Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

McMillan's Fleet Of Foot Offer for Eclipx

Eclipx Group - All hope on new management driving a turnaround

Quiddity Advisors

Event-Driven

On the 8th November <a href="https://www.smartkarma.com/entities/3023" target="_blank">Mcmillan Shakespeare (MMS AU)</a> and <a href="https://www.smartkarma.com/entities/339" target="_blank" data-smartkarma-citation="entities:339:1">Eclipx (ECX AU)</a> agreed to merge pursuant to a <a href="https://www.asx.com.au/asxpdf/20181108/pdf/4403nqlt7tysgg.pdf" target="_blank">Scheme Implementation Agreement</a>, wherein Eclipx shareholders will receive 0.1414 MMS shares plus A$0.46 cash for each Eclipx share, or $2.85/share based on the (then) closing price of MMS on the 7 November, or a 33.2% premium to Eclipx’s undisturbed share price.
MMS' share price has since declined 19%, equating to a consideration for its scrip/cash deal of $2.36, or ~16% below the initial indicative offer price. MMS' drop has in fact fallen in tandem with the sector, which is down ~9% since the announcement; just that MMS has fallen further, no doubt exacerbated by hedge funds shorting MMS and buying ECX.
To put that in context, <a href="https://www.smartkarma.com/entities/13984" target="_blank" data-smartkarma-citation="entities:13984:1">Sg Fleet (SGF AU)</a>'s rejected cash/scrip Offer in August currently equates to $2.44/share. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/071/361/original/Price%202.PNG?1543296565" class="editor-image img-responsive" data-smartkarma-image-id="71361"></figure>
<div class="content-caption">Source: CapIQ, "Implied Offer"  = at the time of the announcement</div>
The rumour mill suggests SGF is piecing together an equity raising to shore up funding to reload an offer for ECX. SGF's <a href="https://www.asx.com.au/asxpdf/20180820/pdf/43xgqdmsbtggn7.pdf" target="_blank">prior proposal</a> was also to be to be funded from internal resources, new debt and a pro-rata equity entitlement. 
At the time of SGF's rejection, the speculated magic number to engage with ECX management was $3.00, which MMS was able to achieve at a 5% discount. The question is where SGF would need to launch an offer - presumably a mixture of cash and scrip - such that it would be deemed a superior offer to MMS.
ECX is trading through MMS' terms by 4.5% (3.2% when incorporating dividends) and SGF's prior proposal by 2.4% (using SGF's current price). I would look to enter around these levels. Either MMS sweetens terms and/or SGF returns to the well with a superior offer.

On the 8th November Mcmillan Shakespeare (MMS AU) and Eclipx (ECX AU) agreed to merge pursuant to a Scheme Implementation Agreement, wherein Eclipx shareholders will receive 0.1414 MMS shares plus A$0.46 cash for each Eclipx share, or $2.85/share based on the (then) closing price of MMS on the 7 November, or a 33.2% premium to Eclipx’s undisturbed share price.
MMS' share price has since declined 19%, equating to a consideration for its scrip/cash deal of $2.36, or ~16% below the initial indicative offer price. MMS' drop has in fact fallen in tandem with the sector, which is down ~9% since the announcement; just that MMS has fallen further, no doubt exacerbated by hedge funds shorting MMS and buying ECX.
To put that in context, Sg Fleet (SGF AU)'s rejected cash/scrip Offer in August currently equates to $2.44/share. 

Source: CapIQ, "Implied Offer"  = at the time of the announcement
The rumour mill suggests SGF is piecing together an equity raising to shore up funding to reload an offer for ECX. SGF's prior proposal was also to be to be funded from internal resources, new debt and a pro-rata equity entitlement. 
At the time of SGF's rejection, the speculated magic number to engage with ECX management was $3.00, which MMS was able to achieve at a 5% discount. The question is where SGF would need to launch an offer - presumably a mixture of cash and scrip - such that it would be deemed a superior offer to MMS.
ECX is trading through MMS' terms by 4.5% (3.2% when incorporating dividends) and SGF's prior proposal by 2.4% (using SGF's current price). I would look to enter around these levels. Either MMS sweetens terms and/or SGF returns to the well with a superior offer. 

Expect SG Fleet To Revisit Eclipx As Mcmillan Falls

FleetPartners Group

Expect SG Fleet To Revisit Eclipx As Mcmillan Falls