In today’s briefing:
- 7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce
- KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
- Malaysia Airports (MAHB MK): Mavcom Approval. Sort Of
- INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
- NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
- CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
- 2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock
- Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
- SBI Fintech Solutions: Tender Offer and Delisting
- Samsung Electronics: A Massive 10 Trillion Won Share Buyback Program
7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce
- Yesterday a news article from Bloomberg suggested 7&i was “considering” an MBO. Seven & I Holdings (3382 JP) later confirmed they had received a non-binding proposal from ITO Junro/family.
- The initial number was ¥9trln. If market cap? High. If EV, too low. That would have implied a price just over the first “grossly inadequate” ACT price.
- There is a lot we don’t know. This changes the landscape. It probably shifts the range trade, but it will shift more when we get more clarity on ITO-san’s price.
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
- Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
- Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
- There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.
Malaysia Airports (MAHB MK): Mavcom Approval. Sort Of
- On the 30th October, Malaysian Aviation Commission (Mavcom) said Gateway Development Alliance (GDA)’s proposed privatisation of Malaysia Airports (MAHB MK) did not infringe on the Malaysian Aviation Commission Act 2015.
- Mavcom followed that statement with it “welcomes any party to submit written feedback on the proposed decision by email .. by .. Nov 6”. So, it’s been approved or not?
- In addition, there was conjecture earlier this year whether Mavcom, which will shortly be subsumed by the Civil Aviation Authority of Malaysia, had the clout to prevent the MAHB deal.
INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
- The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
- There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
- There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes.
NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
- On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
- On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
- The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.
CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
- Today, CVC announced a deal to buy out Macromill, Inc (3978 JP). It is agreed and supported by management and the Board.
- The shareholder register on this stock is wide open. It is not burdened by crossholders. It IS burdened by 7 large active holders who have 55%.
- Those holders may complain about the process, the transparency, and the low price. This could be a target for an activist or a strategic overbidder.
2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock
- Ping An Healthcare (1833 HK) (PA Gooddoctor), which was spun off from Ping An Insurance (601318 CH) and listed in May 2018, has announced a change in use of proceeds.
- Part of that change includes the payment of a punchy HK$9.70/share special dividend.
- The more interesting aspect is that a scrip dividend is also afforded, which should allow a stealth MBO from Ping An at zero premium.
Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
- A Democratic Party insider noted some proposals need legal tweaks, so the December 10 deadline may slip, but they’re set on passing the expanded director loyalty duty.
- FKI analyzed top conglomerates’ shareholder structures and found four of the top 10 facing substantial risks.
- We need more clarity before jumping in, but with MBK driving Korea’s hostile M&A scene and the Commercial Act amendments, local chaebols facing control battles are a key KOSPI theme.
SBI Fintech Solutions: Tender Offer and Delisting
- After the market close on 14 November, SBI Fintech Solutions announced that the Japanese financial group SBI is pushing for a tender offer and delisting of SBI Fintech Solutions.
- The tender offer price is 5,000 won per share, which is 36% higher than the closing price on 14 November. The tender offer size amount is about 26 billion won.
- Given the relatively solid upside, we believe SBI Holdings is likely to successfully complete this tender offer and take the company private.
Samsung Electronics: A Massive 10 Trillion Won Share Buyback Program
- Samsung Electronics (005930 KS) announced a massive share buyback program worth 10 trillion won which represents 3.1% of its market cap.
- Of this total amount, about 3 trillion won will be purchased and cancelled in the next three months. This will include 50,144,628 common shares and 6,912,036 preferred shares.
- We believe that this massive share buyback and cancellation is likely to boost Samsung Electronics’ share price resulting in a strong outperformance relative to KOSPI in the next 6-12 months.
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