In today’s briefing:
- Korea: Potential Relegations from K League 1
- Nidec Goes Hostile On Makino Milling at ¥11,000/Share
- Shin Kong/Taishin Merger – Proceeding Apace
- Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
- Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done
- Three Presidents in One Month in South Korea – What’s Next?
- (Mostly) Asia-Pac M&A: Makino, Henlius, GAPack, Nec Networks, Suntec REIT, VCredit, Pentamaster
- Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
- InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
- Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
Korea: Potential Relegations from K League 1
- There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
- There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
- Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
- This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
- The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
- But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.
Shin Kong/Taishin Merger – Proceeding Apace
- Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
- It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
- This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.
Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
- In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
- On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
- The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.
Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done
- Vesync (2148 HK) disclosed a Cayman scheme privatisation offer from the Yang family at HK$5.60, a 33.3% premium to the last close price of HK$4.20. The offer is final.
- While the offer is marginally above the IPO price, it is light compared to sell-side price targets, peer multiples and historical trading ranges.
- Nevertheless, the scrip option, irrevocables and no disinterested shareholder holding a blocking stake facilitate the scheme vote. The offer could be completed by May.
Three Presidents in One Month in South Korea – What’s Next?
- The acting South Korean President Han Duck-Soo was impeached by the South Korea’s Parliament on 27 December. Choi Sang-Mok (finance minister) is now the new, acting President of South Korea.
- There could be multiple impeachments of acting Presidents in the next several weeks which would be unprecedented and raise further concerns about the lack of political stability in South Korea.
- Amid all this political uncertainty, Yoon Suk-Yeol’s approval rating has been improving sharply to more than 30%.
(Mostly) Asia-Pac M&A: Makino, Henlius, GAPack, Nec Networks, Suntec REIT, VCredit, Pentamaster
- I tally 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Four new deals this week: Makino Milling Machine Co (6135 JP)‘s hostile Offer; VCredit Holdings Ltd (2003 HK)‘s takeunder; Vesync (2148 HK)‘s Scheme, and Pentamaster International (1665 HK)‘s Scheme.
- Key updates/news took place on: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Nec Networks & System Integr (1973 JP), and Suntec REIT (SUN SP).
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
- When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
- And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
- The blocking stake is 1.675%. Expect around fourth months to complete. This is done.
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
- InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
- InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
- Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.
Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Seven & I Holdings (3382 JP), Arcadium Lithium (LTM AU), Get Nice Financial Group Ltd (1469 HK).
- Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU), Lac Co Ltd (3857 JP).
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