Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Maeda Road Starts Talks With Nippo (1881) As a White Knight. Not a Winner Yet.

Not All "Parent-Sub" Situations Are Friendly: Maeda Corp Goes Hostile On Affiliate Maeda Road

Maeda Road Post-Tender - Where Do We Stand?

Maeda Corp Has Maeda Road Options... So Do You...

Quiddity Advisors

Event-Driven

Maeda Road Construction Co / Event-Driven

<p>13 months ago, <a href="https://www.smartkarma.com/entities/maeda-corp" target="_blank" data-smartkarma-citation="entities:6781:1" rel="noopener">Maeda Corp (1824 JP)</a> launched a hostile Tender Offer on its 25%-owned but largely independent affiliate <a href="https://www.smartkarma.com/entities/maeda-road-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:2168:1" rel="noopener">Maeda Road Construction Co (1883 JP)</a>. Maeda Corp wanted to get to 51% because the Maeda Road business of infrastructure concessions looked like a great business they wanted to own more of. They left themselves an out whereby they could withdraw the Tender Offer if Maeda Road set a special dividend larger than a certain specified amount. Maeda Road did so after not being able to find a White Knight. Maeda Road, for its part, got very upset, calling on Maeda Corp to dissolve all capital ties and sell its shares in Maeda Road back to the company. </p>
<p>Strangely, after much kerfuffle and speculation, 11 months ago Maeda Corp let the Tender Offer it launched settle without extension or withdrawal, allowing the other 75% of shareholders to get an extra dividend and still sell a number of their shares into the Tender Offer at original terms.</p>
<p>That meant post-Tender the value of Maeda Road to both Maeda Corp and remaining shareholders was relatively lower than the undisturbed price prior to the hostile TOB launch. </p>
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<p>This event was discussed in a series of insights which discussed the interest, the backdrop of the industry, and the event itself. </p>
<table class="table table-striped">
<tbody>
<tr>
<td colspan="2" style="width: 723.636px;">
<h2>Insights on Maeda Corp - Maeda Road Situation in Q1 2020</h2>
</td>
</tr>
<tr>
<td style="width: 80px;">20 Jan 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/not-all-parent-sub-situations-are-friendly-maeda-corp-goes-hostile-on-affiliate-maeda-road" target="_blank" data-smartkarma-citation="insights:35945" rel="noopener">Not All "Parent-Sub" Situations Are Friendly: Maeda Corp Goes Hostile On Affiliate Maeda Road</a> </td>
</tr>
<tr>
<td style="width: 80px;">20 Jan 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/maeda-corp-tender-for-maeda-road-arb-grids-front-end-pricing" target="_blank" data-smartkarma-citation="insights:35955" rel="noopener">Maeda Corp Tender for Maeda Road - Arb Grids &amp; Front End Pricing</a> </td>
</tr>
<tr>
<td style="width: 80px;">9 Feb 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/maeda-road-needs-a-rabbit-from-the-hat-what-rabbit-s-possible-what-rabbit-s-likely" target="_blank" data-smartkarma-citation="insights:36440" rel="noopener">Maeda Road Needs A Rabbit From The Hat - What Rabbit's Possible? What Rabbit's Likely?</a> </td>
</tr>
<tr>
<td style="width: 80px;">20 Feb 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/maeda-road-53bn-rabbit-special-div-appears" target="_blank" data-smartkarma-citation="insights:36792" rel="noopener">Maeda Road - ¥53bn Rabbit (Special Div) Appears</a> </td>
</tr>
<tr>
<td style="width: 80px;">28 Feb 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/maeda-road-starts-talks-with-nippo-1881-as-a-white-knight-not-a-winner-yet" target="_blank" data-smartkarma-citation="insights:36998" rel="noopener">Maeda Road Starts Talks With Nippo (1881) As a White Knight. Not a Winner Yet.</a> </td>
</tr>
<tr>
<td style="width: 80px;">5 Mar 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/maeda-road-s-monty-hall-problem" target="_blank" data-smartkarma-citation="insights:37201" rel="noopener">Maeda Road's 'Monty Hall Problem'</a> </td>
</tr>
<tr>
<td style="width: 80px;">11 Mar 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/maeda-corp-has-maeda-road-options-so-do-you" target="_blank" data-smartkarma-citation="insights:37392" rel="noopener">Maeda Corp Has Maeda Road Options... So Do You...</a> </td>
</tr>
<tr>
<td style="width: 80px;">13 Mar 2020</td>
<td style="width: 622.727px;">
<a href="https://www.smartkarma.com/insights/maeda-road-post-tender-where-do-we-stand" target="_blank" data-smartkarma-citation="insights:37428" rel="noopener">Maeda Road Post-Tender - Where Do We Stand?</a> </td>
</tr>
</tbody>
</table>
<h2>The NEW News</h2>
<p>Today after the close, Maeda Corp (1824), Maeda Road (1883), and <a href="https://www.smartkarma.com/entities/maeda-seisakusho-co-ltd" target="_blank" data-smartkarma-citation="entities:13999:1" rel="noopener">Maeda Seisakusho (6281 JP)</a> made an <a href="https://www.maeda.co.jp/news/blog_assets/attachments/1025/20210224_2.pdf" target="_blank" rel="noopener">announcement</a> they would merge their economic interests in the formation of a Holding Company to be effective on October 1st. The stated purpose is to combine to better take on the headwinds in the construction industry which result from ageing demographics and weaker local and national budgets by unifying the group, improving the liquidity and allocation of management resources made scarce in future by a declining working population, and to speed up management decision-making. </p>
<p>There is a template for this kind of deal, and it <em>always</em> includes better allocation of management resources and speeding up decision-making. It almost never includes description of improvement/efficiency of a practical nature (<em>"we will sell all our cross-holdings and securities and instead use those assets to invest in the equity tranche of public-private initiatives on a high non-recourse leverage basis, improving ROE substantially"</em>). To be clear, that last thing in parentheses is quite clearly something the companies did NOT say but which would be welcome. </p>
<p>This is a relatively easy three-way scrip deal. It looks a done deal. Then there is getting comfortable with the back end.</p>

13 months ago, Maeda Corp (1824 JP) launched a hostile Tender Offer on its 25%-owned but largely independent affiliate Maeda Road Construction Co (1883 JP). Maeda Corp wanted to get to 51% because the Maeda Road business of infrastructure concessions looked like a great business they wanted to own more of. They left themselves an out whereby they could withdraw the Tender Offer if Maeda Road set a special dividend larger than a certain specified amount. Maeda Road did so after not being able to find a White Knight. Maeda Road, for its part, got very upset, calling on Maeda Corp to dissolve all capital ties and sell its shares in Maeda Road back to the company. 
Strangely, after much kerfuffle and speculation, 11 months ago Maeda Corp let the Tender Offer it launched settle without extension or withdrawal, allowing the other 75% of shareholders to get an extra dividend and still sell a number of their shares into the Tender Offer at original terms.
That meant post-Tender the value of Maeda Road to both Maeda Corp and remaining shareholders was relatively lower than the undisturbed price prior to the hostile TOB launch. 



This event was discussed in a series of insights which discussed the interest, the backdrop of the industry, and the event itself. 




Insights on Maeda Corp - Maeda Road Situation in Q1 2020



20 Jan 2020

Not All "Parent-Sub" Situations Are Friendly: Maeda Corp Goes Hostile On Affiliate Maeda Road 


20 Jan 2020

Maeda Corp Tender for Maeda Road - Arb Grids &amp; Front End Pricing 


9 Feb 2020

Maeda Road Needs A Rabbit From The Hat - What Rabbit's Possible? What Rabbit's Likely? 


20 Feb 2020

Maeda Road - ¥53bn Rabbit (Special Div) Appears 


28 Feb 2020

Maeda Road Starts Talks With Nippo (1881) As a White Knight. Not a Winner Yet. 


5 Mar 2020

Maeda Road's 'Monty Hall Problem' 


11 Mar 2020

Maeda Corp Has Maeda Road Options... So Do You... 


13 Mar 2020

Maeda Road Post-Tender - Where Do We Stand? 



The NEW News
Today after the close, Maeda Corp (1824), Maeda Road (1883), and Maeda Seisakusho (6281 JP) made an announcement they would merge their economic interests in the formation of a Holding Company to be effective on October 1st. The stated purpose is to combine to better take on the headwinds in the construction industry which result from ageing demographics and weaker local and national budgets by unifying the group, improving the liquidity and allocation of management resources made scarce in future by a declining working population, and to speed up management decision-making. 
There is a template for this kind of deal, and it always includes better allocation of management resources and speeding up decision-making. It almost never includes description of improvement/efficiency of a practical nature ("we will sell all our cross-holdings and securities and instead use those assets to invest in the equity tranche of public-private initiatives on a high non-recourse leverage basis, improving ROE substantially"). To be clear, that last thing in parentheses is quite clearly something the companies did NOT say but which would be welcome. 
This is a relatively easy three-way scrip deal. It looks a done deal. Then there is getting comfortable with the back end.

Maeda Corp/Road/Seisakusho - 3-Way Merger 1 Year After Hostile Takeover