In today’s briefing:
- MEGA M&A! 7&I (3382 JP) Gets Non-Binding Bid from Alimentation Couche-Tard (ATD CN)
- Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID
- Hang Seng Internet & IT Index Rebalance: Three Changes & A Few Surprises
- Apple Inc (AAPL US): $43bn Passive Buying Driven by Berkshire Selling & Market Consultation
- Seven & I Holdings (3382 JP): Couche-Tard “friendly” Proposal Likely to Go Nowhere
- Apple (AAPL): Berkshire’s Sell-Off Triggers $37bn Demand from S&P 500
- EQT’s Offer For PropertyGuru (NYSE:PGRU): As Clean As It Gets
- Peptron Rights Issue: The 25% Discount Is an Attractive Outright Position Opportunity
- Lumir IPO Preview
- FXI Rebalance Preview: China Tower (788 HK) Could Replace CICC (3908 HK)
MEGA M&A! 7&I (3382 JP) Gets Non-Binding Bid from Alimentation Couche-Tard (ATD CN)
- Today, part-way through the day, the Nikkei ran an article saying that Alimentation Couche-Tard (ATD CN) had made a confidential non-binding proposal to buy Seven & I Holdings (3382 JP).
- 7&i shares obviously went up (limit up in a hurry, staying there, large size traded limit up at close).
- Now things get complicated. 7&i has said they received a non-binding proposal for all the shares. There will be a Special Committee of all Independent Directors. All stakeholders will matter.
Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID
- Tokyo Metro (TKYMETRO JP)’s shareholders, the Japanese and Tokyo Metropolitan Governments, could look to raise up to US$2bn by selling half of their stake via an IPO.
- Tokyo Metro is one of the two metro network operators in the Tokyo region. It operates nine subway lines.
- In this note, we take an early look at the possible listing.
Hang Seng Internet & IT Index Rebalance: Three Changes & A Few Surprises
- There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the September rebalance. There are some surprises.
- Estimated one-way turnover at the rebalance is 3.4% resulting in a round-trip trade of HK$2.04bn (US$262m). 7 stocks will have over 1x ADV to trade.
- Weimob Inc. (2013 HK) is a surprise add. There is 6x ADV to buy from passive trackers and shorts are 12% of shares out and 24x ADV to cover.
Apple Inc (AAPL US): $43bn Passive Buying Driven by Berkshire Selling & Market Consultation
- Berkshire Hathaway Inc Cl B (BRK/B US) held over 5% of Apple (AAPL US). Nearly half of that was sold in the June quarter to take the holding to 2.63%.
- Berkshire’s selling should result in an increase in Apple (AAPL US)‘s free float in the S&P 500 INDEX (SPX INDEX) and other related indices.
- There will also be large buying in Apple (AAPL US) from the Technology Select Sector SPDR (XLK US) ETF if the proposals in the market consultation are implemented.
Seven & I Holdings (3382 JP): Couche-Tard “friendly” Proposal Likely to Go Nowhere
- Seven & I Holdings (3382 JP) shares rose 22.7% as it confirmed media reports that it had received a confidential, non-binding preliminary proposal from Alimentation Couche-Tard (ATD CN).
- The interest is unsurprising due to the weak share price performance. Since ValueAct’s open letter on 25 January 2022, the shares are up 5.2% vs. the Nikkei 225 up 38.0%.
- Couche-Tard aims for a friendly offer, which is challenging as it requires support from the founder’s family and the Japanese government. Therefore, the probability of a binding proposal is low.
Apple (AAPL): Berkshire’s Sell-Off Triggers $37bn Demand from S&P 500
- Free float is forecasted to increase from ~94% to 100% in S&P 500 and other US and Global indices after Berkshire halved its stake in Apple (AAPL US) .
- Forecasted demand from S&P 500 and S&P TMI is 164.2m shares, $37.1bn and 3.0 ADV at the close of 20 September 2024.
- Materialization of the free float increase is uncertain due to debatable strategic shareholder classification. ETF ratios and current free float improve the confidence of the forecast.
EQT’s Offer For PropertyGuru (NYSE:PGRU): As Clean As It Gets
- Listed on the 18th March 2022 at US$8.33/share, Singaporean-based online real estate portal PropertyGuru (PGRU US) has now announced a US$6.70/share cash Offer from Sweden’s EQT AB.
- That backs out a premium to undisturbed of 52%. Media speculation of a takeover for the TPG/KKR-backed PropertyGuru first surfaced around the 21st May this year.
- TPG and KKR, collectively holding ~56.1%, are supportive. REA Group Ltd (REA AU), holding 17.2%, is also on board. The key Offer condition is two-thirds of shareholders approving terms.
Peptron Rights Issue: The 25% Discount Is an Attractive Outright Position Opportunity
- Peptron’s lack of single-stock futures means no risk-free arbitrage but also less speculative selling, making the 25% discount an attractive outright position opportunity.
- The low capital increase rate may stabilize the stock price, and more forfeited shares could lower the cost of securing subscription rights during the trading window.
- Consider buying rights during the trading period or targeting forfeited shares. Conservatively estimate the final offering price range to set a profitable cost for securing rights.
Lumir IPO Preview
- Lumir is getting ready to complete its IPO on KOSDAQ in September. The IPO which is expected to raise between 49.5 billion won to 61.5 billion won.
- Lumir specializes in the development of observation satellite technology including image data processing devices and onboard computers for a number of government satellite series.
- Lumir had sales of 12.1 billion won (up 90.5% YoY) in 2023. Its sales surged by 477% YoY to reach 8.2 billion won in 1H24.
FXI Rebalance Preview: China Tower (788 HK) Could Replace CICC (3908 HK)
- With the review cutoff done, we expect just one change for the iShares China Large-Cap (FXI) (FXI US) ETF in September.
- China Tower (788 HK) is a high probability inclusion while China International Capital Corporation (3908 HK) is a high probability deletion.
- There has been an increase in cumulative excess volume for both stocks in the last few months, but the pace has slowed noticeably in the recent past.
💡 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
