Last Week in Event SPACE ...
In an industry that has had more than its share of broken deals, ugly headline risk, political noise and activists, the Bristol Myers Squibb Co (BMY US) and Celgene Corp (CELG US) deal looks attractive.
The timing looks ripe for an Amorepacific Corp (090430 KS) set-up.
(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events - or SPACE - in the past week)
Xiaomi Corp (1810 HK) (Mkt Cap: $30bn; Liquidity: $79mn)
After 6.5bn+ shares came off lockup last week (by Travis Lundy's estimate), Xiaomi made a placement equal to about 1% of shares outstanding at a sharp discount to the close. This follows a block of 120mm shares last Thursday at HK$8.80 (at a 13+% discount); Apoletto reported a distribution (sale) of 594+mm shares on January 9th to reduce their total position across all funds from 9.25% to 4.99%; and there was a block placement launched earlier in the week for 231mm shares for sale between HK$9.28 and HK$9.60.
(link to Travis' insight: Early Investors Say "Xiaomi The Money" Post LockUp Expiry)
NTT (Nippon Telegraph & Telephone) (9432 JP) (Mkt Cap: $80bn; Liquidity: $185mn)
After the close of trading on the 15 January, NTT announced it had repurchased 3.395mm shares for ¥15.349bn in the first 7 trading days of the month, purchasing 10.9% of the volume traded. This announcement was bang in line with Travis' insight the prior day, where he anticipated the buybacks would soon be done.
NTT DoCoMo bought back ¥600bn of shares from NTT at the end of 2018. That means NTT DoCoMo could buy back perhaps ¥300-400bn of shares from the market over the next year or so before 'feeling the need' to buy back shares from NTT again. NTT will likely buy back at least ¥160bn of NTT shares from the government in FY19 starting April 1st, which means there will be room to buy back another ¥100bn from the government before not having any more room to do so.
There could be an NTT buyback from the market in FY2019, and one should expect that for the company to buy back shares from the government again, if NTT follows the pattern shown to date, there should be another ¥400-500bn of buybacks from the market over the next two years, and if EPS threatens a further fall on NTT DoCoMo earnings weakness, NTT might boost the buyback to make up for that.
(link to Travis' insight: NTT Buyback Almost Done)
Capitaland Ltd (CAPL SP) (Mkt Cap: $10.4bn; Liquidity: $16mn)
Singaporean real-estate group Capitaland has entered into a SPA to buy Ascendas-Singbridge (ASB) from its controlling shareholder, Temasek. The proposed acquisition values ASB at an enterprise value of S$10.9bn and equity value of S$6.0bn. Capitaland will fund the acquisition through 50% cash and 50% in shares (862.3mn shares @$3.25/share - ~17% dilution). Capitaland-ASB will have a pro-forma AUM of S$116bn, making it the largest real estate investment manager in Asia and the ninth largest global real estate manager.
(link to Arun George's insight: Capitaland (CAPL SP): Transformational Acquisition at a Premium)
Yungtay Engineering (1507 TT) (Mkt Cap: $792bn; Liquidity: $1mn)
Hitachi Ltd (6501 JP) announced it had received approvals from the relevant government authorities, and its Tender Offer for Yungtay (at TWD 60/share) has now launched. The Tender Offer will go through March 7th 2019 with the target of reaching 100% ownership. Son of the founder, former CEO, and Honorary Chairman Hsu Tso-Li (Chou-Li) of Yungtay has agreed to tender his 4.27% holding. The main difference between the offer details as discussed in Going Up! Hitachi Tender for Yungtay Engineering (1507 TT) back in October, is a minimum threshold for success of reaching just over one-third of the shares outstanding, with a minimum to buy of 88,504,328 shares (21.66%, including the 4.27% to be tendered by Hsu Tso-Li).
(link to Travis' insight: Hitachi Tender for Yungtay Engineering Launches)
Courts Asia Ltd (COURTS SP) (Mkt Cap: $58mn; Liquidity: $0.02mn)
Courts, a leading electrical, consumer electronics and furniture retailer predominantly in Singapore and Malaysia, has announced a voluntary conditional offer from Japanese big box electronics retailer Nojima Corp (7419 JP) at $0.205/share, a 34.9% premium to the last closing price. The key condition to the Offer is the valid acceptances of 50% of shares out. Singapore Retail Group, with 73.8%, has given an irrevocable to tender. Once tendered, this offer will become unconditional. The question is whether minorities should hold on.
(link to my insight: Courts Asia To Be Taken Over By Nojima)
Navitas Ltd (NVT AU) (Mkt Cap: $1.4bn; Liquidity: $3mn)
The board of Navitas, a global education provider, has unanimously backed a revised bid by 18.4% shareholder BGH Consortium of A$5.825/share, 6% higher than its previous rejected offer and a 34% premium to undisturbed price.
(link to Arun George's insight: Navitas (NVT AU): A Bid Priced to Go with a Reasonable Chance of a Competing Bid)
Panalpina Welttransport Holding (PWTN SW) (Mkt Cap: $4.2bn; Liquidity: $13mn)
Panalpina Welttransport announced that it had received an unsolicited, non-binding proposal from DSV A/S (DSV DC) to acquire the company at a price of CHF 170 per share, consisting of 1.58 DSV shares and CHF 55 in cash for each Panalpina share. The offer comes at a premium of 24% to Panalpina’s closing share price of CHF 137.5 as of 11 January 2019 and 31% to the 60-day VWAP of CHF 129.5 as of 11 January 2019. Following the announcement, Panalpina's shares surged above the terms of the offer implying that the market was anticipating a higher bid from DSV or one of its competitors.
(link to Travis' insight: Beleaguered Panalpina Gets An Unsolicited Takeover Offer)
Celgene Corp (CELG US) (Mkt Cap: $60bn; Liquidity: $743mn)
Earlier this month, Bristol Myers Squibb Co (BMY US) and Celgene announced a definitive agreement for BMY to acquire Celgene in a $74bn cash and stock deal. The headline price of $102.43 per Celgene share plus one CVR (contingent value right) is a 53.7% premium to CELG’s closing price of $66.64 on January 2, 2019, before assigning any value to the CVR. The CVR has a binary outcome: it will either be worth zero or will be worth a $9 cash payment upon the FDA approval of three drugs.
links to
John's insight: Celgene Acquisition by Bristol-Myers Squibb: A Call to Arbs
Antya's insight: Celgene and Bristol-Myers Squibb – Undervalued and Underappreciated
Ck Infrastructure Holdings (1038 HK)/Power Assets Holdings (6 HK)
On the 10 January, PAH announced CKI had entered into a placing agreement to sell 43.8mn shares (2.05% of shares out) at HK$52.93/share (a 4.7% discount to last close), reducing CKI's holding in PAH to 35.96%. This is CKI's first stake sale in PAH since the 2015 restructuring of the Li Ka Shing group of companies, and it has been over three years since the CKI/PAH scheme merger was blocked by minority shareholders. It is also around two months since FIRB blocked CKI/PAH/CKA/CKHH in its scheme offer for APA Group (APA AU).
(link to my insight: StubWorld: CK Infra/Power Assets, Amorepacific, JCNC)
Amorepacific Group (002790 KS)/Amorepacific Corp (090430 KS)
Following Curtis Lehnert's (TRADE IDEA: Amorepacific (002790 KS) Stub: A Beautiful Opportunity) and Sanghyun Park's (Full List of Korea's Single-Sub Holdcos with Current Sigma % - Quick Thought on Amorepacific) insights, I analysed Amorepacific's stub earnings over the past 6 years to see if there was any viable/usable correlation in the implied stub.
(link to my insight: StubWorld: CK Infra/Power Assets, Amorepacific, JCNC)
Briefly ...
Sanghyun recommends a long Holdco and go short Sub for Hankook Tire Worldwide (000240 KS). By my calcs - I don't use a 20MDA - the current discount to NAV is 40% against a one-year average of 38.5%, with a 32%-43% band. My implied stub trades above the one-year average.
(link to Sanghyun's insight: Hankook Tire Worldwide Stub Trade: Another Quick Mean Reversion The Other Way Around)
The Offer for Selangor Properties (SPR MK) has been bumped again, to RM6.30 from RM6.00. The original Offer was pitched at RM5.70/share. This latest proposal is a 55% premium to the undisturbed price and 10% above the initial bid. This is starting to look reasonable, at 0.89x P/B. On balance, this will probably now get up. (link to my earlier insight: Selangor Props - Privatisation Offer Does Not Reflect Full Value)
In a similar vein, LEAP Holdings Group Ltd (1499 HK) is potentially subject to a takeover. Leap is part of Webb''s Enigma Network.
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 |
New Sports Group (299 HK) | 18.69% | CCB | China Goldjoy | Suspended due to Code |
Luxey International (Holdings) (8041 HK) | 20.75% | Astrum | JPM | |
Cinda International Holdings (111 HK) | 40.92% | Cinda | Outside CCASS | |
Yugang International (613 HK) | 34.33% | Get Nice | ?? | Suspended due to Code |
CSMall Group Ltd (1815 HK) | 22.65% | BNP | Outside CCASS |
Country | Target | Deal Type | Event | E/C | |
Aus | Stanmore Coal | Off Mkt | 22-Jan | Deal Close Date | C |
Aus | Healthscope | Scheme | 23-Jan | New Zealand OIO approval | E |
Aus | Greencross | Scheme | 25-Jan | FIRB Approval | E |
Aus | Sigma Healthcare | Scheme | 31-Jan | Binding offer to be Announced | E |
Aus | Propertylink Group | Off Mkt | 31-Jan | Close of offer | C |
Aus | Eclipx Group | Scheme | 1-Feb | First Court Hearing | C |
Aus | GrainCorp | Scheme | 20-Feb | Annual General Meeting | C |
Aus | MYOB Group | Scheme | 11-Mar | First Court Hearing Date | C |
HK | Sinotrans Shipping | Scheme | 22-Jan | Payment Date | C |
HK | Harbin Electric | Scheme | 22-Feb | Despatch of Composite Document | C |
HK | Hopewell Holdings | Scheme | 28-Feb | Despatch of Scheme Document | C |
India | Bharat Financial | Scheme | 30-Jan | Transaction closes | E |
India | GlaxoSmithKline | Scheme | 27-Mar | India - CCI approval | E |
Japan | Pioneer | Off Mkt | 25-Jan | Shareholder Vote | C |
NZ | Trade Me Group | Scheme | 22-Jan | Scheme Booklet provided to Apax | C |
Singapore | PCI Limited | Scheme | 25-Jan | Release of Scheme Booklet | E |
Taiwan | LCY Chemical Corp. | Scheme | 23-Jan | Last day of trading | C |
Thailand | Delta Electronics | Off Mkt | 28-Jan | SAMR Approval | E |
Finland | Amer Sports | Off Mkt | 23-Jan | Extraordinary General Meeting | C |
Norway | Oslo Børs VPS | Off Mkt | Jan | Offer process to commence | E |
UK | Shire plc | Scheme | 22-Jan | Settlement date | C |
US | Red Hat, Inc. | Scheme | March/April | Deal lodged for approval with EU Regulators | C |
US | iKang Healthcare | Scheme | Jan | Offer close date, (failing which) 31-Jan-2019 - Termination Date | C |
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