In today’s briefing:
- Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains
- Benefit One (2412): M3 Extends For a Full Month
- Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
- A Review of Tender Offers of Korean Companies in 2023
- JIC Consortium Possibly In Line to Win Shinko At “¥800bn”, Which Makes You Go 🤔…
- Shinko Electric (6967 JP): JIC’s Pre-Conditional Tender Offer at JPY5,920
- Denso (6902 JP): The Current Playbook
- CPMC (906 HK): SASAC Usurper?
- CPMC Holdings (906 HK): Possible Scenarios as ORG Mulls a Competing Offer
- HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)
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.
Benefit One (2412): M3 Extends For a Full Month
- Today after the close, Benefit One Inc (2412 JP) amended its Tender Offer Target Opinion Statement to note that Dai Ichi Life had made a proposal to acquire 100%.
- To allow the Board time to evaluate this proposal, the Company requested a Tender extension. Bidder M3 Inc (2413 JP) was obliged to extend 10 days. They extended 20 days.
- This tells us a bunch of things. It is worth thinking about what happened to get here.
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.
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.
JIC Consortium Possibly In Line to Win Shinko At “¥800bn”, Which Makes You Go 🤔…
- A Nikkei article today suggested that Fujitsu had granted preferential negotiating rights to buy Shinko Electric Industries (6967 JP) to a JIC-led consortium (including DNP and Mitsui Chem) for ~¥800bn.
- This happened late in the afternoon session. Shares spiked 5+%, then were halted. A gray market ensued.
- A Bloomberg article provided more info, and the same info nuanced slightly differently. The wording in yet other articles was interesting enough that it is worth discussing.
Shinko Electric (6967 JP): JIC’s Pre-Conditional Tender Offer at JPY5,920
- After months of speculation, Shinko Electric Industries (6967 JP) has recommended the JIC alliance’s preconditional tender offer of JPY5,920 per share, an 18.9% premium to the undisturbed price (31 May).
- The pre-condition relates to regulatory approvals in Japan, China, Korea, and possibly Vietnam. The offeror may waive the pre-condition. The offer is long-dated and expected to start in August 2024.
- The minimum acceptance condition requires a 33.3% minority acceptance rate. Despite the low 7.1% premium to the last close, the offer resulted from a competing bidding process.
Denso (6902 JP): The Current Playbook
- Since the US$4.0 billion secondary placement announcement, Denso Corp (6902 JP)’s shares are down 4.3% from the undisturbed price of JPY2,298 per share (28 November).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Denso’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 13 December. Investors participating in previous large Japanese placements tend to secure positive returns.
CPMC (906 HK): SASAC Usurper?
- In what I viewed as one of the cleaner deals, CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China.
- A decent premium to undisturbed, a low tendering threshold, and a large shareholder giving an irrevocable – this looked done.
- Now ORG Development Limited/ORG Technology Co., Ltd. A (002701 CH), holding 24.4% of shares out, is mulling a competing conditional general cash Offer. One of these Offers will get up.
CPMC Holdings (906 HK): Possible Scenarios as ORG Mulls a Competing Offer
- CPMC Holdings (906 HK) disclosed that ORG Technology Co., Ltd. A (002701 CH), the second-largest shareholder, is considering a competing voluntary conditional general cash offer.
- It is rare to bid against an SOE bidder. ORG likely has implicit SOE support to launch a competing offer due to the need for Chinese regulatory approvals.
- The possible scenarios suggest Mr Zhang Wei is the winning bid’s kingmaker. Mr Wei sold down 260K shares at HK$6.35 on 8 December, indicating a willingness to exit.
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)
- Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
- Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
- Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK).
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