONABLE-PRICE‘ – Our findings will not surprise long-term investors in Japanese equities; the simple asset allocation decision to prefer domestic growth over global value has determined the quartile-ranking of many strategies in recent years. Although many of these Sectors, Peer Groups and stocks are now overvalued, we do not expect the underlying business dynamics to change in the years ahead and many excellent investment opportunities remain, especially down the cap-scale. Periodic and often substantial mean reversions in the more cyclical sectors, such as the one that has occurred in the last two days, will offer attractive trading opportunities for more-nimble portfolio managers. Longer-term orientated investors are better-advised to continue to favour ‘consistency-at-a-reasonable-price’. Some of our ‘findings’, as explained in more DETAIL below, are as follows: –
- SECTORS – The better investors in Japan over the last two decades have eschewed traditional manufacturing in favour of Services, IT/Internet, Retail, Restaurants and ‘FB&T‘. Only Machinery and Electrical Equipment outperformed the market’s 4% compound annual growth rate (CAGR) over the period.
- PEER GROUPS– The most-consistent Peer Groups are found in industries associated with food, drugs, welfare, shelter and amusement. Only five of the top-forty Peer Groups – Online Payment Services, E-Commerce, IT System Services, Telecom Distribution Services and Internet Software & Services belong to the ‘new age’. There are no manufacturing Peer Groups in the top-forty. The best performing Peer Group is Securities Services, and the worst-performing is Investment Management & Advice. Although both have similar levels of consistency, the stock exchange has beaten its fund managers by 28% annually since 2005.
- COMPANIES – The simple average fourteen-year compound annual share price appreciation for all listed large-cap companies is +5.1%. For all listed companies the average falls to just +0.5%, highlighting the perils of investing in Japan’s small caps. The average share price CAGR for our hindsight-selected top-forty is +18.7%. In contrast, only one of our forty least-consistent companies outperformed the market and the average for the least-consistent forty companies was a negative -3.2%. Unsurprisingly, there are eight banks and six steel companies on the list, along with two glass companies and two shipping lines.
- CONSISTENCY HALL OF FAME/SHAME AWARDS – We have selected one company from each of the most and least consistent lists as the winner of a ‘Consistency Award’. Both are highlighted in the chart above. One of them will be as surprising to many readers as it was to us.
4. Last Week in Event SPACE: Renault/Nissan, Bank Danamon, Kabu, Celgene, Intouch
Last Week in Event SPACE …
- The eventual unwind of tension may involve an increase in Nissan Motor (7201 JP)‘s stake in Renault SA (RNO FP) and a decrease in Renault’s stake in Nissan.
- After being in the works for two years (or more), a Mitsubishi UFJ Financial (8306 JP) / Bank Danamon Indonesia Tbk (BDMN IJ) deal has finally come to fruition.
- Where there is smoke there is often fire. This smells like smoke in the rumoured negotiations between KDDI Corp (9433 JP) and Kabu.Com Securities (8703 JP).
- Bristol Myers Squibb Co (BMY US) talk up the Celgene Corp (CELG US) deal, but remain tight-lipped on regulatory filings.
Intouch Holdings (INTUCH TB) pops on rumours of a government-backed takeover of Thaicom Pcl (THCOM TB).
- Plus CCASS movements and expected upcoming events for key M&A transactions.
(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events – or SPACE – in the past week)
M&A – ASIA-PAC
Bank Danamon Indonesia (BDMN IJ) (Mkt Cap: $6.2bn; Liquidity: $3.1mn)
In December 2017, Mitsubishi UFJ Financial (8306 JP) launched a complicated three-step process to acquire up to 40%, then up to 73.8% (or more) in BDMN, five years after DBS’ aborted attempt to obtain a majority in the same bank. Mid-week, local papers announced the planned merger between BDMN and BNP with shareholder vote for both banks 26 March 2019 (record date 1 March) and effective date 1 May 2019.
- It looks like this is almost completely bedded down. MUFG has a good relationship with Indonesian regulators and it would not have arrived at this Step 3 without pretty clear pre-approval indicated.
- The result is an effective Tender Offer Trade at IDR 9,590/share for the float of BDMN. With shares up 8% the day of the announcement, there was another 6+% left for payment in three months and a week which comes out to 25.4% annualized in IDR terms through the close. Travis thought this is an excellent return for the risk here.
- Indonesian takeover procedures generally require a Mandatory Takeover Offer procedure when someone goes over a 50% holding. But banks being bought by foreigners are a different category and bank takeovers are regulated by the OJK. The upshot is that if you tender, you will get the Tender Offer consideration. And if EVERY public shareholder tenders, MUFG will have to conduct a selldown of 7.5% within a very short period, and a selldown of 20% within 2 years or up to 5 years (a virtual IPO when it comes), in order to meet the free float requirements.
(link to Travis Lundy‘s insight: BDMN/BBNP Merger Leads to BDMN Buyout Arb)
Propertylink Group (PLG AU) (Mkt Cap: $497mn; Liquidity: $2.3mn)
ESR has now declared its Offer for Propertylink “to be best and final“, and the Offer has been extended until the 28 February (unless further extended). After adjusting for the interim distribution of A$0.036/share (ex-date 28 December; payment 31 January), the amount payable by ESR under the Offer is A$1.164/share, cash. The Target Statement issued back on the 20 November included a “fair and reasonable” opinion from KPMG, together with unanimous PLG board support.
- The next key event is CNI’s shareholder vote on the 31 January. This is not a vote to decide on tendering the shares held by CNI in PLG into ESR’s offer; but to give CNI’s board the authorisation to tender (or not to tender) its 19.5% stake in PLG.
- Although no definitive decision has been made public by CNI, calling the EGM to get shareholder approval and attaching a “fair & reasonable” opinion from an independent expert (Deloitte) to CNI’s EGM notice, can be construed as sending a strong signal CNI’s board will ultimately tender in its shares. According to the AFR (paywalled), CNI’s John Mcbain said: “We want to make sure when we do decide to vote, if we get shareholder approval, the timing is with us“.
- Assuming the resolution passes, CNI’s board decision on PLG shares will take place shortly afterwards. My bet is this turns unconditional the first week of Feb. The consideration under the Offer would then be paid 20 business days after the Offer becomes unconditional. Currently trading with completion in mind at a gross/annualised spread of 0.8%/6.7%, assuming payment the first week of March.
(link to my insight: Propertylink – CNI Shareholders To Vote On ESR’s Final Offer)
Shinmaywa Industries (7224 JP) (Mkt Cap: $1.2bn; Liquidity: $0.5mn)
The company announced a Tender Offer to buy back 26.666mm of its own shares at a roughly 10.5% premium to last trade. That’s a big tender offer. It is ¥40bn and 29.0% of shares outstanding. Shinmaywa prepared this well because they rearranged their holding grouping to be all held under corporate entities (in many situations, they hold under personal names). For some of us, that should have been a clue.
- The main purpose of this effort is to get rid of Murakami-san, but Travis’ back of the napkin suggests just a 25% gain for Murakami, which is small beer for an investor bullish on the company’s prospects.
- The outright long prospects do not impress. There are a lot of companies in the market with 3+% dividend rates and low PERs which are illiquid. The company will go into a net debt situation. That will likely cap future buybacks to the limit of spending this year’s net income. That would be big, but Travis expects with a high dividend, buybacks will be less likely.
- Overall the business is OK, but it is unlikely to grow dramatically enough to warrant an ROE and margins which would make a price of 1.3-1.5x book appropriate in the near-term. Travis expects the tender offer to go through, and expects the price to be a bit “sticky” at this level near-term.
(link to Travis’ insight: Shinmaywa Own Share Tender Offer at Premium)
New Sports Group (299 HK) (Mkt Cap: $233mn; Liquidity: $0.5mn)
Huarong-CMB network [HCN] play New Sports announced a cash or scrip offer, with the cash alternative of $0.435/share priced at a premium of 3.57% to last close. The Offeror (China Goldjoy (1282 HK) – another HCN play) has entered into an SPA to acquire 37.18% of shares out. Upon successful completion of the SPA, Goldjoy will hold 66.44% and be required to make an unconditional general offer for all remaining shares.
- The key condition to the SPA is Goldjoy’s shareholder approval. This should be a simple majority and the major shareholder, Yao Jianhui, has 41.9% in Goldjoy according to HKEx and page 23 of the Offer announcement.
- Despite the potential issues faced by New Sports, this is a very real deal, with financing in place for the cash option.
(link to my insight: Dubious Delisting Deals: New Sports, LEAP, China Singyes Solar)
Kabu.Com Securities (8703 JP) (Mkt Cap: $1.4bn; Liquidity: $3.7mn)
The Nikkei surprised everyone with an article saying KDDI Corp (9433 JP) was holding negotiations to acquire a stake of up to just under 50% in Kabu.com, which is the online brokerage entity of Mitsubishi UFJ Financial Group (8306 JP) with 1.1mn customers.
- The idea is not a new one. The mobile telecommunications market in Japan is mature, and one of the few ways Type 1 telecom providers can grow is by adding content through the “pipes.” KDDI needs non-telecom revenue channels. KDDI has a bank, and life insurance, and some investment in asset management channels. It needs more, and better. A broker with a bank attached is a pretty good way to get long-term investment and savings products to customers.
- Kabu.com is not the best one out there in terms of bang for buck. But KDDI already has a JV with kabu.com majority shareholder MUFG and another with kabu.com. If you could buy an online broker, you might choose to buy Rakuten or SBI, but you can’t. You have to buy the rest of the company with them.
- Kabu.com shares were bid limit up all day long after the Nikkei article and closed at ¥462, which is a 10+ year closing high. You have to believe that KDDI is willing to pay a knock-out price to get this trade done. They may, but that is the bet. But Travis sees no impediment to the deal getting done.
(link to Travis’ insight: KDDI Deal for Kabu.com (8703 JP) Coming?)
Kosaido Co Ltd (7868 JP) (Mkt Cap: $1.4bn; Liquidity: $3.7mn)
Printing and HR services company and funeral parlor operator Kosaido announced that Bain Capital Private Equity would conduct an MBO on its shares via Tender Offer, with a minimum threshold for success of acquiring 66.67% of the shares outstanding. The Tender Offer commenced on 18 January and goes through 1 Mach 2019. The Tender Offer Price is ¥610/share, which is a 43.8% premium to the close of the day before the announcement and a 59.7% premium to the one-month VWAP up through the day before the announcement.
While the pretense will be that the deal is designed to grow the funeral parlor business (which, given the demographics, should be a decent business over time), this is a virtual asset strip in progress. It is the kind of thing which gives activist hedge funds a bad name, but when cloaked in the finery of “Private Equity”, it looks like renewal of a business.
It is a decent premium but an underwhelming valuation. Because of the premium, and its smallcap nature, Travis expect this gets done. If deals like this start to not get done, that would be a bullish sign. Investors will finally be taking the blinders off to unfair M&A practices.
This is a small deal. It is meaningless in the grand scheme of things. But it is a deal which should not have been done at this price because better governance would have meant the stock traded at better than 0.4x book before the announcement.
(link to Travis’ insight: Smallcap Kosaido (7868 JP) Tender Offer: Wrong Price But Whaddya Gonna Do?)
M&A – US
Celgene Corp (CELG US) (Mkt Cap: $60.5bn; Liquidity: $762mn)
Bristol Myers Squibb Co (BMY US) announced earnings for 4Q18 this morning followed by a conference call. Most metrics beat street expectations but the withdrawal of its application for Opdivo + low-dose Yervoy for first-line (NSCLC) lung cancer patients with high tumour mutation burdens after discussions with the FDA weighed on shares of BMY today. But for arbs who have the CELG/BMY spread set up, the positive comments on the Celgene acquisition provided further assurance of BMY’s commitment to the deal.
- There was, however, no discussion, in the prepared remarks or the Q&A, of the status of antitrust filings (nor was the question asked in the Q&A). The U.S. Hart-Scott-Rodino antitrust filing should have been made with the FTC/DoJ by January 16th, 2019 according to the terms of the merger agreement, although this has not been publicly confirmed. The EU Competition web site does not show a competition filing having been made, and I would not have expected one so soon after the announcement of the deal.
- Closing prices equate to annualised rates of return of ~20% / ~26.5%, respectively, by John DeMasi‘s calcs, which is very attractive.
links to
John’s insight: Bristol-Myers Beats the Drum for Celgene in 4Q18 Earnings Call)
ANTYA Investments Inc‘s insight: Bristol Myers Squib – Reaffirming Its View on Celgene Corp
EVENTS
Renault SA (RNO FP) / Nissan Motor (7201 JP)
Travis succinctly summarised the ongoing saga of governance and control that is the Renault/Nissan Alliance and speculates on the next chapter.
- Carlos Ghosn is likely in more trouble. The release last Friday by Nissan and Mitsubishi makes clear that Ghosn effectively signed contracts to pay himself a very large sum of money from the funds of the Nissan-Mitsubishi Alliance treasury in ways which contravened the rules established for that Joint Venture.
- The other news was that French visitors to Tokyo allegedly informed Japanese officials of their intention to have Renault appoint the next chairman of Nissan (as apparently, the Alliance agreement allows) and of the French State’s intention to seek to integrate Nissan and Renault under the umbrella of a single holding company. This is, the French state seeking to intervene in the governance of Nissan. That’s a no-no according to the Alliance Agreement.
- Nissan CAN react to any Renault breach of Nissan’s governance by purchasing shares to render Renault’s shares voteless. It can, for example, purchase economic exposure to Renault shares in the form of a cash-settled derivative, where it had neither voting rights nor the access to obtain them. It can do so quickly enough to react to anything that Renault can do by surprise, but it would be a clear breach of the Alliance Agreement to do so quickly.
- Travis reckons Renault and Nissan will not deliberately blow up their Alliance – they will work through their issues slowly and painfully. This will cause uncertainty among investors. IF the two companies ever sort out their relationship and decide to merge, the combined entity is cheap. Very cheap. If they blow up their Alliance, they are both going to turn out to be expensive.
(link to Travis’ insight: Nissan/Renault: French State Intervention Continues)
TOC Co Ltd (8841 JP) (Mkt Cap: $778mn; Liquidity: $1.3mn)
Earlier this week, TOC announced a ToSTNeT-3 Buyback, to buy up to 4.6mn shares or 4.49% of shares outstanding at ¥778/share. With this latest buyback, TOC has bought back 30% of shares outstanding in the past 14 months after selling a large asset before that. This has resulted in 49.5% of the votes held by the Ohtani family and their namesake companies, another 30% will be held by cross-holders who are loyal to the family, about 8-9% of the company will be owned by passive investors, and 11-13% of shares will be held by everyone else.
- The company’s largest and most famous asset is a near-50-year-old building. There have been suggestions of redevelopment (discussed in more depth here). The two family members controlling almost 50% of the shares (plus the New Otani Company parent) are 72 and 66yrs old respectively. A 10-year redevelopment project might outlast them. The project might be better off in other hands.
- The company has very long-held real estate assets – some of which are fully-depreciated and have very low land price book values. The share price is trading below Tangible Book Value. The shares trade at roughly 8x EBIT, which is very inexpensive for deeply undervalued and still earning real estate assets.
- The stock is illiquid, trading US$1.25mm/day on a three-month average, and sometimes a lot less, but there is considerable asset backing to these shares. Travis would want to be long here.
(link to Travis’ insight: Another Semi-BIGLY Buyback at TOC: STILL an MBO Candidate)
STUBS & HOLDCOS
Intouch Holdings (INTUCH TB) / Advanced Info Service (ADVANC TB)
Both Intouch Holdings (INTUCH TB) and Thaicom Pcl (THCOM TB) gained ~10% earlier in the week in response to rumours of a government takeout of Thaicom. I estimate the discount to NAV at ~23%, versus an average of 28%, around its narrowest inside a year. The implied stub is at its narrowest inside a year. It was a decent move, translating to a Bt15.2bn lift in Intouch’s market cap, ~4.5x the value of the holding in Thaicom. That alone would suggest Intouch had been overbought.
- That the Thai State-run CAT Telecom may take over Thaicom has a ring of truth to it. The military/government uses Thaicom, the only satellite operator in Thailand, and perhaps it is not (finally) comfortable with Singapore’s indirect interest in Thaicom via Singtel (ST SP)‘s stake in Intouch. It is an election year.
The rumoured price tag is Bt8.50/share or ~28% premium to the undisturbed price. Even a takeover premium north of 50% has no material impact on Intouch, as Thaicom accounts for 2% of NAV/GAV. However, selling Thaicom will further clean up what is already a very straightforward single-stock Holdco structure.
Optically Intouch has run its course in response to these Thaicom rumours – Intouch has denied any definitive approach/agreement – however, if a sale unfolds, this may help nudge the discount marginally lower from here.
- Should CAT buy out Intouch’s stake, would it be required to make an Offer for all remaining shares? As the stake is above one of the key thresholds, (that is, 25%, 50% or 75% of its the total voting rights) it would be required to conduct a mandatory tender offer. But CAT may be afforded a partial offer, if Thaicom shareholders approve.
(link to my insight: StubWorld: Intouch Gains On Possible Sale of Thaicom)
Briefly …
Sanghyun Park recommended an Orion Holdings (001800 KS) unwind trade after Orion Corp (271560 KS)‘s mid-week underperformance. By my calcs, Orin is trading at a 49% discount to NAV against a one year average of 48%.
(link to Sanghyun’s insight: Orion Holdco Trade: Current Status & Trade Approach)
SHARE CLASSIFICATIONS
Samsung Electronics (005930 KS)
With SamE’s1P discount to Common at 16.61%, the lowest since mid-November last year, Sanghyun recommends to go long Common and short 1P with a short term horizon.
(link to Sanghyun’s insight: Samsung Electronics Share Class: Close Prev Position & Initiate New One Reversely)
OTHER M&A UPDATES
LEAP Holdings Group Ltd (1499 HK) announced an MGO at $0.1585/share vs. the last close of $0.39, but above Anthony Wong’s (the seller) in-price of $0.1236/share. Like Wong, this new Offeror has no experience in LEAP’s business. The Offeror is primarily a vehicle owned by Xu Mingxing, who has experience in blockchain technology. However, a more detailed overview of the Offeror can be found on page 14 of the HKEx link, which provides details of no less than 15 individuals with stakes into the Offeror.
- M1 Ltd (M1 SP)‘s deal price now declared FINAL. Closing extended by two weeks to February 18th.
- The major shareholder of Qianhai Health Holdings (911 HK) has entered into a SPA, the completion of which would trigger a mandatory conditional offer at HK$0.25/share, a 0.3% premium to last close.
- Xingfa Aluminium (98 HK) is currently suspended pursuant to the Code. China Lesso Group Holdings (2128 HK), the second largest shareholder, acquired its shares in April last year. Xingfa was also subject to a (failed) scheme in 2017.
CCASS
My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.
Often these moves can easily be explained – the placement of new shares, rights issue, movements subsequent to a takeover, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.
Name | % change | Into | Out of | Comment |
42.58% | China Sec | Kingston | ||
37.88% | SHK | OCBC | ||
10.04% | Credit Suisse | HSBC | ||
19.74% | CNI Sec | CM Sec | ||
19.255 | Citi | Outside CCASS |
- Source: HKEx
UPCOMING M&A EVENTS
Country | Target | Deal Type | Event | E/C | |
Aus | Healthscope | Scheme | 31-Jan | Binding offer to be submitted | C |
Aus | Sigma Healthcare | Scheme | 31-Jan | Binding offer to be Announced | E |
Aus | Eclipx Group | Scheme | 1-Feb | First Court Hearing | C |
Aus | GrainCorp | Scheme | 20-Feb | Annual General Meeting | C |
Aus | Stanmore Coal | Off Mkt | 12-Feb | Settlement date | C |
Aus | Propertylink Group | Off Mkt | 28-Feb | Close of offer | C |
Aus | MYOB Group | Scheme | 11-Mar | First Court Hearing Date | C |
HK | Harbin Electric | Scheme | 22-Feb | Despatch of Composite Document | C |
HK | Hopewell Holdings | Scheme | 28-Feb | Despatch of Scheme Document | C |
India | Bharat Financial | Scheme | 30-Jan | Transaction closes | E |
India | GlaxoSmithKline | Scheme | 27-Mar | India – CCI approval | E |
Indonesia | BDMN | Tender Offer | 1-Mar | Record Date for participation in s/holder meeting | C |
Japan | Pioneer | Off Mkt | 1-Mar | Issuance of the new shares and common stock to be delisted on the Tokyo Stock Exchange | C |
Japan | Showa Shell Sekiyu Kk | Scheme | 1-Apr | Merger Effective | C |
Japan | Idemitsu Kosan | Scheme | 1-Apr | Merger Effective | C |
NZ | Trade Me Group | Scheme | 29-Jan | Scheme Booklet provided to the Takeovers Panel | C |
Singapore | Courts Asia Limited | Scheme | 8-Feb | Despatch of offer document | C |
Singapore | M1 Limited | Off Mkt | 18-Feb | Closing date of offer | C |
Singapore | PCI Limited | Scheme | Jan/Feb | Dispatch of scheme doc | E |
Thailand | Delta Electronics | Off Mkt | 28-Jan | SAMR Approval | E |
Finland | Amer Sports | Off Mkt | 28-Feb | Offer Period Expires | C |
Norway | Oslo Børs VPS | Off Mkt | Jan | Offer process to commence | E |
Switzerland | Panalpina Welttransport | Off Mkt | 27-Feb | Binding offer to be Announced | E |
UK | Shire plc | Scheme | 22-Jan | Settlement date | C |
US | iKang Healthcare | Scheme | Jan | Offer close date, (failing which) 31-Jan-2019 – Termination Date | C |
US | Red Hat, Inc. | Scheme | March/April | Deal lodged for approval with EU Regulators | C |
5. Also in the News: Updates from Japanese Retail Markets
Below are several recent updates on Japanese retail and consumer markets that, while not meriting in-depth Insights of their own, are important trends impacting retail stocks.
TPP: profit and loss for Japan
The Trans-Pacific Partnership trade deal came into effect in late December, immediately cutting import tariffs across much of Southeast Asia. Despite some claims that this will help consumers, the cuts are most likely to benefit trading firms and leading food wholesalers like Mitsubishi Shokuhin (7451 JP) and Itochu Shokuhin (2692 JP) rather than result in lower retail prices.
Mash and Jun to start premium online lifestyle mall in October
Two leading lifestyle and fashion firms, Mash Holdings and Jun, will together launch a new challenger in the fashion and lifestyle online market in October. This is a threat to the premium end of ZOZO’s (3092 JP) marketplace as well as the nascent Stripe Department, a joint venture between Softbank (9434 JP) and Stripe International, an unlisted fashion retailer.
A flat fashion market
A comprehensive recent survey of fashion industry managers suggests they are less optimistic about the outlook for 2019 compared to a year ago, weighed down with worries about depopulation, global trade, and changing consumer sentiment. More optimistically, many are investing in e-commerce as well as preparing to expand overseas.
Organic foods growing in popularity
After something of a false start back in the 1990s, organic fresh food is now moving out of a limited niche and into the mainstream, benefiting Oisix Ra Daichi (3182 JP) in particular.
Muji really is no name in China
Ryohin Keikaku’s (7453 JP) Muji is popular in China, but trademark conflicts, easy replication, as well as new emulator brands, all mean the “no brand” brand is not assured of continued success in the market.
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