In today’s briefing:
- Arb Carnage As Giordano’s Offer Also Fails
- Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program
- Atlas Arteria Placement – How to Lose Friends and Alienate Your Largest Shareholder
- SET50 Index Rebalance Preview: Three Potential Changes in December
- Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion
- Ramsay’s Bait-And-Switch KKR Offer Heads for the Exit
- VNET: Management’s Low-Balled Non-Binding Proposal
- Moya Holdings: Anthoni Salim’s Exit Offer
- Australia: S&P/ASX, FTSE, REMX, GDXJ Flows This Friday
- Tencent/Netease: September Batch of Game Approval & Thoughts on Trading
Arb Carnage As Giordano’s Offer Also Fails
- Utter carnage in arb-world this week, as Frasers Hospitality Trust (FHT SP) fails, Link Administration (LNK AU) and Ramsay Health (RHC AU) are potentially next, and now Giordano (709 HK).
- 46.04%. That’s the only number that matters, which represents the total shares owned by the Cheng family plus shares tendered.
- The Chengs are restricted from launching another Offer for 12 months. Giordano will be sold off today, however, this is a buy if it retraces to around the undisturbed levels.
Canon Buyback Done, Ricoh’s Done Shortly, Back To Your Regularly Scheduled Program
- Canon Inc (7751 JP) has announced two buyback programs this year of ¥50bn each. Ricoh Company Ltd (7752 JP) announced one in May for ¥30bn.
- The result is 2.9% bought back vs 4.4%. The accretion nod goes to Ricoh. But so does the overhang nod going forward. Effissimo+Crossholders is 40% for Ricoh. Mid20s for Canon.
- Buyback impact-related trade timing has worked for Canon. Ricoh’s buyback ends imminently. There may be a trade to do here.
Atlas Arteria Placement – How to Lose Friends and Alienate Your Largest Shareholder
- Atlas Arteria (ALX) aims to raise around US$2bn (A$3bn) via a non-renounceable entitlement offer to fund the purchase of its majority interest in Chicago Skyway.
- Over the past few months, ALX has garnered interest from IFM which has increased its stake to 19.99%. IFM had publicly opposed this acquisition.
- In this note, we will talk about the deal dynamic and run the deal through our ECM framework.
SET50 Index Rebalance Preview: Three Potential Changes in December
- The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) started on 1 September and will end 30 November.
- We currently see one high probability change and two lower probability changes to the index at the upcoming rebalance.
- There are a couple of lower probability adds/deletes that will have between 3-5 days of ADV to trade from passive funds and could be interesting from a trading angle.
Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion
- Atlas Arteria (ALX AU) is acquiring 66.67% in Skyway Concession Company LLC, the concessionaire of the Chicago Skyway for an equity value of US$2.013bn (A$3.098bn).
- The acquisition will be funded by a fully underwritten 1:1.95 ANREO to raise A$3.098bn. The offer price of A$6.3/share is a 13.7% discount to TERP and 19.3% discount to last.
- The increase in market cap could result in Atlas Arteria (ALX AU) being added to the S&P/ASX 50 Index at the December rebalance.
Ramsay’s Bait-And-Switch KKR Offer Heads for the Exit
- KKR cannot improve the terms of its offer but left the door open by stating that a deal can be quickly closed if the Board is willing to reset expectations.
- The transaction is stuck in an impasse as Ramsay Health Care (RHC AU) will not recommend KKR’s offer until it is improved, and KKR says it cannot improve terms.
- The peers’ shares have been, on average, flat since the undisturbed date. The shares are trading slightly below the undisturbed price and are attractive on fundamentals.
VNET: Management’s Low-Balled Non-Binding Proposal
- Back on the 11 April, Chinese internet data center services provider VNET (VNET US) announced a non-binding proposal from Hina Group and Shanghai’s Industrial Bank at an utterly underwhelming US$8.00/ADS.
- Then crickets. A reported tilt from MBK Partners failed to materialise.
- VNET has now announced a preliminary non-binding proposal from founder Josh Sheng Chen, at a similarly underwhelming price of US$8.20/ADS.
Moya Holdings: Anthoni Salim’s Exit Offer
- Indonesian water treatment play Moya Holdings Asia (MHAL SP) has announced an Exit Offer from Tamaris Infrastructure, an Anthoni Salim-controlled entity.
- The Offer price is S$0.092/share, a 41.5% premium to last close. The Offer price will not be increased.
- The Offer requires approval from 75% of disinterested shareholders. Tamaris and its concert parties hold 72.84%.
Australia: S&P/ASX, FTSE, REMX, GDXJ Flows This Friday
- Changes to the S&P/ASX indices, FTSE All-World/All-Cap, VanEck Vectors Rare Earth/Strategic Metals (REMX US) and VanEck Vectors Junior Gold Miners (GDXJ US) will be implemented at the close on Friday.
- There are quite a few stocks that have over 5 days of ADV to trade from passive trackers. Pre-positions will be built up on a lot of names.
- Short interest has increased on a lot of additions/upweights and decreased on the deletions/downweights.
Tencent/Netease: September Batch of Game Approval & Thoughts on Trading
- China just announced game approval for September batch. More games were approved in September compared to July, June and August.
- Pace of China game approval continued to pick up albeit at a much slower pace than pre-tightening.
- Tencent continue to score zero and Netease managed to get one game approved in 14 months.
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