In today’s briefing:
- Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3
- Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- New Deal for Benefit One (2168) Could Mean Lots More Money for Pasona (2168)
- China: Consolidated Flows at the Close Tomorrow
- Benefit One (2412 JP): Dai-Ichi Life Counters M3 with a Privatisation Offer
- KOSPI 200 Futures Calendar Spread Trading: Latest on Year-End Dividend Record Date Changes
- Denso Corp Placement – Not Quite Shaping up for a Win Yet
- Hankyu Hanshin Takeout of OS Corp
- Oh, The Irony! Perpetual Rejects Soul Patts’ “Fair” Offer
- Quiddity HSCEI Mar 24 Rebalance: Same Rankings; Same Questions
Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3
- Today post-close, life insurer Dai Ichi Life Insurance (8750 JP) announced plans to launch a Tender Offer to buy out all minorities in Benefit One Inc (2412 JP) at ¥1,800/share.
- M3’s Partial (55%) Tender at ¥1,600/share ending next week is obviously a question.
- This is GREAT news for M&A in Japan. It’s good for holders of Benefit One and Pasona Group (2168 JP) too.
Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- Rakuten Group (4755 JP) is looking to sell 25.5m shares of Rakuten Bank (5838 JP) via a secondary offering at a discount of between 8.7%-12.3%.
- The offering will raise a maximum of US$433m and Rakuten Group (4755 JP) will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.
- There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.
New Deal for Benefit One (2168) Could Mean Lots More Money for Pasona (2168)
- Today, Dai Ichi Life Insurance (8750 JP) announced a proposed counter/over-bid for Benefit One Inc (2412 JP). ¥1800/share for minorities and a better (undefined) outcome for Pasona Group (2168 JP).
- This throws the cat amongst the pigeons as it is unsolicited, for 100% not just to get Pasona’s stake, and it will require Benefit One recommend or not.
- For Pasona, this deal structure would likely increase the net result from the stake sale, possibly substantially so. It’s in the details.
China: Consolidated Flows at the Close Tomorrow
- Local indices in China including the CSI 300 Index, CSI 500 Index, STAR50 Index and SSE50 Index will rebalance at the close tomorrow.
- There are many changes for the indices and there are stocks that are adds and/or deletes from multiple indices which results in cumulative or offsetting flows.
- We estimate turnover at the close tomorrow in China will be around US$7.5bn with big impact on a lot of stocks.
Benefit One (2412 JP): Dai-Ichi Life Counters M3 with a Privatisation Offer
- Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY1,800 (floor price) + share of Pasona Group (2168 JP)’s TOB tax benefits.
- The pre-conditions relate to the Board recommendation, Pasona support, and M3 Inc (2413 JP) offer not completing its partial offer. The tender offer starts in mid-January 2024 (20 business days).
- While the Dai-ichi Life offer is light, M3’s engagement in a bidding war is low. The proposed minimum acceptance condition (15.51% ownership ratio) requires a 32% minority acceptance rate.
KOSPI 200 Futures Calendar Spread Trading: Latest on Year-End Dividend Record Date Changes
- It would be prudent to anticipate that a considerable portion of these 636 companies will indeed adjust their dividend record dates, effective from this year’s year-end dividends.
- One notable setup gaining attention is calendar spread trading for the KOSPI 200 futures in anticipation of an upward trend in the KOSPI 200 futures market towards the year’s end.
- This entails buying the near-month and selling the far-month, liquidating when the price difference reverts. Traders pay attention to potential far-month divergence due to the shift in dividend record dates.
Denso Corp Placement – Not Quite Shaping up for a Win Yet
- On 28th Nov 2023, Toyota (7203 JP) announced that it would sell around 9.4% of Denso (6902 JP) in order to reduce its cross-shareholding.
- Since then the shares haven’t corrected by much, as compared to prior large secondary deals.
- We have covered the deal background in our earlier notes. In this note, we talk about deal dynamics, as compared to prior deals.
Hankyu Hanshin Takeout of OS Corp
- The flip-side of the Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV. is the Hankyu-Hanshin deal to buy OS Corp (9637).
- Tokyo-Based Toho buys out Kansai-based Hankyu-Hanshin’s stake in Tokyo-based Rakutenchi. HH buys out Toho’s stake in Kobe-based OS Corp. This is a “TOB Swap”. HH owns 21.7% of Toho too.
- Like Rakutenchi, it is being done at a PBR higher than 1, but a decent discount to NAV. But this one is horribly, horribly illiquid (1,000 shs/day)
Oh, The Irony! Perpetual Rejects Soul Patts’ “Fair” Offer
- Yesterday, Washington H. Soul Pattinson and Co. Ltd (SOL AU) made a $3bn scrip offer Aussie-listed equities manager Perpetual Ltd (PPT AU).
- Under the indicative terms, PPT shareholders receive one-third of the Offer in SOL shares, and two-thirds in PPT’s asset management arm via an in-specie spin-off.
- PPT rejected the proposal as it undervalues PPT, its corporate trust and wealth management businesses; and it offers SOL shares as consideration. But the Offer is not without merit.
Quiddity HSCEI Mar 24 Rebalance: Same Rankings; Same Questions
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
- In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in March 2024.
- Based on the current data, I see only one low-conviction ADD and one low-conviction DEL.
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