In today’s briefing:
- New Benefit One Deal Recalculated, More Benefit for All, Less for One
- Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price
- Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755
- TOPIX Inclusions: Who Is Ready (Dec 2023)
- MVIS Global Junior Gold Miners Index Rebalance: Few Large Weight Changes
- Index Rebalance & ETF Flow Recap: NKY, TW Div+, ASX200, NZX50, Mom30, Top10EW, MVW, Rakuten Bank
- MVIS Global Rare Earth/Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added
- MVIS US Listed Semiconductor 25 Index Rebalance: TSMC Is the Big Sell
- Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction
- Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low
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.
Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price
- Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) has a total value of JPY285,733 million (JPY1,800 per share).
- The offer structure is that Pasona Group (2168 JP) will receive JPY1,800 less TOB tax benefits. Minorities will receive JPY1,800 plus the proportionate share of Pasona’s TOB tax benefits.
- Our estimated minority offer price is JPY2,086 per share, which is 15.9% higher than the JPY1,800 floor price and 9.1% higher than the last close price.
Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755
- Outsourcing Inc (2427 JP) has recommended a Bain-backed preconditional MBO tender offer of JPY1,755 per share, a 52.1% premium to the undisturbed (8 December).
- The offer is light vs. peer and historical multiples and opportunistically takes advantage of the 20% price fall due to the disclosure of employment adjustment subsidies issues on 1 August.
- Based on the irrevocables, the minimum acceptance condition requires a 61.9% minority acceptance rate. The acceptance rate could prove challenging. The tender offer is to start by late January 2024.
TOPIX Inclusions: Who Is Ready (Dec 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- One of our TOPIX Inclusion Pre-event names Visional (4194 JP) confirmed it has received approval to move to the Prime Market in December 2023.
- Currently, we are expecting one TOPIX Inclusion at the end of December 2023 and two more at the end of January 2024 (including Visional).
MVIS Global Junior Gold Miners Index Rebalance: Few Large Weight Changes
- There are no constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December, but there are float and capping changes for some stocks.
- Estimated one-way turnover is 2.8% and that leads to a one-way trade of US$122m.
- There are 13 stocks with over US$5m to trade from passive trackers, though the impact is not very big on the stocks.
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.
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added
- Albemarle Corp (ALB US) will replace ioneer (INR AU) in the VanEck Rare Earth/Strategic Me (REMX US) at the close on 15 December.
- Constituent changes, float changes and capping changes result in an estimated one-way turnover is 13.4% and in a one-way trade of US$50m.
- The mainland China stocks in the index have been the biggest laggards and this rebalance will reduce their weight in the index significantly.
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.
Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction
- Dai Ichi Life (8750 JP)‘s proposal suggests more upside to Benefit One (2412 JP)‘s minorities than originally thought, and less upside (but still a chunk) to Pasona Group (2168 JP).
- It’s all over for EOFlow (294090 KS), as Medtronic Plc (MDT US) folds it tent.
- Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of Hankook & Company (000240 KS) has joined MBK Partners in making a partial Tender Offer for Hankook & Co.
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.
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