Last Week in Event SPACE ...
(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)
Saracen Mineral Holdings (SAR AU) (Mkt Cap: $4.7bn; Liquidity: $37mn)
Northern Star Resources (NST AU) and SAR have agreed to a merger-of-equals via a Scheme of Arrangement under which NST will acquire 100% of SAR. SAR shareholders will receive 0.3763 new NST shares for each SAR share. SAR will also pay a fully franked dividend of A$0.038/share, conditional on the Scheme becoming effective. Subsequent to a successful Scheme, NST shareholders will hold 64% of the combined entity (with roughly a A$16bn market cap), and SAR shareholders 36%. Standard Scheme conditions apply: SAR shareholders approving the Scheme (75%); independent expert concluding the Scheme is in the best interest of SAR shareholders; and no MACs, for either NST and SAR.
links to:
my insight: Northern Star/Saracen: Merger Of Equals
Mio Kato's insight: Saracen – Trade the Northern Star Deal and Then Stay Long Northern Star
Vedanta Ltd (VEDL IN) (Mkt Cap: $6bn; Liquidity: $37mn)
Travis Lundy issued a trio of reports, covering the AGM on the 30 September to approve the audited financial results of the fiscal year ended 31 March and to re-appoint a certain number of directors; 1Q results on the 3 October; and the commencement of the Reverse Book Build Auction on 5 October and ending on the 9 October.
Hengxing Gold Holding (2303 HK) (Mkt Cap: $0.5bn; Liquidity: $0.3mn)
HGH announced a pre-conditional Scheme from Shandong Gold Mining Co., Ltd. (1787 HK) ("SGM"). Under the terms of the Scheme, SGM is offering 0.17241 SGM shares (5/29) for every HGH share. A special dividend of HK$0.3585/HGH was declared on the 29 September, for which the record date will be 16 October 2020. The scrip terms will not be adjusted for the special dividend. The offer, inclusive of the dividend represents a discount to last close of 2.2%. Terms will not be increased.
(link to my insight: Hengxing (2303 HK): Offer From Shandong Gold)
CIMC-TianDa Holdings (445 HK) (Mkt Cap: $0.5bn; Liquidity: $0.5mn)
CIMC-Tianda announced an Offer by way of a Scheme primarily from China International Marine Cntnrs Gp (2039 HK) (CIMC). The cancellation price is HK$0.266/share, a 20.66% premium to last close. The price is final. CIMC, together with joint offeror concert parties hold 75.53% of CIMC-Tianda, following the conversion of a CB held by Wison Engineering Services Co (2236 HK). Therefore Scheme Shareholders will comprise 24.47% of shares out. Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme & not more than 10% of ALL Independent Shares against, or 2.447% of shares out. The headcount applies as CIMC-Tianda is Cayman incorporated.
(link to my insight: CIMC-Tianda (445 HK): Scheme Offer Lead By CIMC)
In NTT Data – Should Benefit from Suga’s Digitalisation Drive While You Wait for an NTT Buyout, Mio disagrees with suggestions that NTT (Nippon Telegraph & Telephone) (9432 JP) should sell off NTT Data Corp (9613 JP) due to a lack of synergy between the two companies. He believes, regardless of historical performance, that NTT could turn NTT Data into a wholly-owned subsidiary once it tidies up its balance sheet following the Docomo deal.
In Korea M&A Spotlight: CJ Logistics Announces It Will Sell CJ Rokin Logistics (China), Douglas Kim discussed Cj Logistics (000120 KS) plans to sell its 52.3% stake in CJ Rokin Logistics (China), which may be worth ₩520bn-₩630bn.
In Toshiba Tec – Where Is Toshiba Tec Headed?, with the planned IPO for Kioxia being delayed for at least a few months, Mio wonders whether this brings Toshiba Tec (6588 JP) more into play.
Remarkably - the judge has declined to sanction the Scheme for Allied Properties (H.K.) (56 HK). No reasons were provided. And the judgment has yet to appear on the Judiciary website, so we are none the wiser. "APL, AGL and the Offeror are currently taking legal advice on the appropriate actions to be taken in relation to the Judgment". The trading in the shares will not be resumed unless and until further notice. Total disaster. This is the first ruling of its kind, since PCCW Ltd (8 HK) was blocked by the Court of Appeal.
Toyota Industries (6201 JP) / Toyota Motor (7203 JP)
TICO is up 24% in the past three months compared to ~5% for 8.5%-held Toyota Motor (7203 JP) and ~6% for the TOPIX. As a result, the implied stub is at levels only (briefly) surpassed in 2H17 and 1Q2018.
(link to my insight: Toyota Industries (6201 JP): Trading Rich Vs Toyota Motors)
Swire Pacific (A) (19 HK) / Swire Properties (1972 HK)
Swire Pac has announced it intends to list its wholly-owned Swire Blue Ocean A/S (to be renamed Cadeler A/S) on the Oslo Stock Exchange. What would be the market cap for Cadeler? It currently operates two windfarm installation vessels (WIV). WIV appears a business in demand, one that industry reports suggest there is a global shortage. Listing now while this industry is "buoyant" is probably a good thing.
(link to my insight: Swire Pacific: Oslo Spin-Off For Windfarm Installation Ops)
Melco International Development (200 HK) / Melco Resorts & Entertainment (MLCO US)
I see Melco's discount to NAV at ~32%, against its 12-month average of 26%. According to the HKEx, Lawrence has now added 2.7% in Melco or 39.2mn shares year-to-date, taking his direct take in Melco to 58.42% and elevating his look-thru stake in MLCO to 33.2%. Lawrence cleared 50% in Melco back on the 6 Jan 2015, and is no longer subject to the "creeper rule", and is now free to take his stake up to 75% without restrictions, provided no other shareholder has 10% of shares out. It is worth noting the acquisition of shares Melco by Lawrence this year has primarily occurred at an implied stub higher the current level.
(link to my insight: StubWorld: Melco (200 HK) At NAV Trough Levels)
Morningstar Japan Kk (4765 JP) (Mkt Cap: $0.4bn; Liquidity: $0.5mn)
Online financial information provider Morningstar announced (J-only) on 29th September they had received approval to move to the First Section of the Tokyo Stock Exchange as of 19th October 2020. The TSE Section Transfers page says the market section is "undecided". However, the company's announcement says that they are expecting a move to the First Section. This might be because the TSE1 could be contingent on the success of the company's equity offerings that were launched in conjunction with the Section Transfer announcement. TSE1 reassignment would trigger inclusion into the TOPIX Index and if they successfully move to TSE1 in October (as planned) the Inclusion Event can be expected to be at the close of trading 27th November 2020.
(link to Janaghan's insight: TOPIX Inclusion (4765 JP): Morningstar Japan)
EduLab (4427 JP) (Mkt Cap: $0.9bn; Liquidity: $4mn)
Ed-Tech company Edulab announced (Japanese-only) last week they had received approval to move to the First or Second Section of the Tokyo Stock Exchange as of 19th October 2020. In conjunction, they also announced an equity offering (J-only). The decision as to whether the stock will be permitted to join the First or Second Section could depend on the success of this offering. If the company moves to the First Section, it would trigger inclusion into the TOPIX Index and the Inclusion Event could be expected to be at the close of trading 27th November 2020.
(link to Janaghan's insight: TOPIX Inclusion (4427 JP): Edulab)
Japan Investment Adviser Co (7172 JP) (Mkt Cap: $0.4bn; Liquidity: $8mn)
Japan Investment Advisers announced on 30th September, they had received approval to move to the First Section of the Tokyo Stock Exchange as of 8th October 2020. TSE1 reassignment triggers inclusion into the TOPIX Index and the Inclusion Event can be expected to be at the close of trading 27th November 2020.
(link to Janaghan's insight: TOPIX Inclusion (7172 JP): Japan Investment Adviser Co)
GardaWorld, a privately-held security services company, has made an hostile formal cash offer for G4S at 190p per share. This represents a 30% premium to the close price of G4S on 11 September, the day prior to GardaWorld announced its intention to launch an offer. The offer is subject to valid acceptance of 90% shares, government, statutory, regulatory, environmental or investigative body, court approvals, right of pre-emption, first refusal or similar right, EU Antitrust Clearance and US Antitrust Clearance and regulatory clearances. G4S is trading through terms on expectations of a higher bid.
(link to Jesus Rodriguez Aguilar's insight: G4S - GardaWorld: Lowball Offer)
Talktalk Telecom (TALK LN) (Mkt Cap: $1.4bn; Liquidity: $4mn)
Britain’s fourth-largest broadband company Talktalk announced that it has received a preliminary and non-binding proposal from Toscafund Asset Management LLP to acquire the remaining ~70% it does not own. A pre-condition is that TalkTalk’s executive chairman and co-founder Charles Dunstone, who owns ~30% stake, provides an irrevocable undertaking for an unlisted share alternative (i.e. a new private company under Toscafund) in respect of the Offer. David Ross, the other co-founder, owns 11%. Trading through terms at 99p. Jesus reckons a higher bid of 108p. But Talktalk is willing to engage with Toscafund suggesting pricing is looking full.
(link to Jesus' insight: TalkTalk - Toscafund: Preliminary & Non-Binding Proposal)
In Liberbank - Unicaja: Merger Conversations, Exchange Ratio, Jesus discusses reports that Unicaja Banco SA (UNI SM) is in preliminary discussions to take over Liberbank SA (LBK SM).
In Alibaba to Buy 10% of Dufry, Oshadhi Kumarasiri discussed Alibaba Group (9988 HK) 10% acquisition in Dufry AG (DUFN SW).
FTSE China 50 Index Rebalance Preview. At the current time, Brian Freitas sees JD.com (HK) (9618 HK) and NetEase (9999 HK) being included into the index and expects China Railway Group Ltd H (390 HK) and Cgn Power Co Ltd H (1816 HK) to be deleted from the index. This is the first review where JD and Netease are eligible for inclusion since they have completed a 3-month trading history in Hong Kong. Alibaba Group (9988 HK)'s weight in the index will increase due to the third and final tranche of its inclusion in the index. FTSE China 50 Index Rebalance Preview: BIG Turnover & Ant Group Fast Entry Post Listing
FTSE China A50 Index Rebalance Preview. Using last market prices, Brian sees one high probability addition BYD Co Ltd (002594 CH) and one high probability deletion China United Network A (600050 CH). There are a few other stocks that are not too far away from inclusion and could make it into the list depending on how the stocks perform between now and the review cut-off date. FTSE China A50 Index Rebalance Preview: One High Probability Change & A Few That Are Close
NIFTY50 Index Rebalance Preview. A third of the way through the review period that runs from August 2020 to January 2021, Brian sees three stocks, Tata Consumer Products (TGBL IN), Dabur India Ltd (DABUR IN) and Godrej Consumer Products (GCPL IN), eligible for inclusion in the index. The three lowest ranked stocks in the index are Gail India Ltd (GAIL IN), Indian Oil Corp (IOCL IN) and Coal India Ltd (COAL IN). There could be a third change if listed Futures & Options (F&O) are introduced on Avenue Supermarts (DMART IN) by the end of the review period in January. The stock is already a member of the Nifty 100 Index and the lack of F&O is the only reason keeping the stock out of the index. NIFTY50 Index Rebalance Preview - Peeking Into the Distant Future
FTSE TWSE Taiwan 50 Index Rebalance Preview. Using last market prices, Brian sees Novatek Microelectronics Corp (3034 TT) at rank 40 and just making the cut for index inclusion, while Lite On Technology (2301 TT) at rank 57 is at risk of deletion. There is an extremely slim possibility of more than one change in this review. FTSE TWSE Taiwan 50 Index Rebalance Preview: Will Novatek Make It This Time?
In insight Homecoming For Chinese Companies: Appraisal Rights & Fair Value last month, I explored the mechanics of Section 238 of the Cayman Companies Law, the case history of four appraisal rights judgments, and what dissenting shareholders may expect when taking their merger objections to Court.
In Trina Solar: Appraisal Rights Judgment Another Setback for Dissenters, I discussed the recent judgment on the appraisal rights assessment for Trina Solar (TSL US).
Company | DCF | Market Price | Merger Price |
Integra | 75% | 25% | - |
Shanda | 100% | - | - |
Qunar | 50% | 50% | - |
Nord Anglia | 40% | - | 60% |
Trina Solar | 25% | 30% | 45% |
PCCW Ltd (8 HK)'s partial is now unconditional in all respects and will remain open for a further 14 days. On the 19 October, the results of the partial Offer will be known. So far, 1.288bn shares have tendered vs. 154.59mn to be bought.
Re: regulatory approvals, Leyou Technologies (1089 HK) said Canadian and US regulatory bodies have signed off on the Offer from Tencent Holdings (700 HK). Scheme doc to be despatched on or before the 9 November.
Metlifecare Ltd (MET NZ) has announced a "shareholder has lodged a Notice of Opposition to the High Court application for the Scheme of Arrangement with Asia Pacific Village Group Limited". It is doubtful this will have any bearing on the outcome - shareholders had already approved the deal on the 2 October and the next High Court hearing is on the 15 October.
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, lock-up expiry, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.
Name | % chg | Into | Out of |
Shi Shi (8181 HK) | 35.30% | HSBC | Kingston |
Time Watch Investments (2033 HK) | 19.33% | GS | DBS |
iDreamsky Technology Limited (1119 HK) | 10.75% | ML | CIC |
Haitian International Holdings (1882 HK) | 20.24% | UBS | Outside CCASS |
HengTen Ltd (136 HK) | 64.17% | Haitong | Outside CCASS |
The following large movement(s) concern recently listed companies, and therefore are (likely) lock-up related.
Name | % chg | Into | Out of |
Baozun (9991 HK) | 24.61% | JPM | CS |
Huali University Group (1756 HK) | 11.25% | St Chart | UBS |
Renrui Human Resources (6919 HK) | 10.90% | VMS | Outside CCASS |
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