In today’s briefing:
- Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
- Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises
- Allkem/Livent Merger Vote Tomorrow: Will Vote Get Past?
- JSR (4185) – Deal Approval Unexpectedly Delayed, As Expected
- Comprehensive List: 359 Companies on KOSPI & KOSDAQ Deferring Yearend Dividend Record Dates
- TSMC Chairman to Retire, + or — Impacts to Shareholders
- Oriental Land: Approaching the Tipping Point
- Pan Ocean Considering on a Rights Offering Capital Raise of Nearly 3 Trillion Won for the HMM Deal
- Taihan Electric Wire: Rights Offering of 50% of Outstanding Shares
- Gina Joins SQM In Bid For Azure (AZS AU)
Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
- The Allkem/Livent “merger of equals” discussed in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises and Allkem/Livent: Enlarged Charging Unit is on track.
- As of the end of last month, all approvals are received or are expected to be received. The Scheme Booklet is expected next month. Deal is expected to close end-CY2023.
- The deal STILL has interesting side issues with index. Even more interesting than Newcrest/Newmont. This is an update with more detail as we probably have 8-10 weeks left.
Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises
- Today, after the close, ASX-listed Allkem Ltd (AKE AU) (formerly known as Orocobre, which merged with Galaxy Resources in 2021) announced it would merge with Livent (LTHM US).
- At US$10bn, this “merger-of-equals” NEWCO (pro-forma US$1.9bn revenue, US$1.2bn EBITDA), with NYSE primary listing and foreign entity listing on the ASX, would be a global lithium player. Deal closing end-2023.
- The doc (243 pages) and presentation (42p) are worth reading. There are interesting index effects, and there may be “Lithium Risk” in this deal for arbs, but it looks good.
Allkem/Livent Merger Vote Tomorrow: Will Vote Get Past?
- The vote is tomorrow. It is slightly contested. Shareholder proxies have recommended approving. Some others say Allkem is going too cheap.
- It probably should get done because of scale benefits, and if it breaks, it might be good for Allkem, which is “good risk arb risk”
- But the trade here is some combination of lithium rebound and index event, with index impact details here.
JSR (4185) – Deal Approval Unexpectedly Delayed, As Expected
- Today after the close, JSR Corp (4185 JP) announced that the expected “end-December” commencement of JIC’s Tender Offer to take the company private would be delayed.
- This was somewhat expected to widely expected based on initial FUD which then gave way to “specialised reporting” a couple of weeks ago which indicated as much.
- Here I look at potential implications, spreads, and risks. And it still looks like one has to let it run (and buy a dip).
Comprehensive List: 359 Companies on KOSPI & KOSDAQ Deferring Yearend Dividend Record Dates
- The data is crucial for year-end dividend arbitrage. We can strategically target Single-stock futures’ spread basis widening due to information timeliness disparities, focusing on companies with high dividend yields.
- Furthermore, it offers valuable insights into assessing the December-March spread levels, potentially leading to a rollover distortion in KOSPI 200 futures’ calendar spread trading.
- Postponed yearend dividend record dates to March may clash with first-quarter dividends, offering a new trading opportunity. this unique situation could significantly impact spot and futures prices.
TSMC Chairman to Retire, + or — Impacts to Shareholders
- Chairman 69 years old Dr. Liu will retire and 70 years old CEO Dr. Wei will step up. What story do we believe? Will TSMC to regain its strong outperperformance?
- Positive impacts: we expect Arizona fab equipment move-in and ramp up might be further delayed if no subsidies are granted; two teams competing to one voice/team/direction.
- Three risks: 1. Dr. Wei at his age of 70 without a strong management backup; 2. Dr. Wei might make a wrong decision deeply; 3. absolute power corrupts.
Oriental Land: Approaching the Tipping Point
- Google Search trends for Tokyo Disneyland and DisneySea in recent months point to potential vulnerabilities in Oriental Land’s FQ3 performance.
- Tokyo Disneyland’s rising ticket prices have narrowed the cost gap with Shanghai and Hong Kong Disneyland, potentially leading to a loss of customers to its counterparts.
- Should Oriental Land (4661 JP) shares fail to surpass its recent peak in January next year, we think shares could undergo a rather substantial correction.
Pan Ocean Considering on a Rights Offering Capital Raise of Nearly 3 Trillion Won for the HMM Deal
- A consortium led by the Harim Group and JKL Partners has been chosen as the preferred bidder to acquire a 57.9% stake in HMM.
- Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) are the main creditors of HMM, which is the largest shipping company in Korea.
- Pan Ocean is expected to complete a rights offering of nearly 3 trillion won which is 136% of its current market cap. This is excessive and negative for Pan Ocean.
Taihan Electric Wire: Rights Offering of 50% of Outstanding Shares
- Last week, Taihan Electric Wire announced a rights offering of 50% of its outstanding shares. The company is expected to raise 526 billion won.
- Taihan Electric Wire is expected to use the rights offering proceeds to mostly expand its submarine cable production.
- With the share price falling 21% since the announcement of the rights offering last week, Taihan Electric Wire looks more attractive.
Gina Joins SQM In Bid For Azure (AZS AU)
- This makes life a lot simpler. Gina Rinehart’s Hancock Prospecting will now team up with Chile’s SQM to take control of lithium play Azure Minerals (AZS AU).
- In a binding Offer, by way of a Scheme, the joint bidders (collectively holding ~37.79%) are offering A$3.70/share, a 5.1% bump in terms to SQM’s prior Scheme Offer.
- An off-market takeover at A$3.65/share unfolds IF this Scheme were to fail. If both fail/lapse, SQM will, “in certain circumstances”, be required to proceed with its off-market transaction of A$3.50/share.
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