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

New ams Deal for Osram In Store - It's Doable

Second ams Deal for Osram - Concessions And "Elbow Calculus"

ams AG Finds a Loophole: Ups the Osram Bid to €41 but Does Not Extend

Ams Deal for Osram On the Table: Trading Wide

Quiddity Advisors

Event-Driven

After buying 100 shares at €41/share last week when the market was trading sub-€39, <a href="https://www.smartkarma.com/entities/ams-ag" target="_blank" data-smartkarma-citation="entities:22278:1" rel="noopener">ams AG (AMS SW)</a> obligated themselves to pay €41/share for all of <a href="https://www.smartkarma.com/entities/osram-licht-ag" target="_blank" data-smartkarma-citation="entities:21689:1" rel="noopener">OSRAM Licht AG (OSR GR)</a>. However, because ams did not file an amendment to the Offer Prospectus, they were not obliged to extend the Offer Period. So they did not. The Offer Period closed on 1 October and they urged people to tender. This was viewed as a risk. But ams took it. And they bought shares in the market which would allow them to have a seat at the table in case they did not reach the minimum offer threshold.Late Friday they announced the results:<blockquote>
ams, a leading worldwide supplier of high performance sensor solutions, announces that the minimum acceptance threshold of 62.5% required in conjunction with the all-cash takeover offer for OSRAM Licht AG announced on 3 September 2019 was not achieved. The final acceptances level was 51.6%.
As a result of purchases prior to the expiry of the ams Offer, ams is currently the largest shareholder in OSRAM with a direct shareholding of 19.99%. ams will not exceed this current direct shareholding of 19.99% before having obtained required merger control and other regulatory clearances.
ams continues to view the combination of ams and OSRAM as strategically compelling given that it would enable the creation of a global leader in sensor solutions and photonics. To this effect and supported by ams shareholders, ams continues to explore strategic options to pursue the acquisition of OSRAM, on the basis of its shareholding position, as this will translate into a stronger combined company.
“While the highly attractive ams Offer for OSRAM at a full valuation was not successful, the strategic logic and the significant advantages of combining ams and OSRAM are unchanged,” said Alexander Everke, CEO of ams. “Our vision with OSRAM is to create a global leader in sensor solutions and photonics built around European technology, which will ensure that Europe remains at the forefront of optical technology globally. We intend to leverage our position as OSRAM's largest shareholder in a dialog with OSRAM as we continue to pursue the full acquisition of the company, securing a solid future for OSRAM.”  [ed: my bold]
</blockquote>51.6% is not great. It means ams got 31.6% of the 80% they did not own (though they probably bought shares in the market which had intended to tender but decided to get out without the risk of the deal not going through), when they needed 42.5%. The path forward is not clear. The aftermarket reaction was to send the shares below €38 and briefly below €37.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/100/829/original/Screenshot%202019-10-05%20at%2011.23.38%20AM.png?1570247809" class="editor-image img-responsive" data-smartkarma-image-id="100829"></figure><div style="text-align: left;" class="content-caption">source: tradingview.com, Quiddity</div><hr>After the results, Osram provided a <a href="https://www.osram-group.com/en/media/press-releases/pr-2019/04-10-2019b" target="_blank" rel="noopener">press release</a> saying... <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/100/828/original/Screenshot%202019-10-05%20at%2011.56.03%20AM.png?1570247778" class="editor-image img-responsive" data-smartkarma-image-id="100828"></figure><div class="content-highlight">The important part for investors is the one where it says Advent and Bain Capital are currently inspecting the books with a view to submitting an offer for Osram. </div>Given ams' shareholding in Osram, I expect they may need to have a discussion with ams.And there are things ams can do as well, separately, to further its own cause. More detail below.

After buying 100 shares at €41/share last week when the market was trading sub-€39, ams AG (AMS SW) obligated themselves to pay €41/share for all of OSRAM Licht AG (OSR GR). However, because ams did not file an amendment to the Offer Prospectus, they were not obliged to extend the Offer Period. So they did not. The Offer Period closed on 1 October and they urged people to tender. This was viewed as a risk. But ams took it. And they bought shares in the market which would allow them to have a seat at the table in case they did not reach the minimum offer threshold.Late Friday they announced the results:
ams, a leading worldwide supplier of high performance sensor solutions, announces that the minimum acceptance threshold of 62.5% required in conjunction with the all-cash takeover offer for OSRAM Licht AG announced on 3 September 2019 was not achieved. The final acceptances level was 51.6%.
As a result of purchases prior to the expiry of the ams Offer, ams is currently the largest shareholder in OSRAM with a direct shareholding of 19.99%. ams will not exceed this current direct shareholding of 19.99% before having obtained required merger control and other regulatory clearances.
ams continues to view the combination of ams and OSRAM as strategically compelling given that it would enable the creation of a global leader in sensor solutions and photonics. To this effect and supported by ams shareholders, ams continues to explore strategic options to pursue the acquisition of OSRAM, on the basis of its shareholding position, as this will translate into a stronger combined company.
“While the highly attractive ams Offer for OSRAM at a full valuation was not successful, the strategic logic and the significant advantages of combining ams and OSRAM are unchanged,” said Alexander Everke, CEO of ams. “Our vision with OSRAM is to create a global leader in sensor solutions and photonics built around European technology, which will ensure that Europe remains at the forefront of optical technology globally. We intend to leverage our position as OSRAM's largest shareholder in a dialog with OSRAM as we continue to pursue the full acquisition of the company, securing a solid future for OSRAM.”  [ed: my bold]
51.6% is not great. It means ams got 31.6% of the 80% they did not own (though they probably bought shares in the market which had intended to tender but decided to get out without the risk of the deal not going through), when they needed 42.5%. The path forward is not clear. The aftermarket reaction was to send the shares below €38 and briefly below €37.source: tradingview.com, QuiddityAfter the results, Osram provided a press release saying... The important part for investors is the one where it says Advent and Bain Capital are currently inspecting the books with a view to submitting an offer for Osram. Given ams' shareholding in Osram, I expect they may need to have a discussion with ams.And there are things ams can do as well, separately, to further its own cause. More detail below.

Ams Offer Does Not Win Osram. Back To Square 2.