Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Equity Analyst with experience in fundamental and event-driven research in Frontier and Emerging markets. 

On Smartkarma, I mainly publish insights on index flow events in the Asia-Pacific region. This includes predicting regular and intra-review index changes and estimating upcoming passive flows. I also cover special situations such as mergers & acquisitions, equity offerings, buybacks, and other corporate restructuring events.

Pan-Asia Index Flows & Special Situations

JSR (4185 JP) Tender Offer for Medical & Biological Labs (4557 JP)

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Medical & Biological Laboratories / Event-Driven

Medical & Biological Laboratories (4557 JP)

On 27th October 2020, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a> ("JSR") announced a <a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1892862/00.pdf" target="_blank" rel="noopener">Tender Offer</a> to acquire the remaining shares in its 50.8%-owned subsidiary <a href="https://www.smartkarma.com/entities/medical-biological-labs-co" target="_blank" data-smartkarma-citation="entities:12811:1" rel="noopener">Medical &amp; Biological Labs Co (4557 JP)</a> ("MBL") in an all-cash Deal that valued the company at a market cap of ~¥ 23bn (US$218mn). The Offer Price was ¥4400/share in cash. MBL was founded in 1969 as the first manufacturer of antibodies in Japan. Having evolved over time, the company now offers clinical diagnostics and research reagents designed for analysis of proteins and/or genes associated primarily with autoimmune disorders, cancer, gynecological diseases, and infectious diseases. Most importantly, MBL also develops substances that could be used in COVID-19 research and has other COVID-19 related products in its product portfolio such as PCR kits for detecting new coronavirus, Antibody test kits for checking infection history, and Gene extraction kits to extract RNA samples from the upper respiratory tract samples (nasopharyngeal swab samples).Previously, I covered this Deal in <a href="https://www.smartkarma.com/insights/jsr-4185-jp-tender-offer-for-medical-biological-labs-4557-jp" target="_blank" data-smartkarma-citation="insights:44617" rel="noopener">JSR (4185 JP) Tender Offer for Medical &amp; Biological Labs (4557 JP)</a>. The Offer came at a premium of 23.8% to the undisturbed price and was below the mid-points of the DCF and Peer Comp Valuation ranges suggested by the Acquirer Advisor. On the other hand, according to Target Advisor's forecasts, the Offer Price translated to EV/Rev and EV/EBITDA multiples of 2.1x, and 9.2x respectively 2021E. Furthermore, the offer was opportunistically timed when MBL's EV/EBITDA (LTM) multiple was close to its 3-year low. Considering these facts and that the company's financial performance could directly benefit from COVID-19 driven demand for testing and research, the Offer Price seemed light. Regardless of the lightness of the Offer, I concluded "there might be enough friendly shareholders to get this Deal over line" and that is what has happened. On Friday after market close, on the day following the end of the Tender Offer Period, both the Acquirer (<a href="https://ssl4.eir-parts.net/doc/4185/tdnet/1912460/00.pdf" target="_blank" rel="noopener">J-only</a>) and the Target (<a href="https://ssl4.eir-parts.net/doc/4557/tdnet/1912400/00.pdf" target="_blank" rel="noopener">J-only</a>) provided updates on the Transaction. What next? Read on.

On 27th October 2020, JSR Corp (4185 JP) ("JSR") announced a Tender Offer to acquire the remaining shares in its 50.8%-owned subsidiary Medical &amp; Biological Labs Co (4557 JP) ("MBL") in an all-cash Deal that valued the company at a market cap of ~¥ 23bn (US$218mn). The Offer Price was ¥4400/share in cash. MBL was founded in 1969 as the first manufacturer of antibodies in Japan. Having evolved over time, the company now offers clinical diagnostics and research reagents designed for analysis of proteins and/or genes associated primarily with autoimmune disorders, cancer, gynecological diseases, and infectious diseases. Most importantly, MBL also develops substances that could be used in COVID-19 research and has other COVID-19 related products in its product portfolio such as PCR kits for detecting new coronavirus, Antibody test kits for checking infection history, and Gene extraction kits to extract RNA samples from the upper respiratory tract samples (nasopharyngeal swab samples).Previously, I covered this Deal in JSR (4185 JP) Tender Offer for Medical &amp; Biological Labs (4557 JP). The Offer came at a premium of 23.8% to the undisturbed price and was below the mid-points of the DCF and Peer Comp Valuation ranges suggested by the Acquirer Advisor. On the other hand, according to Target Advisor's forecasts, the Offer Price translated to EV/Rev and EV/EBITDA multiples of 2.1x, and 9.2x respectively 2021E. Furthermore, the offer was opportunistically timed when MBL's EV/EBITDA (LTM) multiple was close to its 3-year low. Considering these facts and that the company's financial performance could directly benefit from COVID-19 driven demand for testing and research, the Offer Price seemed light. Regardless of the lightness of the Offer, I concluded "there might be enough friendly shareholders to get this Deal over line" and that is what has happened. On Friday after market close, on the day following the end of the Tender Offer Period, both the Acquirer (J-only) and the Target (J-only) provided updates on the Transaction. What next? Read on.

JSR Deal Tender Results for MBL (4557 JP) Imply Faster Squeeze-Out