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

Quiddity Advisors

Event-Driven

Independent News and Media Plc / Event-Driven

The Board of <a href="https://www.smartkarma.com/entities/28064" target="_blank" data-smartkarma-citation="entities:28064:1">Independent News and Media Plc (INM LN)</a> have <a href="https://otp.tools.investis.com/clients/uk/inmp/rns/regulatory-story.aspx?cid=1291&amp;amp;newsid=1257596" target="_blank">unanimously recommended</a> a €0.105/share cash offer, by way of a Scheme, from Belgian newspaper publishing and broadcast media company Mediahuis NV. Rumours of an offer spread in early April leading to an <a href="https://otp.tools.investis.com/clients/uk/inmp/rns/regulatory-story.aspx?cid=1291&amp;amp;newsid=1245555" target="_blank">announcement</a> by INM on the 4 April that it had received an approach in relation to a possible offer.
The Offer price is a 44% premium to the undisturbed price of €0.0728 and 63% premium to the 30-day VWAP. The Offer values INM at ~€145.6m.
The posting of the Scheme doc was <a href="https://otp.tools.investis.com/clients/uk/inmp/rns/regulatory-story.aspx?cid=1291&amp;newsid=1257661" target="_blank">conditional</a> on receipt of irrevocable undertakings from <a href="https://en.wikipedia.org/wiki/Denis_O%27Brien" target="_blank">Denis O'Brien</a> (29.88%) and <a href="https://en.wikipedia.org/wiki/Dermot_Desmond" target="_blank">Dermot Desmond</a> (15%). Together with irrevocable undertakings given by INM's Directors, Mediahuis will have undertakings to vote in favour of the resolutions at the Scheme Meeting of 44.90% 
The same day, Mediahuis <a href="https://otp.tools.investis.com/clients/uk/inmp/rns/regulatory-story.aspx?cid=1291&amp;newsid=1257740" target="_blank">announced</a> it had acquired 26% of the issued shares from O'Brien and Desmond at €0.105/share. The terms of the irrevocable undertakings for the remaining 18.88% held by O'Brien and Desmond continue to apply. Together with shares held by Thomas Leysen, Mediahuis' Chairman, Mediahuis owns 27.01% of shares out, sufficient to block a competing offer.
The Scheme doc is expected to be posted within 28 days of the announcement and the transaction is expected to be declared effective in the third quarter of 2019. 
INM has recorded three consecutive years of negative growth, with <a href="https://otp.tools.investis.com/clients/uk/inmp/rns/regulatory-story.aspx?cid=1291&amp;newsid=1243751" target="_blank">2018 net income</a> down 28% yoy.
Of note, O’Brien will take home €43.5mn from the sale of his stake. However, it is estimated he paid ~€500mn accumulating his stake over a 13-year period. That's a non-negligible loss on investment - compounded by the 2008 crash - even for Ireland's richest man, all but suggesting minorities should similarly cut their losses.
It is not all smooth sailing though. INM had cash reserves of €81.7mn as at FY18, therefore Mediahuis is paying ~€64mn (net) to acquire INM or a trailing PER of 7x, well below its peer group average. 
And INM is profitable, albeit on a sliding scale; while in the Republic of Ireland, INM accounts for &gt;50% of the daily newspaper market and &gt;65% of the Sunday market.  
The backdrop to O'Brien's exit is also muddied with a recent High Court <a href="https://www.irishtimes.com/business/media-and-marketing/high-court-receives-first-report-from-inm-inspectors-1.3856998" target="_blank">document</a> citing business dealings were "certainly suggestive of an unlawful purpose directed to the benefit of Mr O'Brien directly or indirectly and the detriment of the company".
Still, if the success of the Scheme is in doubt, Mediahuis has the option to switch into a Tender Offer - on similar terms - and assuming a minimum acceptance threshold of 50%, requires just 5% of shares out to tender. 
Although one INM shareholder said the company was being sold for "<a href="https://www.theguardian.com/media/2019/apr/30/ireland-independent-news-media-sold-denis-o-brien" target="_blank">buttons</a>", the switch option and minimal tendering required suggests this deal looks likely to get up.

The Board of Independent News and Media Plc (INM LN) have unanimously recommended a €0.105/share cash offer, by way of a Scheme, from Belgian newspaper publishing and broadcast media company Mediahuis NV. Rumours of an offer spread in early April leading to an announcement by INM on the 4 April that it had received an approach in relation to a possible offer.
The Offer price is a 44% premium to the undisturbed price of €0.0728 and 63% premium to the 30-day VWAP. The Offer values INM at ~€145.6m.
The posting of the Scheme doc was conditional on receipt of irrevocable undertakings from Denis O'Brien (29.88%) and Dermot Desmond (15%). Together with irrevocable undertakings given by INM's Directors, Mediahuis will have undertakings to vote in favour of the resolutions at the Scheme Meeting of 44.90% 
The same day, Mediahuis announced it had acquired 26% of the issued shares from O'Brien and Desmond at €0.105/share. The terms of the irrevocable undertakings for the remaining 18.88% held by O'Brien and Desmond continue to apply. Together with shares held by Thomas Leysen, Mediahuis' Chairman, Mediahuis owns 27.01% of shares out, sufficient to block a competing offer.
The Scheme doc is expected to be posted within 28 days of the announcement and the transaction is expected to be declared effective in the third quarter of 2019. 
INM has recorded three consecutive years of negative growth, with 2018 net income down 28% yoy.
Of note, O’Brien will take home €43.5mn from the sale of his stake. However, it is estimated he paid ~€500mn accumulating his stake over a 13-year period. That's a non-negligible loss on investment - compounded by the 2008 crash - even for Ireland's richest man, all but suggesting minorities should similarly cut their losses.
It is not all smooth sailing though. INM had cash reserves of €81.7mn as at FY18, therefore Mediahuis is paying ~€64mn (net) to acquire INM or a trailing PER of 7x, well below its peer group average. 
And INM is profitable, albeit on a sliding scale; while in the Republic of Ireland, INM accounts for &gt;50% of the daily newspaper market and &gt;65% of the Sunday market.  
The backdrop to O'Brien's exit is also muddied with a recent High Court document citing business dealings were "certainly suggestive of an unlawful purpose directed to the benefit of Mr O'Brien directly or indirectly and the detriment of the company".
Still, if the success of the Scheme is in doubt, Mediahuis has the option to switch into a Tender Offer - on similar terms - and assuming a minimum acceptance threshold of 50%, requires just 5% of shares out to tender. 
Although one INM shareholder said the company was being sold for "buttons", the switch option and minimal tendering required suggests this deal looks likely to get up.

Independent News & Media And The Survival Of Ink