In today’s briefing:
- The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group
- Another Block Deal Sale of Ecopro Materials
- Shift Up IPO – Refiling and Other Updates, Not Ranked at the Top Anymore
- Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer
- Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
- Clarifying BRV’s Post-Block Deal Lockup Conditions Involving Ecopro Materials
- Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value
- Webtoon Entertainment Pre-IPO – Peer Comparison – Relatively Small in Operating Scale as a Platform
- Shiseido (4911 JP): Brainstorming For Potential Buyers
- Block Deal Sale of 3.6% Shares of Enchem
The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group
- Early this morning, rumors spread that Hyundai’s honorary chairman Chung Mong-koo was hospitalized and died, causing stock prices to surge, but Hyundai denied this news.
- Control of Hyundai hinges on increasing the stake in Mobis. Chung Eui-sun aims to keep Mobis’s stock low, but Chung Mong-koo’s health complicates timing and strategy.
- Mobis’s trading point depends on Chung Mong-koo’s health. Three scenarios: he’s healthy, critically ill, or deceased. Current rumors’ price impacts are unlikely to subside soon.
Another Block Deal Sale of Ecopro Materials
- Shares of EcoPro Materials are down 16% today to 112,300 won, due to another block deal sale of by BRV Capital in the after hours trading on 13 June.
- After the second block deal sale on 14 June, BRV’s stake declined further from 21.2% to 18.2%.
- This block deal sale at a big discount is likely to raise overhang concerns about further block deal sales by BRV Capital in the coming months/years.
Shift Up IPO – Refiling and Other Updates, Not Ranked at the Top Anymore
- Shift Up (462870 KS) plans to raise up to US$320m in its South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- We have looked at the company’s performance, undertaken a peer comparison and talked about valuations in our past notes. In this note, we talk about the refiling and other updates.
Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer
- Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price.
- The timing looks opportunistic as Fancl’s shares are down 20% YTD. The offer period is from 17 June to 29 July.
- While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light.
Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
- Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
- The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
- This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.
Clarifying BRV’s Post-Block Deal Lockup Conditions Involving Ecopro Materials
- In Korea, the lockup period for block deals is set by the seller and underwriters, not by law, and can be adjusted if both parties agree.
- BRV obtained consent from Goldman, UBS, and KB for a second block deal after assessing that many initial buyers had sold their shares.
- Understanding this lockup structure provides key insights into predicting when the next block deal might occur.
Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value
- Today at noon JST, Rs Technologies (3445 JP) released an announcement on TDNet, “Our policy regarding the tender offer for Helios Techno Holding Co., Ltd. shares”
- In it, they indicated that the price offered – ¥825/share – is a price which “fully returns to general shareholders the increased enterprise value that will result from [transaction] synergies.”
- They acknowledge the market price is trading higher than the TOB Price, but say they have no plans to raise the Tender Offer Price. So now what? It depends.
Webtoon Entertainment Pre-IPO – Peer Comparison – Relatively Small in Operating Scale as a Platform
- Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
- Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
- In our previous note, we talked about the company’s historical performance. In this note, we undertake a peer comparison.
Shiseido (4911 JP): Brainstorming For Potential Buyers
- Today, according to public news, Kirin Holdings will launch a tender offer for Fancl Corp (4921 JP) at a likely 30% premium.
- The beauty industry is historically ripe with M&A deals. It is not hard to see why, as the global beauty sector trades at a hefty valuation multiple.
- In this insight, we brainstorm for potential buyers of Shiseido Company (4911 JP) and analyze the viability of such.
Block Deal Sale of 3.6% Shares of Enchem
- After the market close on 14 June, it was reported that Woori PE/other investors will be selling 705,384 shares of Enchem in a block deal, representing 3.6% of outstanding shares.
- The block deal discount rate ranges from 6.9% to 8.92%, resulting in potential block deal sale price of 270,500 won to 276,500 won.
- We would not subscribe to this block deal and we are concerned about the valuations of Enchem after a sharp share price appreciation this year.
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