In today’s briefing:
- New Benefit One Deal Recalculated, More Benefit for All, Less for One
- Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low
- MVIS US Listed Semiconductor 25 Index Rebalance: TSMC Is the Big Sell
- Index Rebalance & ETF Flow Recap: NKY, TW Div+, ASX200, NZX50, Mom30, Top10EW, MVW, Rakuten Bank
- Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains
- A Review of Tender Offers of Korean Companies in 2023
- Exploring the Possibility of an LG Energy Solution Block Deal
- Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
- Softbank (9984 JP): Adding a Strengthening JPY to the Mix
- Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover
New Benefit One Deal Recalculated, More Benefit for All, Less for One
- The deal from Dai-Ichi Life for Benefit One Inc (2412 JP) appears language I did not get the first time around. The JPY 1800/share price is a proposed combined value.
- The deal would then lower the TOB price to Pasona, and share the benefits from that lower price to Benefit One minorities.
- That suggests more upside to Benefit One than I originally thought, and less upside (but still a chunk) to Pasona.
Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low
- On Friday 8 December, Bain announced an MBO with Outsourcing Inc (2427 JP) Chair Haruhiko Doi to take the company private at a 51% premium. Looks good at first glance.
- It is, however, an offer at ~6.6x Management Forecast derived Dec 2024 EBITDA. This for a top player in a fast-growing market where Street/mgmt both see up-and-to-the-right results from here.
- This is a delayed start (late-Jan) for regulatory approvals. It is too cheap. It is blockable. But Doi-san is young at 64yrs old and he could come back years later.
MVIS US Listed Semiconductor 25 Index Rebalance: TSMC Is the Big Sell
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) in December but there are a lot of float and capping changes.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) is the biggest sell while NVIDIA Corp (NVDA US) is the biggest buy.
- Estimated one-way turnover is 6.6% resulting in a one-way trade of US$682m. Couple of stocks have greater than 0.2x ADV to trade.
Index Rebalance & ETF Flow Recap: NKY, TW Div+, ASX200, NZX50, Mom30, Top10EW, MVW, Rakuten Bank
- There were a lot of rebalance implementations in China on Friday, plus a few upcoming index changes that were announced during the week.
- There are a lot of implementations this week, with KOSPI 200 and KOSDAQ 150 on Thursday and then others across a bunch of countries on Friday.
- There were big inflows to Tracker Fund of Hong Kong (2800 HK) during the week taking units outstanding to a new high. ETF inflows continue even as the market drops.
Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains
- On 28th Nov 2023, Toyota Motor (7203 JP) announced that it would sell around 9.4% of Denso Corp (6902 JP) in order to reduce its cross-shareholding.
- The shares hadn’t corrected much till our last note on 7th Dec 2023, they have since corrected by 6% .
- We have covered the deal background and deal dynamics in our earlier notes. In this note, we talk about the recent share price movement, as compared to prior deals.
A Review of Tender Offers of Korean Companies in 2023
- We review the major tender offers of Korean companies in 2023. Some of the major M&A tender offers that have closed this year include Osstem Implant and SM Entertainment.
- Among the 15 companies targeted for tender offers, there are 5 companies including Osstem Implant, SM Entertainment, Lutronic Corp where the purpose of the tender offers is for M&A.
- There were a total of 18 companies that submitted tender offer results announcements in 2023 (as of 11 December), up 157% YoY.
Exploring the Possibility of an LG Energy Solution Block Deal
- The prevailing sentiment in Yeouido signals a shift of companies, originally preparing for EB issuances, toward block deals. Local brokerages are competing to identify potential block deals involving major issuers.
- The local market anticipates LG Chem opting for a short-term block deal, considering the potential reduction of the LG Energy stake below 80% to alleviate global minimum corporate tax burdens.
- Timing is a challenge, but based on corrections before July’s EB issuance, we could proactively plan for January. Abundant liquidity in LG Energy’s futures eases trading instrument concerns.
Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
- On Monday after the close, trading house Yamazen Corp (8051 JP) announced a secondary offering where five bank shareholders would sell ~6.7mm shares (including greenshoe).
- It appears as if most of the banks are selling everything, making it about US$50mm, 50 days of ADV, and about 7% of shares out.
- But this should get swallowed pretty easily. The stock is DIRT CHEAP. The caveat? Crossholders and insiders will still own 45-48% post-offer.
Softbank (9984 JP): Adding a Strengthening JPY to the Mix
- In 1HFY23, a weak JPY – with it having depreciated from JPY132 to JPY149 to the USD – has actively supported the group’s valuation, contributing 12% to SoftBank group’s NAV
- The BoJ is looking to tighten monetary policy, whilst all other major central banks are set to cut rates; under this scenario, it is likely for the JPY to strengthen
- Softbank shares trade at a 51%+ stated NAV discount yet we believe that there is downside risk to at least Arm’s high valuations, which could tighten the discount significantly
Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover
- Privately-Held Chemist Warehouse’s (CWG) “transformational merger” with pharmaceutical wholesaler and franchisor Sigma Healthcare (SIG AU) will result in CWG’s shareholders holding 85.75% of the merged company.
- CWG shareholders will receive A$700mn in cash plus new Sigma shares. Sigma will also undertake a $400mn equity raising to fund working capital needs.
- Sigma has the backing of its largest shareholder HMC. The risk to completion pivots off ACCC approval.
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