In today’s briefing:
- [JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
- Chinese Estates (127 HK): Understanding The Scheme Voting
- T-Gaia (3738 JP) – Possible Premium Takeout Story
- Chronic Insider Trading in the Korean Tender Offer Market & Time Positions for Short-Term Targets
- Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer
- Midea Real Estate (3990 HK): An In-Specie Distribution to Unlock Value
- Hyundai Motor India Pre-IPO – The Positives – Quasi-Local, Riding the SUV Wave
- NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics
- Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing
[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
- In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
- Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
- Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness.
Chinese Estates (127 HK): Understanding The Scheme Voting
- Chinese Estates (127 HK)‘s Scheme was always going to be a tricky affair, given Hong Kong’s 2021 M&A bloodbath – e.g. Soho China (410 HK) & Golden Throat (6896 HK).
- 95.95% of Disinterested Shareholders voted for the Scheme. However, the Scheme failed the “headcount test”, as it was not approved by a majority in number of Scheme Shareholders.
- Hong Kong abolished the headcount test in March 2014. Cayman and Bermuda-incorporated companies should follow suit.
T-Gaia (3738 JP) – Possible Premium Takeout Story
- I kind of hate this, but I also can’t ignore it. Apparently, an expensive media service Reporting on Deals or about the Market for Mergers, had an article today.
- Bloomberg carried a small blurb saying there was “speculation on a tender offer…. according to traders”. The stock is untraded, limit up.
- The most informative comment comes from Japanese stock market portal ‘kabutan‘ which suggests “overseas media” thinks Sumitomo Corp will sell its shares. I look at the possibilities below.
Chronic Insider Trading in the Korean Tender Offer Market & Time Positions for Short-Term Targets
- There is a high likelihood of information leaking through the lead securities firm when the tender offer prospectus is provided to branches about three days before the disclosure.
- With the FSS’s stricter stance, tender offer candidates may act swiftly before new regulations, prompting attention to potential surges in tender offers.
- Our approach is clear: identify short-term tender offer candidates, monitor trading volumes for spikes, and use the three-day pre-disclosure surge to time our positions effectively.
Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Shanghai Henlius Biotech (2696 HK) disclosed a pre-conditional privatisation offer by Shanghai Fosun Pharmaceutical (Group) (2196 HK) at HK$24.60, a 36.7% premium to the undisturbed price. The offer price is final.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is no minimum acceptance condition.
- Long term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be supportive partly because of the share alternative option.
Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer
- Shanghai Fosun Pharmaceutical (2196 HK) has made a HK$24.60/share Offer (best & final), in cash, for H-shares not held in Shanghai Henlius Biotech (2696 HK). A scrip alternative may be afforded.
- As Henlius is PRC-incorporated, this Offer is structured as a Merger by Absorption, involving a Scheme-like vote for independent H-shareholders. There is no tendering condition.
- Pre-Conditions include NDRC, MoC, and SAFE. The Long Stop date to secure these conditions is 30th April 2025. That’s way too conservative. This should be wrapped up around mid 4Q24.
Midea Real Estate (3990 HK): An In-Specie Distribution to Unlock Value
- On 25 June, Midea Real Estate Holding (3990 HK) disclosed an in-specie distribution of its PD&S business through a scrip or cash (HK$5.90 per share, 57.33% premium to undisturbed price).
- The key condition will be approval of the distribution by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection).
- Midea RE will remain listed with an asset-light retained business, which is estimated to be worth HK$1.93. The Group’s estimated value is HK$7.83, a 17.6% upside to the last close.
Hyundai Motor India Pre-IPO – The Positives – Quasi-Local, Riding the SUV Wave
- Hyundai Motor (005387 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
- HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
- In this note, we talk about the positive aspects of the deal.
NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics
- Naspers and Prosus released results for FY24 yesterday morning. The initial market reaction was positive, both discounts closed narrower for the day.
- Since the appointment of Fabricio Bloisi was announced in May, both discounts have widened.
- JSE indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R58bn, R38bn traded in the closing auction (66%).
Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing
- The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.
- Henlius’ share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.
- As usual, Fosun doesn’t consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.
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