Last Week in Event SPACE ...
The reported sale of NXC Corp/Nexon Co Ltd (3659 JP) is possibly a fishing expedition.
(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events - or SPACE - in the past week)
Nexon Co Ltd (3659 JP) (Mkt Cap: $12.6bn; Liquidity: $37mn)
Douglas Kim revisited the news that Kim Jung-Joo wants to sell his stake in the Nexon Group. Travis Lundy also chimed in with his read of the situation. The key questions are whether Kim Jung-Ju would sell NXC (and NXMH) - which holds a 48% stake in Nexon Co - as reported by the local press, or whether NXC and NXMH would sell their stakes in Japan-listed Nexon. The implication being that if they sold the stake in Nexon, it would mean buyers would get a large stake in a single company, whereas there is a bunch of other stuff floating around in NXC and its subsidiaries.
As a trade, this does not look like a great risk arb bet (where you make a bet that a company will get taken over) at first glance if the total trade for NXC is going to be ₩10tn. It would be a good trade if the ₩10tn number were made up of say ₩3tn of assets (in NXC), then the assumption that the current market price adding ₩7tn of assets to arrive at that total of ₩10tn would be an "estimate" of current value rather than an estimate of what it would take to get the deal done, and current market value is a significant premium to book (where NXC has heretofore reported its financials and Nexon). In that case, one might imagine that a bidding war could result in a higher price for Nexon, and an easy exit at ¥2000+/share.
links to:
Travis' insight: Would a Sale of Founder's Holdco NXC Corp Trigger a Tender Offer for Nexon (3659 JP)?
Douglas' insight: Korea M&A Spotlight: Will the Nexon Group Sell the Korean or the Japanese Company?
M1 Ltd (M1 SP) (Mkt Cap: $1.4bn; Liquidity: $2.9mn)
Konnectivity Pte. Ltd officially announced the launch of its Offer to by M1 Ltd (M1 SP). The Close is 4 February, but the Offer is not Final.
(link to Travis' insight: M1 Offer Despatched - Dynamics Still Iffy)
Gruh Finance (GRHF IN) (Mkt Cap: $2.5bn; Liquidity: $0.5mn)
Bandhan Bank (BANDHAN IN) ("BBL") and GRUH announced together on January 7th that their respective boards have considered and approved a Scheme of Amalgamation where Bandhan Bank will be the acquiring entity and GRUH Finance will become the acquired entity. At the exchange ratio of 568 Bandhan Bank shares per 1000 GRUH Finance shares, GRUH Finance's price currently translates to a PER and PBV of 51.8x and 12.5x respectively which is significantly higher than the average for its comparable peers (PER=14.9x; PBV=2.0x).
(link to Travis' insight: Bandhan Bank To Buy GRUH: A Pricey Bank/NBFC Deal)
Healius (HLS AU) (Mkt Cap: $1.2bn; Liquidity: $5mn)
As widely expected, Healius's board rejected the unsolicited and conditional proposal from Jangho Group Co Ltd A (601886 CH) at A$3.25/share. Pricing under the proposal is okay, at best, valuing Healius roughly in sync with Sonic Healthcare (SHL AU), its nearest peer. Optically, the indicative offer is underwhelming, 20% below the recent high in March last year, and below where Jangho was accumulating its stake in early 2016.
(link to my insight: Healius And The (Likely) First Salvo)
Pci Ltd (PCI SP) (Mkt Cap: $190mn; Liquidity: $0.2mn)
For those who like plain vanilla, PCI announced Pagani Holding (an SPV indirectly owned by Platinum Equity Advisors) had made a S$1.33/share cash offer for the company by way of a scheme. Chuan Hup Holdings (CH SP), which holds 76.7% in PCI, has given an irrevocable undertaking to vote its stake in favour of the scheme resolution. So this is a done deal. The more interesting facet here is that Chuan Hup is currently trading at discount to its net cash after factoring in the proceeds from the sale of PCI shares.
(link to my insight: PCI Ltd - All Over Before It Starts)
Faroe Petroleum (FPM LN) (Mkt Cap: $762mn; Liquidity: $13mn)
As anticipated in my insight (DNO Closes In On Faroe) last week, DNO ASA (DNO NO) bumped its Offer for Faroe, which has now been declared unconditional. Tendered shares get paid in 14 days. The final closing date of the offer is the 6 February.
(link to my insight: DNO/Faroe - And That's A Wrap)
Toshiba Corp (6502 JP) (Mkt Cap: $17.8bn; Liquidity: $122mn)
The company bought back 16% of volume in the month (in December), and 15% of rolling 4-week ADV if only the first 20 days were days on which the company bought - which based on execution prices seems likely.
(link to Travis' insight: Toshiba Buyback: Proceeding Apace, But That's Slow)
BGF Co Ltd (027410 KS) / Bgf Retail (282330 KS)
I calculate a discount to NAV of 55% against a one-year average of 32%, which appears excessive for a simple single stock Holdco structure. Both Sanghyun Park and Douglas Kim have discussed this aberration in their insights (Korean Stubs Spotlight: A Pair Trade Between BGF Co. & BGF Retail & BGF Holdo Trade: Status Update & Recommended Action).
(link to my insight: StubWorld: Time For A BGF Setup? An Unlikely Boost for Kingboard)
Kingboard Chemical (148 HK) / Kingboard Laminates Holdings (1888 HK)
Kingboard, which hasn't been in the news since it sold its 9.6% stake in Cathay Pacific Airways (293 HK) to Qatar Airways back in November 2017, is coming up "expensive" on my monitor, after KBC's mid-week price outperformance over KBL.
(link to my insight: StubWorld: Time For A BGF Setup? An Unlikely Boost for Kingboard)
Briefly ...
I compiled a summary of the 93 M&A transactions, with a collective deal size of ~US$215bn, published on Smartkarma in 2018, and analysed which sectors attracted the most interest: (Mostly Asia) M&A in 2018: What Was Hot, And What Was Not
Swire Pacific Ltd Cl A (19 HK) / Swire Pacific Ltd-Cl B (87 HK)
The premium for Swire's As over the Bs - [19 HK/(5* 87 HK)] - continues to increase and is now at its highest since October 2003.
Advanced Semiconductor Mfg Corp Ltd. (3355 HK)'s merger by absorption has been approved by shareholders.
My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.
Often these moves can easily be explained - the placement of new shares, rights issue, movements subsequent to a takeover, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.
Name | % change | Into | Out of | Comment |
Hing Ming Holdings Ltd (8425 HK) | 15.00% | Kingston | Outside CCASS | |
China New Higher Education (2001 HK) | 13.70% | CCB | China Int'l | |
New Sports Group (299 HK) | 46.55% | CCB | China Goldjoy | |
Postal Savings Bank Of China (1658 HK) | 11.42% | HSBC | UBS | |
Huifu Payment Limited (1806 HK) | 10.04% | HSBC | Outside CCASS |
Country | Target | Deal Type | Deal Size US$ mm | Event | E/C | |
Aus | GrainCorp | Scheme | $1,738 | 17-Jan | Binding offer to be announced | E |
Aus | Stanmore Coal | Off Mkt | $140 | 22-Jan | Deal Close Date | C |
Aus | Healthscope | Scheme | $3,259 | 23-Jan | New Zealand OIO approval. | E |
Aus | Greencross | Scheme | $476 | 25-Jan | FIRB Approval | E |
Aus | Sigma Healthcare | Scheme | $416 | 31-Jan | Binding offer to be Announced | E |
Aus | Eclipx Group | Scheme | $662 | 1-Feb | First Court Hearing | C |
Aus | MYOB Group | Scheme | $1,258 | 11-Mar | First Court Hearing Date | C |
HK | Sinotrans Shipping | Scheme | $431 | 14-Jan | Listing to be withdrawn from HKSE | C |
HK | Hopewell Holdings | Scheme | $2,723 | 28-Feb | Despatch of Scheme Document | C |
India | Bharat Financial | Scheme | $2,385 | 30-Jan | Transaction closes | E |
India | GlaxoSmithKline | Scheme | $4,645 | 27-Mar | India - CCI approval | E |
Japan | Pioneer | Off Mkt | $230 | 25-Jan | Shareholder Vote | C |
Malaysia | Unisem (M) Berhad | Off Mkt | $438 | 17-Jan | Settlement Date | C |
NZ | Trade Me Group | Scheme | $1,761 | 22-Jan | Scheme Booklet provided to Apax | C |
Singapore | PCI Limited | Scheme | $44 | 25-Jan- | Release of Scheme Booklet | E |
Taiwan | LCY Chemical Corp. | Scheme | $1,563 | 23-Jan | Last day of trading | C |
Thailand | Delta Electronics | Off Mkt | $2,109 | 28-Jan | SAMR Approval | E |
Finland | Amer Sports | Off Mkt | $5,349 | 23-Jan | Extraordinary General Meeting | C |
Norway | Oslo Børs VPS | Off Mkt | $352 | Jan | Offer process to commence | E |
UK | Shire plc | Scheme | $60,257 | 22-Jan | Settlement date | C |
US | Red Hat, Inc. | Scheme | $33,584 | 16-Jan | Special meeting to vote for merger | C |
US | iKang Healthcare | Scheme | $1,580 | Jan | Offer close date, (failing which) 31-Jan-2019 - Termination Date | C |
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