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

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Quiddity Advisors

Event-Driven

<p>Today after the close, food (margarine, oils &amp; fats for chocolate and similar, shortening, frying oil, etc) and chemical (polymer additives, chemicals for semiconductor mfg processes/etc, and other advanced upstream chemicals) business <a href="https://www.smartkarma.com/entities/3122" target="_blank" data-smartkarma-citation="entities:3122:1">Adeka Corp (4401 JP)</a> announced that it would conduct a Partial Tender Offer for a stake in agrochemical company <a href="https://www.smartkarma.com/entities/17345" target="_blank" data-smartkarma-citation="entities:17345:1">Nihon Nohyaku (4997 JP)</a>. </p><p>Adeka already owns 16,176,000 shares or 23.10% of shares outstanding and would lift its stake by a minimum of 7,667,952 shares and a maximum of 12,056,049 shares to end with a stake of 34.06-40.33% of shares outstanding. The Tender Offer Price is ¥900/share, which is a 33% premium to today's close, and about a 36% premium to the 52-week average. It is, however, well below the 5-year high price. </p><p>On the condition that the Partial Tender Offer is a success, Nippon Nohyaku would THEN conduct a Third Party Offer, selling up to 20,895,600 shares at ¥670/share (for up to ¥14bn), with payment for the shares occurring between 28-Sep 2018 and one month later. The actual number of shares sold would depend on the results of the Tender Offer, but the result would be that Nippon Nohyaku would sell enough shares to get ADEKA to a 51% position after all is said and done. <em>This is the deal that <a href="https://www.smartkarma.com/entities/961" target="_blank" data-smartkarma-citation="entities:961:1">Nippon Steel &amp; Sumitomo Metal (5401 JP)</a> should have done with <a href="https://www.smartkarma.com/entities/15900" target="_blank" data-smartkarma-citation="entities:15900:1">Sanyo Special Steel (5481 JP)</a>. </em></p><p>Given the situation, I <em>expect</em> that the result will be that the maximum will be tendered, and therefore the capital injection will be at the small end. ADEKA expects it at 11.94mm shares.</p><table class="table table-striped"><tbody>
<tr><td colspan="4"><h2>Tender Offer Details</h2></td></tr>
<tr>
<td><strong>Situation</strong></td>
<td style="text-align: right;"><strong>Shares</strong></td>
<td style="text-align: right;"><strong>% of Shares Out</strong></td>
<td style="text-align: right;"><strong>% of Shares Out<br>ex-Tsy</strong></td>
</tr>
<tr>
<td>ADEKA (including subs) Owns Now</td>
<td style="text-align: right;">16,179,629</td>
<td style="text-align: right;">23.11%</td>
<td style="text-align: right;">24.21%</td>
</tr>
<tr>
<td>Treasury Shares (as of 30-June-2018 (end of Q3))</td>
<td style="text-align: right;">3,190,656</td>
<td style="text-align: right;">4.56%</td>
<td style="text-align: right;">4.77%</td>
</tr>
<tr>
<td>Shares Outstanding</td>
<td style="text-align: right;">70,000,000</td>
<td style="text-align: right;">100.00%</td>
<td style="text-align: right;"></td>
</tr>
<tr><td colspan="4"></td></tr>
<tr>
<td><strong>Tender Minimum</strong></td>
<td style="text-align: right;"><strong>7,667,952</strong></td>
<td style="text-align: right;"><strong>10.95%</strong></td>
<td style="text-align: right;"><strong>11.47%</strong></td>
</tr>
<tr>
<td>Result if Tender Minimum Purchased</td>
<td style="text-align: right;">23,843,952</td>
<td style="text-align: right;">34.06%</td>
<td style="text-align: right;">35.69%</td>
</tr>
<tr><td colspan="4"></td></tr>
<tr>
<td><strong>Tender Maximum</strong></td>
<td style="text-align: right;"><strong>12,056,049</strong></td>
<td style="text-align: right;"><strong>17.22%</strong></td>
<td style="text-align: right;"><strong>18.04%</strong></td>
</tr>
<tr>
<td>Result if Tender Maximum Purchased</td>
<td style="text-align: right;">28,232,049</td>
<td style="text-align: right;">40.33%</td>
<td style="text-align: right;">42.26%</td>
</tr>
<tr><td colspan="4"></td></tr>
<tr>
<td colspan="2">Tender Offer Price</td>
<td colspan="2" style="text-align: center;">¥900 / share</td>
</tr>
<tr>
<td colspan="2">Tender Agent</td>
<td colspan="2" style="text-align: center;">Nomura Securities</td>
</tr>
</tbody></table><h2>Schedule</h2><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 848px;"><h2> Schedule of Tender Offer </h2></td></tr>
<tr>
<td style="width: 541.5px;"><p><strong> Event </strong></p></td>
<td style="width: 306.5px;"><p><strong>Date</strong></p></td>
</tr>
<tr>
<td style="width: 541.5px;"><p> Announcement Date </p></td>
<td style="width: 306.5px;"><p>21-Aug-18</p></td>
</tr>
<tr>
<td style="width: 541.5px;"><p> Start Date </p></td>
<td style="width: 306.5px;"><p>22-Aug-18</p></td>
</tr>
<tr>
<td style="width: 541.5px;"><p> Closing Date </p></td>
<td style="width: 306.5px;"><p>19-Sep-18</p></td>
</tr>
<tr>
<td style="width: 541.5px;"><p> Payment Date </p></td>
<td style="width: 306.5px;"><p>27-Sep-18</p></td>
</tr>
</tbody></table><p>This insight continues with fundamentals, shareholder breakdown, pro-ration analysis, and more.</p><p>A companion insight will have the Arb Grids.</p>

Today after the close, food (margarine, oils &amp; fats for chocolate and similar, shortening, frying oil, etc) and chemical (polymer additives, chemicals for semiconductor mfg processes/etc, and other advanced upstream chemicals) business Adeka Corp (4401 JP) announced that it would conduct a Partial Tender Offer for a stake in agrochemical company Nihon Nohyaku (4997 JP). Adeka already owns 16,176,000 shares or 23.10% of shares outstanding and would lift its stake by a minimum of 7,667,952 shares and a maximum of 12,056,049 shares to end with a stake of 34.06-40.33% of shares outstanding. The Tender Offer Price is ¥900/share, which is a 33% premium to today's close, and about a 36% premium to the 52-week average. It is, however, well below the 5-year high price. On the condition that the Partial Tender Offer is a success, Nippon Nohyaku would THEN conduct a Third Party Offer, selling up to 20,895,600 shares at ¥670/share (for up to ¥14bn), with payment for the shares occurring between 28-Sep 2018 and one month later. The actual number of shares sold would depend on the results of the Tender Offer, but the result would be that Nippon Nohyaku would sell enough shares to get ADEKA to a 51% position after all is said and done. This is the deal that Nippon Steel &amp; Sumitomo Metal (5401 JP) should have done with Sanyo Special Steel (5481 JP). Given the situation, I expect that the result will be that the maximum will be tendered, and therefore the capital injection will be at the small end. ADEKA expects it at 11.94mm shares.
Tender Offer Details

Situation
Shares
% of Shares Out
% of Shares Out ex-Tsy


ADEKA (including subs) Owns Now
16,179,629
23.11%
24.21%


Treasury Shares (as of 30-June-2018 (end of Q3))
3,190,656
4.56%
4.77%


Shares Outstanding
70,000,000
100.00%




Tender Minimum
7,667,952
10.95%
11.47%


Result if Tender Minimum Purchased
23,843,952
34.06%
35.69%



Tender Maximum
12,056,049
17.22%
18.04%


Result if Tender Maximum Purchased
28,232,049
40.33%
42.26%



Tender Offer Price
¥900 / share


Tender Agent
Nomura Securities

Schedule
 Schedule of Tender Offer 

 Event 
Date


 Announcement Date 
21-Aug-18


 Start Date 
22-Aug-18


 Closing Date 
19-Sep-18


 Payment Date 
27-Sep-18

This insight continues with fundamentals, shareholder breakdown, pro-ration analysis, and more.A companion insight will have the Arb Grids.

ADEKA Partial TOB for Nihon Nohyaku (4997 JP) : Part I