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

Quiddity Advisors

Event-Driven

Today after the close, MBK Partners and <a href="https://www.smartkarma.com/entities/1677" target="_blank" data-smartkarma-citation="entities:1677:1">Kuroda Electric Co Ltd (7517 JP)</a> announced a multi-stage transaction to take out a portion of the Murakami &amp; associated entity shareholdings and take the company private. But it's complicated. <ul><li>FIRST... MBK Partners will launch a Tender Offer to purchase a minimum of 18,918,900 shares and an expected quantity of 28,378,330 shares (but will purchase all shares tendered if more than 18.9189mm shares are tendered) at ¥2,720/share. This is a 34.65% premium to today's closing price. This Tender Offer commences November 2nd and goes until December 15th. That would get MBK 50.3% of the shares outstanding at a minimum or up to 100% of the shares if all were tendered.</li><li>THEN... the company itself will conduct a Buyback Tender Offer (on its own shares) at ¥2,688/share for up to 11,160,800 shares (for a total of just over ¥30bn). This is a 33.07% premium to the close. This deal would start on December 25th and go until January 26th.</li></ul>The "Murakami-related" entities hold 39% of the shares outstanding ex Treasury shares. All the shares held under the four names have agreed to tender. But ~63% of the shares are agreed to tender into the Company's Buyback Tender Offer. The other 37% has agreed to tender into MBK's Tender Offer.The result of a successful Tender Offer for MBK, gaining 18.92mm shares, and a successful Buyback Tender Offer for Kuroda gaining 9.26mm shares (the number committed now) would be that after cancellation of the Treasury shares thus bought, MBK would own two-thirds of the shares outstanding. So while it looks like MBK is just targeting 50.3%, they are targeting two-thirds, and if MBK's Tender Offer is successful, the stock will be delisted sometime in spring and minorities would be squeezed out. This is a funky deal, but it is pretty straightforward for most arbitrageurs.

Today after the close, MBK Partners and Kuroda Electric Co Ltd (7517 JP) announced a multi-stage transaction to take out a portion of the Murakami &amp; associated entity shareholdings and take the company private. But it's complicated. FIRST... MBK Partners will launch a Tender Offer to purchase a minimum of 18,918,900 shares and an expected quantity of 28,378,330 shares (but will purchase all shares tendered if more than 18.9189mm shares are tendered) at ¥2,720/share. This is a 34.65% premium to today's closing price. This Tender Offer commences November 2nd and goes until December 15th. That would get MBK 50.3% of the shares outstanding at a minimum or up to 100% of the shares if all were tendered.THEN... the company itself will conduct a Buyback Tender Offer (on its own shares) at ¥2,688/share for up to 11,160,800 shares (for a total of just over ¥30bn). This is a 33.07% premium to the close. This deal would start on December 25th and go until January 26th.The "Murakami-related" entities hold 39% of the shares outstanding ex Treasury shares. All the shares held under the four names have agreed to tender. But ~63% of the shares are agreed to tender into the Company's Buyback Tender Offer. The other 37% has agreed to tender into MBK's Tender Offer.The result of a successful Tender Offer for MBK, gaining 18.92mm shares, and a successful Buyback Tender Offer for Kuroda gaining 9.26mm shares (the number committed now) would be that after cancellation of the Treasury shares thus bought, MBK would own two-thirds of the shares outstanding. So while it looks like MBK is just targeting 50.3%, they are targeting two-thirds, and if MBK's Tender Offer is successful, the stock will be delisted sometime in spring and minorities would be squeezed out. This is a funky deal, but it is pretty straightforward for most arbitrageurs. 

Funky Kuroda Electric Two-Stage Deal - MBK Takes Out Murakami