In today’s briefing:
- L’Occitane (973 HK): Tendering Now Open
- Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump
- ASICS (7936 JP): The Current Playbook
- Furukawa Battery (6937) – Ugly Process in Virtual Take-Under Take-Private
- NIFTY50 Index Rebalance Preview: Big Flow, Big Impact, Big Positioning
- True Wind Raises Partial TOB Price for Sun Corp (6736 JP) By 8%. Not Enough.
- Toyota’s BIG Buyback Via Tender Offer from Banks & Insurers
- Furukawa Battery (6937 JP): Long-Dated Pre-Conditional Offer at JPY1,400
- Sun Corporation (6736 JP): The Uphill Struggle for True Wind’s Revised Partial Offer
L’Occitane (973 HK): Tendering Now Open
- Exactly two weeks after the scrip alternative was announced, L’Occitane (973 HK)‘s Composite Document has been issued. The Offer is now open for acceptances.
- The IFA (Somerley) considers terms to be fair & reasonable. A lifetime high coupled with a scrip option – yes, this is fair.
- Keep an eye on CCASS moves prior to the first closing date, the 23rd July. I have a call with the FA tomorrow. Hit me up with any questions.
Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.
- Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies.
- Of these, they have a combined stake of over US$1bn in 23 companies.
Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump
- Kirin Holdings (2503 JP)’s JPY8,620 offer for Fancl Corp (4921 JP) closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.
- MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer.
- The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump.
ASICS (7936 JP): The Current Playbook
- Since the US$1.4 billion secondary placement announcement, ASICS Corp (7936 JP)’s shares are up 0.9% from the undisturbed price of JPY2,564 per share (12 July).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asics’ shares have deviated from the pattern of previous large placements.
- The offering will likely be priced on 23 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.
Furukawa Battery (6937) – Ugly Process in Virtual Take-Under Take-Private
- Today after the close, Advantage Partners announced the intention to launch a TOB to take over Furukawa Battery (6937 JP) at ¥1,400 – a 26% premium to last.
- This will require substantial time to obtain regulatory and foreign investment clearances so it is anticipated the Tender Offer will be launched at end-March 2025. I expect that is conservative.
- The price paid to minorities is a premium. But the price paid by the buyer is actually a takeunder. And it gets worse from there.
NIFTY50 Index Rebalance Preview: Big Flow, Big Impact, Big Positioning
- Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are shoo-ins to replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
- Passive NIFTY Index trackers will need to trade at least 3.3x ADV and 7.7x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
- Cumulative excess volume has increased in all stocks but there are some stocks where there will still be more positioning over the next few weeks.
True Wind Raises Partial TOB Price for Sun Corp (6736 JP) By 8%. Not Enough.
- Today, the final day of the Tender Offer that True Wind Capital launched on 10 June 2024 to buy 19% of Sun Corp (6736 JP), TWC raised its price to ¥4,750/share./
- They also lowered their minimum from 3.7934mm shares (17.0%) to 3.3472mm shares (15.0%).
- As Cellebrite DI (CLBT US) had traded higher, SunCorp had too, and even though shares fell today, they are at ¥4,785/share.
Toyota’s BIG Buyback Via Tender Offer from Banks & Insurers
- With FY23 earnings in May, Toyota Motor (7203 JP) announced a ¥1trn buyback (410mm shares, 3.04%). Given shares were ¥3,599 the day before, it meant fewer shares or a Tender.
- Like Honda (who hadn’t bought pre-offering), Toyota hadn’t bought back in the first couple of months. We knew there was bank and insurer overhang. That overhang lasts for years.
- Today, Toyota announced an “organised” 410mm share ¥1trln Tender Offer Buyback. Several financial institutions have announced plans to tender. This provides guidance on supply/demand for the rest of the year.
Furukawa Battery (6937 JP): Long-Dated Pre-Conditional Offer at JPY1,400
- Furukawa Battery (6937 JP) recommended a pre-conditional tender offer from Advantage Partners, Tokyo Century Corp (8439 JP) and Furukawa Electric (5801 JP) consortium at JPY1,400, 22.6% premium to the undisturbed price.
- The precondition is approval under the competition laws of Japan and Thailand. The offer is long-dated and anticipated to commence in March 2025.
- While not a knockout bid, the required minority acceptance rate is not onerous. A long-dated offer presents a free option on a bump due to earnings upside or a counteroffer.
Sun Corporation (6736 JP): The Uphill Struggle for True Wind’s Revised Partial Offer
- True Wind has increased its partial offer for Sun Corp (6736 JP) by 8.0% to JPY4,750 and lowered the minimum number of shares to be purchased from 3.8 to 3.3m.
- True Wind’s offer has inadvertently spotlighted the valuation disparity vs the Cellebrite DI (CLBT US) stake, resulting in the shares trading through terms.
- True Wind’s revised offer will struggle to succeed as the 8% price uplift is materially lower than the 19% value increase in the Cellebrite stake (since the offer announcement).
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
