Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Sankyo (6417) - Second Go-Round for a BIG Buyback

Quiddity Advisors

Event-Driven

On 6 August 2019, pachinko machinery maker <a href="https://www.smartkarma.com/entities/sankyo-co-ltd" target="_blank" data-smartkarma-citation="entities:12385:1" rel="noopener">Sankyo Co Ltd (6417 JP)</a> announced that it would try to buy back just over 22,000,000 shares for ¥75.37 billion, and announced it would cancel the resulting treasury shares after the completion of the buyback.
The company has consistently bought back shares for the past ten years, and has traded in a reasonably stable price range in that period, despite seeing Revenues and Operating Profits fall sharply in that period. The company has been significantly cash-rich for the twenty years I have watched it.
Of course, in an industry like Sankyo inhabits, given the general level of skepticism about the industry's long-term future, good capital policy should be seen as super-important. One might consider the business to be in permanent long-term run-off.
<h2>The Buyback News</h2>
The company will buy back those shares principally from Marf Corporation ("MC"), which is the personal company of Mr. Hideyuki Busujima who is the Representative Director and Chairman of Sankyo, and son of founder Kunio Busujima who passed away in 2016. MC held 28.346mm shares as of 31 March, or 34.92%. Family members own a bit more under their own names.
The buyback will be conducted through the means of a Tender Offer at JPY 3,426/share which is a 10.0% discount to the one-month average closing price in the month to 5 August. It was a 5.6% discount to the closing price before the announcement was made.
International active investors should take note of three really important things here:
<ol>
<li>This tender offer is not for you, even if the share price falls below the Tender Offer Price. There are mechanics to these things which make it unattractive for you. </li>
<li>There may be another way to achieve a slightly better result than the Tender Offer if you want to sell shares. The company has created the means of effectively enlarging the size of the buyback if there are willing sellers.</li>
<li>The more people who sell, the more this becomes interesting on the back end. </li>
</ol>
Read on below for more.
<hr>
For more information on Japanese Tender Offers and M&amp;A, please refer to the <a href="https://www.smartkarma.com/insights/quiddity-japan-m-a-guide-2019" target="_blank" rel="noopener">Quiddity Japan M&amp;A Guide</a> which is meant as a guide to the rules and practices of M&amp;A and Tender Offers in Japan, including minority and dissenter rights.

On 6 August 2019, pachinko machinery maker Sankyo Co Ltd (6417 JP) announced that it would try to buy back just over 22,000,000 shares for ¥75.37 billion, and announced it would cancel the resulting treasury shares after the completion of the buyback.
The company has consistently bought back shares for the past ten years, and has traded in a reasonably stable price range in that period, despite seeing Revenues and Operating Profits fall sharply in that period. The company has been significantly cash-rich for the twenty years I have watched it.
Of course, in an industry like Sankyo inhabits, given the general level of skepticism about the industry's long-term future, good capital policy should be seen as super-important. One might consider the business to be in permanent long-term run-off.
The Buyback News
The company will buy back those shares principally from Marf Corporation ("MC"), which is the personal company of Mr. Hideyuki Busujima who is the Representative Director and Chairman of Sankyo, and son of founder Kunio Busujima who passed away in 2016. MC held 28.346mm shares as of 31 March, or 34.92%. Family members own a bit more under their own names.
The buyback will be conducted through the means of a Tender Offer at JPY 3,426/share which is a 10.0% discount to the one-month average closing price in the month to 5 August. It was a 5.6% discount to the closing price before the announcement was made.
International active investors should take note of three really important things here:

This tender offer is not for you, even if the share price falls below the Tender Offer Price. There are mechanics to these things which make it unattractive for you. 
There may be another way to achieve a slightly better result than the Tender Offer if you want to sell shares. The company has created the means of effectively enlarging the size of the buyback if there are willing sellers.
The more people who sell, the more this becomes interesting on the back end. 

Read on below for more.

For more information on Japanese Tender Offers and M&amp;A, please refer to the Quiddity Japan M&amp;A Guide which is meant as a guide to the rules and practices of M&amp;A and Tender Offers in Japan, including minority and dissenter rights.

Accretive Sankyo Self-Tender - Boring But A Good Kind of Boring, With Something For Everyone