In today’s briefing:
- Canon Marketing (8060) – Finally Using Its Cash, But It Is Walking The Walk With No Talk Behind
- Tohokushinsha (2329 JP) – 3D Investment Partners Proposes Take-Private
- CPMC Holdings (906.HK) Privatization Update – The Story Behind the Delay of Offer Document Despatch
- Timee IPO Trading – Garnered a Strong Demand, Should Pop
- Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today
- StubWorld: Legend (LEGN US) Offer Or Not, Genscript (1548 HK) Is Attractive
- Arvida (ARV NZ): Stonepeak’s Offer
- Canvest (1381 HK): Trading Wide To Grandblue’s Offer
- NIFTY Bank Index Rebalance Preview: Bandhan Bank Facing Double Deletion
- Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$500m Trade
Canon Marketing (8060) – Finally Using Its Cash, But It Is Walking The Walk With No Talk Behind
- Today after the close, Canon Marketing Japan (8060 JP) announced a large Tender Offer Buyback from its parent company Canon Inc (7751 JP). Canon will tender 20mm shares (15.42%).
- This is a very capital efficient way to conduct a buyback from a parent, and an even better way for a parent to sell shares of a sub.
- This corporate action will reduce equity by 20%, and partially clean up the messy inter-company transactions which should not exist.
Tohokushinsha (2329 JP) – 3D Investment Partners Proposes Take-Private
- 3D Investment Partners, known to be activist-ish-y, purchased 18% of Tohokushinsha Film (2329 JP) in the 12 months to March 2024. They started a public activism campaign in February.
- The company has started down a better governance track, but now 3D has made a takeover proposal to Tohokushinsha, which will consider it under Special Committee.
- There are a couple of possible outcomes here which are interesting to consider. There are no other spoilers possible except those friendly to founders and management.
CPMC Holdings (906.HK) Privatization Update – The Story Behind the Delay of Offer Document Despatch
- Since all the Pre-Conditions have been fulfilled, Baosteel has taken a solid step towards the successful acquisition of CPMC. Comparatively, ORG could encounter resistance and uncertainties in the upcoming process.
- The acquisition of CPMC by ORG cannot be completed by ORG and Zhang Wei alone.Without the “nod” of COFCO/SASAC, what ORG’s going to do is equivalent to a “hostile takeover”.
- ORG’s acquisition of control of CPMC could go against the national strategy of “building strong alliances between SOEs”. In fact, what ORG wants is for Baosteel to raise its Offer.
Timee IPO Trading – Garnered a Strong Demand, Should Pop
- Timee Inc (215A JP) raised US$300m in its Japan IPO. The IPO had been a 100% secondary selldown by existing shareholders.
- Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
- We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.
Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today
- The highest dividend tax rate drops from 49.5% to 25%, leading the local capital market to view the reform as more shareholder-focused than company-focused.
- The top inheritance tax rate drops from the 60% range to 40%, a meaningful reduction for conglomerates like Hyundai and Hanwha, though below initial expectations.
- Tax incentives in the reform are less aggressive than expected, with modest corporate and inheritance tax cuts. However, this compromise increases the likelihood of its passage, boosting short-term market expectations.
StubWorld: Legend (LEGN US) Offer Or Not, Genscript (1548 HK) Is Attractive
- Biotech play Genscript Biotech (1548 HK) and ~48%-held Legend Biotech (LEGN US) popped recently on a reported tilt for Legend. Neither Genscript nor Legend made exchange announcements supporting the claim.
- Preceding my comments on Genscript/Legend are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Arvida (ARV NZ): Stonepeak’s Offer
- Arvida (ARV NZ), a leading retirement living and aged care service provider in New Zealand, announced a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed.
- The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ’s Overseas Investment Office also required.
- A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete.
Canvest (1381 HK): Trading Wide To Grandblue’s Offer
- On the 22 July, waste-to-energy play Canvest Environmental Protection (1381 HK) announced a pre-conditional Offer from Grandblue Environment (600323 CH) at $4.90/share (best & final), by way of a Scheme.
- Terms mirror that announced on the 7th July. Best Approach (54.75% of shares out) is seeking to roll over 7.23%. Pre-cons include the usual regulators: MoC, NDRC, SAMR and SAFE.
- Any new dividends paid will be netted. 4.478% blocking stake. Pre-IPO investor AEP Green Power, has 5.67%. Best Approach is required to abstain from voting on the Scheme and rollover.
NIFTY Bank Index Rebalance Preview: Bandhan Bank Facing Double Deletion
- With the review period nearly complete, Canara Bank (CBK IN) should replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) in September.
- Passive trackers will need to buy over 2 days of ADV in Canara Bank (CBK IN) while selling over 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN).
- There is a strong possibility of Bandhan Bank Ltd (BANDHAN IN) being deleted from a global index in August and that could put the stock under even more pressure.
Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$500m Trade
- Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index with implementation at the close on 31 July.
- Oklo Inc (OKLO US) and Western Uranium & Vanadium Corp (WUC CN) will be added to the index. Estimated one-way turnover is 7.9% resulting in a round-trip trade of US$486m.
- There are only 4 trading days to implementation of the changes and we’d watch out for big moves on stocks that have more than 2x ADV to trade.
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