In this briefing:
1. HHI – DSME Acquisition: Current Situation & Trade Approach
- The DSME deal between HHI and KDB was officially finalized last Friday. We will then have the following four step process. Schedule detail is yet to come out. HHI intermediate holdco is named Korea Shipbuilding & Offshore Engineering, or KSOE.
- HHI went south by nearly 4% last Friday when the deal was finalized. DSME stayed flat. Why did this happen? There was another story we heard last Friday. HHI and Korea Eximbank agreed that the ₩2.3tril CBs wouldn’t be converted into DSME shares and disposed any time soon. Not only that, there will be a downwardly interest adjustment to help ease DSME’s financial burden.
- This agreement immediately sparked a speculation that HHI must have pledged Korea Eximbank some sort of DSME valuation pushings. This is like a value transfer rather from HHI to DSME. I’d wrap the current HHI long/DSEM short position at this point. Short-term, I expect DSME outperforming HHI. Longer term, I still doubt what value transfer from who to who. I’d rather stay away from both.
2. Omron into the Nikkei 225, Pioneer Out
Friday 8 March after the close, the Nikkei announced that because the third party share sale of Pioneer Corp (6773 JP) had been completed, it would be deleted from the Nikkei 225 Average (and the Nikkei 500 Index). Omron Corp (6645 JP) will replace Pioneer in the Nikkei 225 Average, with a deemed par value of 50 yen per share.
The date for this index deletion and inclusion event is the 15th of March, as per the schedule of the February 19th announcement as to how the Pioneer event would be treated.
This affords special sits/events followers a couple of different events to look at.
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