In today’s briefing:
- S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
- [JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run
- Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID
- Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender
- TOPIX Inclusions: Who Is Ready (September 2024)
- M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)
- Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower
- Young Poong Precision (036560 KS) Also Now Trading Through Terms
- Details of MBK’s Four Major Concerns on Management of Korea Zinc
- Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?
S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
- There are 2 changes for the S&P/ASX100 Index, 3 changes for the S&P/ASX 200 (AS51 INDEX) and 16 adds/ 8 deletes for the S&P/ASX300 Index.
- The two big surprises are the inclusion of Guzman Y Gomez (GYG AU) and Yancoal Australia (YAL AU) in the S&P/ASX 200 (AS51 INDEX) and S&P/ASX300 Index.
- The adds to the indices have outperformed the deletes over the last few months and there could be profit-taking in the next few days.
[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run
- In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP) . The market dropped. But that was the opportunity.
- On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.” It’s up 21.5% since (the day after). Peers are down 15-20%.
- The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There’s LOTS of cash left.
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.
Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender
- KKR has rejigged its Fuji Soft Inc (9749 JP) tender offer into a two-stage offer at an unchanged JPY8,800 price. The first stage has no minimum acceptance condition.
- The first stage is designed to facilitate KKR’s acquisition of 3D and Farallon shares, which have tendered and will not withdraw their tenders without KKR’s consent.
- By securing 3D/Farallon’s shares, KKR has effectively blocked a Bain tender offer. Bain could launch a partial offer but it would be constrained by the tradeable share ratio criteria.
TOPIX Inclusions: Who Is Ready (September 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- SUNWELS Co (9229 JP) and Macbee Planet (7095 JP) moved to the Prime market in July 2024 and their TOPIX Inclusion events took place at the end of August 2024.
- We currently have CELSYS (3663 JP), Japan Eyewear Holdings (5889 JP), and Core Concept Technologies Inc (4371 JP) in our TOPIX Inclusions pre-event watchlist.
M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)
- M3 Inc (2413 JP) will buy 50.1-55.0% of Elan Corp (6099 JP). Three principals+family have agreed to tender 50.1%. The premium is not huge. This is not an ATH.
- There will be synergies. I am a little surprised by the deal+price (CEO is young, why sell so cheaply so early?) but it should be good for the TargetCo.
- There are possible post-tender complications on a high participation rate. I expect those can be cured relatively easily.
Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower
- Yesterday, KKR amended its plans to take over Fuji Soft Inc (9749 JP) by creating a Two-Tender Scheme, effectively lowering the threshold for eventual success through clearly coercive tactics.
- 3D (23.46%) and Farallon (9.22%) had already tendered. Contractual terms make it difficult (not impossible) to withdraw. Assuming it goes through, KKR has 32.68%, quasi-negative control.
- This revised structure is clearly abusive of minorities and NOT the deal Fuji Soft signed. This should cause Fuji Soft to Change their Opinion. Shareholder (and Bain) Pressure would help.
Young Poong Precision (036560 KS) Also Now Trading Through Terms
- On the 13th September, MBK joined Young Poong (000670 KS) in seeking control of Korea Zinc (010130 KS) via Partial Tender Offers for KZ and Young Poong Precision (036560 KS).
- This situation has been canvassed by analysts here at Smartkarma; with increasing expectation the Choi family makes a counterbid.
- This insight analyses the fair value of YPP. No matter how you slice it, the Offer Price is punchy. Perhaps not punchier enough.
Details of MBK’s Four Major Concerns on Management of Korea Zinc
- In this insight, we discuss in detail MBK’s four major concerns on the management of Korea Zinc.
- We believe that MBK has legitimate concerns on especially the three factors including poor investments, deteriorating profitability, and increase in equity capital/disposal of treasury shares.
- If and when the 2 trillion won+ is raised, then it could lead to another tender offer and the four concerns highlighted in this insight become much more important.
Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?
- Jeisys Medical’s getting booted from the KOSDAQ 150, and HLB Therapeutics is stepping in as the new addition. This change will officially hit the book on Wednesday, September 25.
- HLB Therapeutics, with a ₩0.70T market cap and 87% float, is set for a 0.51% weight in KOSDAQ 150, triggering over 2 million shares in passive buying: 3.26x 30-day ADTV.
- With today’s after-hours volume spike in HLB Therapeutics, we’re likely to see some price action from early movers spilling into Monday’s open, similar to what we saw with Webzen.
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