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

<p>Today after the close, <a href="https://www.smartkarma.com/entities/1132" target="_blank" data-smartkarma-citation="entities:1132:1">Johnson &amp; Johnson (JNJ US)</a><a href="https://ssl4.eir-parts.net/doc/4924/announcement5/45828/00.pdf" target="_blank">announced</a> a US$2bn+ deal and Tender Offer to buy the 52% of <a href="https://www.smartkarma.com/entities/19625" target="_blank" data-smartkarma-citation="entities:19625:1">Ci:z Holdings (4924 JP)</a> not held by CIC Corp (the family company of CEO Dr. Shirono and family) and Cilag GmbH International - a subsidiary of J&amp;J which already owns 19.9% of Ci:z Holdings. Ci:z Holdings announced that the board of directors resolved at a board meeting today to express its opinion in support of the Tender Offer. </p>
<p>The relationship between Johnson &amp; Johnson and Ci:z Holdings was established with a Capital and Business Alliance proposed in October 2015 and <a href="https://ci-z-holdings.com/en/news/20160801_pr067.pdf" target="_blank">signed</a> in July 2016 whereby J&amp;J got the rights to proactively market Ci:z Holdings brands outside Japan. J&amp;J bought the shares from family members.</p>
<p>CIC Corp has agreed not to sell its shares in the Tender Offer, but there is an existing shareholder agreement with J&amp;J such that CIC agrees not to sell any shares without J&amp;J's permission. J&amp;J has agreed to purchase the shares held by CIC at the same price as the shares purchased in the Tender Offer on the condition that the Tender Offer is completed successfully. The terms of the Tender Offer and side agreements associated are that if the Tender Offer is successful, Dr Shirono will resign as an officer and employee of the company, but will act as Honorary Chairman and Senior Advisor to the board, and provide consulting services to the Offeror and Target Company.</p>
<p>This is Dr. Shirono getting out.</p>
<p>The Tender Offer has a minimum threshold of success of  9,144,100 shares or 18.80%. It is a bit less than 40% of the remaining non J&amp;J, non-CIC float. This is the number that will get J&amp;J to a two-thirds-plus-1-share level which would be required to execute a minority squeezeout via a "Two Step Acquisition" (as discussed below) including the position of both Cilag and CIC.</p>
<table class="table table-striped">
<tbody>
<tr>
<td colspan="2">
<h2>Schedule of Tender Offer </h2>
</td>
</tr>
<tr>
<td>
<p><strong>Event </strong></p>
</td>
<td>
<p><strong>Date</strong></p>
</td>
</tr>
<tr>
<td>
<p>Announcement Date </p>
</td>
<td>
<p>23-Oct-2018</p>
</td>
</tr>
<tr>
<td>
<p>Date of Public Notice of Tender Offer </p>
</td>
<td>
<p>29-Oct-2018</p>
</td>
</tr>
<tr>
<td>
<p>Tender Offer Start Date </p>
</td>
<td>
<p>29-Oct-2018</p>
</td>
</tr>
<tr>
<td>
<p>Tender Offer Closing Date </p>
</td>
<td>
<p>10-Jan-2019 (48 business days)</p>
</td>
</tr>
<tr>
<td>
<p>Payment Date </p>
</td>
<td>
<p>17-Jan-2019</p>
</td>
</tr>
<tr>
<td>
<p>Likely Squeeze Out if &gt;90%</p>
</td>
<td>
<p>late Feb-2019</p>
</td>
</tr>
</tbody>
</table>
<table class="table table-striped">
<tbody>
<tr>
<td colspan="2">
<h2>Details of Tender Offer</h2>
</td>
</tr>
<tr>
<td><strong>Detail</strong></td>
<td><strong>Data In the Detail</strong></td>
</tr>
<tr>
<td>Expected Shares To Buy</td>
<td>25,355,704 shares</td>
</tr>
<tr>
<td>Minimum Shares To Buy For Successful Tender</td>
<td>9,144,100 shares</td>
</tr>
<tr>
<td>Tender Offer Price</td>
<td>¥5,900/share</td>
</tr>
<tr>
<td>Premium to Close (23 Oct)</td>
<td>55.26%</td>
</tr>
<tr>
<td>Premium to 1wk Average as of 22 Oct</td>
<td>59.98%</td>
</tr>
<tr>
<td>Premium to 1mo Average as of 22 Oct</td>
<td>51.63%</td>
</tr>
<tr>
<td>Premium to 3mo Average as of 22 Oct</td>
<td>33.03%</td>
</tr>
<tr>
<td>Lifetime High ?</td>
<td>No</td>
</tr>
<tr>
<td>52 week High ?</td>
<td>No</td>
</tr>
<tr>
<td>Tender Agent</td>
<td>SMBC Nikko Securities</td>
</tr>
</tbody>
</table>
<p>Given how sharply the shares have fallen since this summer, this deal is likely to make it through, but interestingly it is a VERY long-dated Tender Offer (most do not go past 30 days).</p>

Today after the close, Johnson &amp; Johnson (JNJ US)announced a US$2bn+ deal and Tender Offer to buy the 52% of Ci:z Holdings (4924 JP) not held by CIC Corp (the family company of CEO Dr. Shirono and family) and Cilag GmbH International - a subsidiary of J&amp;J which already owns 19.9% of Ci:z Holdings. Ci:z Holdings announced that the board of directors resolved at a board meeting today to express its opinion in support of the Tender Offer. 
The relationship between Johnson &amp; Johnson and Ci:z Holdings was established with a Capital and Business Alliance proposed in October 2015 and signed in July 2016 whereby J&amp;J got the rights to proactively market Ci:z Holdings brands outside Japan. J&amp;J bought the shares from family members.
CIC Corp has agreed not to sell its shares in the Tender Offer, but there is an existing shareholder agreement with J&amp;J such that CIC agrees not to sell any shares without J&amp;J's permission. J&amp;J has agreed to purchase the shares held by CIC at the same price as the shares purchased in the Tender Offer on the condition that the Tender Offer is completed successfully. The terms of the Tender Offer and side agreements associated are that if the Tender Offer is successful, Dr Shirono will resign as an officer and employee of the company, but will act as Honorary Chairman and Senior Advisor to the board, and provide consulting services to the Offeror and Target Company.
This is Dr. Shirono getting out.
The Tender Offer has a minimum threshold of success of  9,144,100 shares or 18.80%. It is a bit less than 40% of the remaining non J&amp;J, non-CIC float. This is the number that will get J&amp;J to a two-thirds-plus-1-share level which would be required to execute a minority squeezeout via a "Two Step Acquisition" (as discussed below) including the position of both Cilag and CIC.




Schedule of Tender Offer 




Event 


Date




Announcement Date 


23-Oct-2018




Date of Public Notice of Tender Offer 


29-Oct-2018




Tender Offer Start Date 


29-Oct-2018




Tender Offer Closing Date 


10-Jan-2019 (48 business days)




Payment Date 


17-Jan-2019




Likely Squeeze Out if &gt;90%


late Feb-2019








Details of Tender Offer



Detail
Data In the Detail


Expected Shares To Buy
25,355,704 shares


Minimum Shares To Buy For Successful Tender
9,144,100 shares


Tender Offer Price
¥5,900/share


Premium to Close (23 Oct)
55.26%


Premium to 1wk Average as of 22 Oct
59.98%


Premium to 1mo Average as of 22 Oct
51.63%


Premium to 3mo Average as of 22 Oct
33.03%


Lifetime High ?
No


52 week High ?
No


Tender Agent
SMBC Nikko Securities



Given how sharply the shares have fallen since this summer, this deal is likely to make it through, but interestingly it is a VERY long-dated Tender Offer (most do not go past 30 days).

Ci:z Holdings

J&J Tenders for Ci:z Holdings