Last Week in Event SPACE: Line/Z Holdings, AOF, Alibaba, Kingsoft, Aramco, Cathay, Toshiba

Last Week in Event SPACE ...

• The goal of the shocker story of LINE Corp (3938 JP) and Z Holdings (4689 JP) (formerly Yahoo Japan) merging, may be to create a Japan-version of GAFA and a WeChat ecosystem equivalent. It may be a question of who the Japan-side decision-maker is. Is this a deal in the offing because of the strategic and operational brilliance of Miyauchi-san and Naver? Or is this Naver just trying to get out?
• ASIC's interim order to Australian Unity Office Fund (AOF AU) is clunky and largely untenable, as if they don't know how markets work.
• With net cash of US$12bn, why does Alibaba Group Holding (BABA US) need another US$10-15bn?
• Kingsoft Corp (3888 HK) proposes spinning off its cloud operations, the third largest of its kind in China behind Alibaba and Tencent Holdings (700 HK).
• How much China invests in Saudi Aramco (131861Z AB) is a political decision by everybody involved. Nobody - not even the most diehard of capitalist SOE managers who wants to earn a higher ROE - will say no if the boss says "we should invest." The roadshow starts on 17 November and pre-roadshow indications appear to be that domestic investors might pay the price MBS wants but international portfolio investors may be more reluctant to go near his desired valuation. He probably needs to accept getting it done, leaving some on the table, and being happy that the price might squeeze higher with him owning 97-98% (plus the taxes, plus the royalties, plus the expenditures keeping his economy alive).
• Subsequent to another forecast downgrade, and despite a 29% decline from its YTD high in April, Cathay Pacific Airways (293 HK) is still expensive versus global peers.
• Just Eat PLC (JE/ LN) is “special”; it is more “special” to Prosus (PRX NA) than other potential bidders. Takeaway.com NV (TKWY NA) cannot match Prosus with regards to the know-how and strategic fit and optionally in the future.
• Plus, other events, CCASS movements and Mood Spins.

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events - or SPACE - in the past week)