In today’s briefing:
- Kenedix Merger: Big Passive Inflows on the Cards
- EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks
- Insulet Accuses EOFlow Of Stealing Trade Secrets
- Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow
- L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?
- Amari Ni Mo… NTT (9432)
- Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
- China to Finally Allow Group Tours to Korea and Japan?
- InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share
- Kyoden (6881 JP) MBO – An Small, Easy, Illiquid, Light But Not Horribly Unfair Done Deal at ¥600
Kenedix Merger: Big Passive Inflows on the Cards
- The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
- The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
- The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.
EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks
- Insulet Corp (PODD US) filed with the United States District Court a complaint for patent infringement against Eoflow (294090 KS), Flex (FLEX US), Luis Malave, Steven DiIanni, and Ian Welsford.
- Insulet’s primary allegation is that Eoflow’s EOPatch device is built using Insulet’s proprietary trade secrets and infringes three Insulet US patents (‘741, ’883 and ‘950 patents).
- The most likely scenarios are that Medtronic Plc (MDT US) and Insulet sign a licensing agreement (resulting in a possible tender offer price cut) or Medtronic walks.
Insulet Accuses EOFlow Of Stealing Trade Secrets
- From the outset, EOFlow (294090 KS) has traded wide (~7% of average) to Medtronic Plc (MDT US)‘s Offer. An apparent delay in filing with Korean regulators formed one argument.
- Now there’s a compelling reason. Key insulin pump competitor Insulet (PODD US) has filed a lawsuit accusing EOFlow of the misappropriation of trade secrets, patent infringement, and trademark dilution.
- Singapore-Based Flex (FLEX US) and three ex-employees of Insulet are also defendants. This does not bode well for the transaction.
Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow
- This signifies the official commencement of a lawsuit against Eoflow in the United States, which has been considered one of the most significant risks for Eoflow.
- Eoflow is externally saying that the aspect of patents claimed by Insulet is actually based on previously expired patents. Hence, Eoflow believes they can win this patent lawsuit.
- This lawsuit emerged before the acquisition decision by Medtronic suggesting a need to consider trading the current spread based on the inference that the tender offer is still valid.
L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?
- According to Bloomberg, L’Occitane (973 HK) is set to receive a HK$35 per share privatisation offer from Reinold Geiger, the Chairman and the largest shareholder.
- The rumoured price is attractive and represents an all-time high share price. Therefore, Acatis KVG, the shareholder with a blocking stake, would be supportive.
- The rumoured price implies multiples at a discount to peer multiples, which explains Mr Geiger’s ambitions for a possible European listing to secure higher valuation multiples.
Amari Ni Mo… NTT (9432)
- NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn’t. Good. Not great.
- But NTT announced a ¥200bn buyback. Again good. Not great.
- And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.
Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
- Insulet Corp (PODD US)’s lawsuit against Eoflow (294090 KS) caused a sharp decline in Eoflow’s share price today (down 10.7% to 24,950 won).
- Insulet is accusing Eoflow of hiring several senior personnel that have helped Eoflow to develop a product that could take away market share from Insulet.
- The most important factor may be Eoflow’s “special sauce” which is some kind of technology/mechanism that allows this 17% greater efficiency/convenience for the wearable EOPatch insulin device.
China to Finally Allow Group Tours to Korea and Japan?
- In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days.
- The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.
- Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.
InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share
- Invocare has entered into a scheme implementation deed with TPG at A$12.7/share. This is higher than the initial offer of A$12.65/share but lower than the revised offer of A$13/share.
- There is an extra A$0.26/share in franking credits for Invocare Ltd (IVC AU) shareholders that can use them.
- Passives will need to sell nearly 11m shares of Invocare Ltd (IVC AU) on the last trading day and there will be an adhoc inclusion to the S&P/ASX 200 Index.
Kyoden (6881 JP) MBO – An Small, Easy, Illiquid, Light But Not Horribly Unfair Done Deal at ¥600
- Today, the personal holding company of Kyoden Co Ltd (6881 JP) founder Hashimoto-san announced a Tender Offer to take the company private.
- Together with his company, he owns 64.75%. He only needs 1.93% to tender. The combination of Shokochukin, SMBC, and Yokohama Bank get him over the line.
- This is small, illiquid, and will trade tight, but it’s a done deal.
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