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

Panasonic Launches Tender For Panahome... Still Light.

Quiddity Advisors

Event-Driven

Friday after the close, <a href="https://www.smartkarma.com/entities/19983" target="_blank" data-smartkarma-citation="entities:19983:1">Panahome Corp (1924 JP)</a> announced (<a href="http://www.panahome.jp/english/news/release/2017/0526.pdf" target="_blank">E</a>, <a href="http://www.panahome.jp/company/news/release/2017/pdf/20170526.pdf" target="_blank">J</a>) that it had decided to continue to recommend parent <a href="https://www.smartkarma.com/entities/222" target="_blank" data-smartkarma-citation="entities:222:1">Panasonic Corp (6752 JP)</a>'s Tender Offer at ¥1,200/share despite having received a Tender Offer Proposal from Oasis Management Company (hereafter "Oasis") at  ¥1,300/share for a stake between 33.5% and 100% of the company. <h2>The History</h2>To recap... late last year, Panasonic and cash-rich homebuilding subsidiary Panahome announced they would merge in a scrip exchange. As <a href="https://www.smartkarma.com/profiles/8" target="_blank" data-smartkarma-citation="accounts:8">Jon Foster</a> described in <a href="https://www.smartkarma.com/insights/an-easy-to-pan-panny-deal-for-panahome" target="_blank" data-smartkarma-citation="insights:7789">An Easy-To-Pan Panny Deal for PanaHome</a>, the deal came at a premium, but it came at a time when the market ratio was at a long-term low. And it came at an implied market price of just 4x EV/EBITDA when comps traded at 6+. It came at a discount to Panasonic's own forward EV/EBITDA calculation despite a decade of better performance and expected ongoing performance, and synergies to Panahome for which minority shareholders were not being paid.Shareholders were disappointed. According to the <a href="https://www.protectpanahome.com/protecting-panahome" target="_blank">website</a> they established (called "Protecting Panahome") to raise awareness of the case, Oasis had in September last year specifically engaged the company in dialogue to improve corporate value, and defend good Corporate Governance practices (I refer you to the website which is informative).Subsequent to the announcement of the deal, Oasis engaged with Panahome suggesting that Oasis might bid for a portion of the company in cash, at ¥1,050/share. Just over a month ago on April 21st, Panasonic and Panahome cancelled their old deal, and Panasonic made a cash offer at ¥1,200/share for the shares they did not own. Panahome noted that they had rejected the Oasis deal partly because the new proposal from Panasonic was higher in price.But that price was still light, as I described in some detail in <a href="https://www.smartkarma.com/insights/panasonic-launches-tender-for-panahome-still-light" target="_blank" data-smartkarma-citation="insights:10191">Panasonic Launches Tender For Panahome... Still Light.</a> My conclusion pre-open April 24th was "You could not pay me to be short ¥1,210/share."<h2>The New News</h2>Today, Panahome revealed that a week later, Oasis had responded to the new deal with a proposal to purchase a shares to arrive at a minimum position of 33.5% and a maximum of 100% at ¥1,300/share, contingent on conducting due diligence, raising the funding, and understanding shareholder contracts.Panahome expressed doubts, and there is reported to have been a back and forth of correspondence, and of interviews between the two sides, the result of which is that Panahome continues to support the bid  of Panasonic at ¥1,200/share. That will leave some people unhappy. Since Panasonic changed the format of its acquisition from a scrip takeover to a cash tender offer, the stock has not traded at or below the tender offer price once. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/026/778/original/20170526_PanahomeChart2.png?1495806351" class="editor-image img-responsive" data-smartkarma-image-id="26778"></figure><div style="text-align: left;" class="content-caption"> data: Bloomberg</div>Since the announcement, 39.35mm shares have traded at a VWAP of ¥1,223.16.That's 23.3% of shares outstanding and 51% of the float. And only 2% of that has traded at or below ¥1,210 per share. Some of that has obviously been traded back and forth between market participants, but it is still impressive the stock has remained this high with no new news and no shareholders showing up with significantly increased positions (Oasis' last reported large shareholder filing to reach 8.95% was at the end of March). One presumes that those who have net purchased at this price have made a decision to either not tender, and then disssent at the shareholder meeting which Panasonic intends to hold, or they are betting on a bump in price. Panahome has responded to Oasis' proposal by saying that a ¥1200/share buyout is better for the corporate value of the company than ¥1300/share. Something does not sound right.I've got popcorn.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/026/779/original/pandapopcorn.gif?1495807114" class="editor-image img-responsive" data-smartkarma-image-id="26779"></figure>More below the fold.

Friday after the close, Panahome Corp (1924 JP) announced (E, J) that it had decided to continue to recommend parent Panasonic Corp (6752 JP)'s Tender Offer at ¥1,200/share despite having received a Tender Offer Proposal from Oasis Management Company (hereafter "Oasis") at  ¥1,300/share for a stake between 33.5% and 100% of the company. The HistoryTo recap... late last year, Panasonic and cash-rich homebuilding subsidiary Panahome announced they would merge in a scrip exchange. As Jon Foster described in An Easy-To-Pan Panny Deal for PanaHome, the deal came at a premium, but it came at a time when the market ratio was at a long-term low. And it came at an implied market price of just 4x EV/EBITDA when comps traded at 6+. It came at a discount to Panasonic's own forward EV/EBITDA calculation despite a decade of better performance and expected ongoing performance, and synergies to Panahome for which minority shareholders were not being paid.Shareholders were disappointed. According to the website they established (called "Protecting Panahome") to raise awareness of the case, Oasis had in September last year specifically engaged the company in dialogue to improve corporate value, and defend good Corporate Governance practices (I refer you to the website which is informative).Subsequent to the announcement of the deal, Oasis engaged with Panahome suggesting that Oasis might bid for a portion of the company in cash, at ¥1,050/share. Just over a month ago on April 21st, Panasonic and Panahome cancelled their old deal, and Panasonic made a cash offer at ¥1,200/share for the shares they did not own. Panahome noted that they had rejected the Oasis deal partly because the new proposal from Panasonic was higher in price.But that price was still light, as I described in some detail in Panasonic Launches Tender For Panahome... Still Light. My conclusion pre-open April 24th was "You could not pay me to be short ¥1,210/share."The New NewsToday, Panahome revealed that a week later, Oasis had responded to the new deal with a proposal to purchase a shares to arrive at a minimum position of 33.5% and a maximum of 100% at ¥1,300/share, contingent on conducting due diligence, raising the funding, and understanding shareholder contracts.Panahome expressed doubts, and there is reported to have been a back and forth of correspondence, and of interviews between the two sides, the result of which is that Panahome continues to support the bid  of Panasonic at ¥1,200/share. That will leave some people unhappy. Since Panasonic changed the format of its acquisition from a scrip takeover to a cash tender offer, the stock has not traded at or below the tender offer price once.  data: BloombergSince the announcement, 39.35mm shares have traded at a VWAP of ¥1,223.16.That's 23.3% of shares outstanding and 51% of the float. And only 2% of that has traded at or below ¥1,210 per share. Some of that has obviously been traded back and forth between market participants, but it is still impressive the stock has remained this high with no new news and no shareholders showing up with significantly increased positions (Oasis' last reported large shareholder filing to reach 8.95% was at the end of March). One presumes that those who have net purchased at this price have made a decision to either not tender, and then disssent at the shareholder meeting which Panasonic intends to hold, or they are betting on a bump in price. Panahome has responded to Oasis' proposal by saying that a ¥1200/share buyout is better for the corporate value of the company than ¥1300/share. Something does not sound right.I've got popcorn.More below the fold.

Panahome Rejects Oasis' Higher Tender Offer Proposal

Panasonic Homes

Panahome Rejects Oasis' Higher Tender Offer Proposal