Weekly Top Ten Event-Driven and Index Rebalance – Apr 13, 2025

1. Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)

By Travis Lundy, Quiddity Advisors

• In early February, Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share. They had approached in October 2024, and continued approaches through end-January.
• Shibaura’s bankers approached Minebea Mitsumi (6479 JP) in January. Due diligence, then bids. They bid ¥4,600. Not enough said the SC. Then Trump. Then ¥4,400. Now ¥4,500 accepted 9 April.
• But Trump tariffs relief came 9 April US time. And the Offer Price is below the mid-point of ALL three different financial advisors. I think this is not done yet.

2. Aussie Arbs: Trump Tariffs And MACs

By David Blennerhassett, Quiddity Advisors

• Travis Lundy succinctly summarised the Trump Tariffs in Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated. Do read his note.
• From an arb standpoint, most (all?) NBIOs will likely see a downward revision in pricing. Vote risk should also be reduced.
• Such tariffs on predominantly domestic businesses should not trigger material adverse changes (MACs) Down Under. But it is still a worthwhile project to dig a little deeper.  

3. HK Merger Arb: Opportunities Amidst the Market Selloff

By Arun George, Global Equity Research Ltd

• The gross spreads of large HK merger arb situations have increased due to the unfortunate fallout from Trump’s trade war. The HSI closed down 13.2%.
• We assess the widening spreads of HK’s merger arb situations based on offer structure, preconditions, conditions, and other factors.
• The deals, ranked in terms of increasing deal risk, are Tam Jai, Soundwill, Vesync, Goldlion, Canvest, ESR, OneConnect, HKBN, and ENN Energy.

4. 7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback

By Travis Lundy, Quiddity Advisors

• Today, Seven & I Holdings (3382 JP) reported full-year earnings. The FY2025 guidance looks OK. Not overly exciting. Optically, it falls short, but 7&i guidance includes York only for H1. 
• The basic outlines of strategy in the Presentation are unchanged from the 6 March strategy report. The company seems convinced an IPO of SEI is a good thing. I’m underwhelmed.
• The company also announced that it would bring forward ¥600bn of its planned 6-year ¥2trln buyback program, and execute it this year. That’s good. 

5. China ETF Inflows & Implications: Central Huijin’s Huge Buying

By Brian Freitas, Periscope Analytics

• Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
• Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
• There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.

6. Suzuki Motor (7269 JP) Placement: Limited Index Buying & Weak Markets Could Pressure Stock

By Brian Freitas, Periscope Analytics

• Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to offload their entire stakes in Suzuki Motor (7269 JP) by way of a secondary offering.
• With the size of the secondary offering less than 5% of the number of shares, there could be no index buying in the short-term and that will pressure the stock.
• If the overallotment option is exercised and the seller of the shares is currently considered as non-float, there could be small passive buying in the short-term.

7. Hong Kong Arbs: (Largely) Immune From Trump Tariffs

By David Blennerhassett, Quiddity Advisors

• In Aussie Arbs: Trump Tariffs And MACs, I ran a ruler over the fifteen live deals Down Under, and how they may be affected by the Trump Tariffs.
• This insight canvasses the ongoing Hong Kong arbs and wording surrounding material adverse changes (MACs). Hong Kong MACs are typically less onerous, and lack specificity, versus Aussie arbs.
• Although the framework exists for an Offeror to enforce a MAC, I’m not aware of any evidence of this occurring under Hong Kong’s Takeovers Code.

8. Korea Short Selling: Biggest Changes in Shorts & Trade Performance

By Brian Freitas, Periscope Analytics

• The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
• Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
• The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.

9. MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm

By Travis Lundy, Quiddity Advisors

• On 3 April mid-day, Mitsubishi Corp (8058 JP) announced its FY25 earnings guidance and new “Shareholder Return Strategy”, a ¥1 trillion buyback, and its “Corporate Strategy 2027” Mid-Term Management Plan.
• The FY25 forecast is for a third consecutive decline in underlying operating cashflow, but a hike in dividend from ¥100 to ¥110 and a ¥1trln share buyback, including ¥230bn tender.
• The combination of dividend and buyback should be 15% of market cap over the next 12mos. And I expect Warren Buffett will consider buying dips.

10. Abacus Storage King (ASK AU) Gets an NBIO from Ki Corp & PSA

By Brian Freitas, Periscope Analytics

• Abacus Storage King (ASK AU) was demerged from Abacus Property Group in 2023 and the stock has traded in a range since listing.
• Now, Ki Corp and Public Storage (PSA US) have made a conditional and non-binding proposal to take Abacus Storage King (ASK AU) private at A$1.47/share.
• The offer is a 27% premium to the last close of the stock and is higher than the price that the stock has traded at since listing.