Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Equity Analyst with experience in fundamental and event-driven research in Frontier and Emerging markets. 

On Smartkarma, I mainly publish insights on index flow events in the Asia-Pacific region. This includes predicting regular and intra-review index changes and estimating upcoming passive flows. I also cover special situations such as mergers & acquisitions, equity offerings, buybacks, and other corporate restructuring events.

Pan-Asia Index Flows & Special Situations

Sakura Sogo REIT IPO - Small, Old Buildings, With Little NOI Growth

Sakura Sogo/Mirai: White Knight Guess The Ratio Isn't Easy Pickings

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Japan-listed small-cap REITs <a href="https://www.smartkarma.com/entities/sakura-sogo-reit" target="_blank" data-smartkarma-citation="entities:23566:1" rel="noopener">Sakura Sogo Reit (3473 JP)</a> (SSR) and <a href="https://www.smartkarma.com/entities/star-asia-investment-corp" target="_blank" data-smartkarma-citation="entities:24040:1" rel="noopener">Star Asia Investment (3468 JP)</a> <a href="http://sakurasogoreit.com/file/en-news-c47b4264adf671697fbd5299a898482a3d834ba3.pdf" target="_blank" rel="noopener">announced</a> on 2nd March they had agreed to combine in an Absorption-type Merger. The exchange ratio will be 0.89 SAR shares per SSR share.
The Deal comes after a 10-month-long dispute between the two parties. 
In May 2019,  SSR's shareholder Lion Partners which is also part of the Star Asia Group proposed a merger between SSR and SAR citing governance failures and declining business performance as reasons. 
In a hostile reaction to this, SSR's board described this proposal as a <a href="http://sakurasogoreit.com/file/en-news-ac7441881b965412c0b3c8972ae1022b1e0b00b6.pdf" target="_blank" rel="noopener">"abusive, coercive" and "deceptive"</a> attempt by SAR to exploit the loopholes of the <a href="http://sakurasogoreit.com/file/en-news-057fbdb16097ac7bb90def5d4e354cb6c9ffbd49.pdf" target="_blank" rel="noopener">“Deemed Approval System” in Japanese Investment Trusts</a> to circumvent more-stringent takeover requirements. 
They also went a step further to find an alternative acquisition proposal from <a href="https://www.smartkarma.com/entities/mirai-corp" target="_blank" data-smartkarma-citation="entities:27741:1" rel="noopener">Mirai Corp (3476 JP)</a>(MC) to avoid having to merge with SAR. However, SSR's defense failed and they finally reached a settlement with SAR in August 2019. After several months of negotiations, SSR and SAR finally agreed to this Deal. 
This Deal is conditional on receiving approvals from both Target shareholders and Acquirer shareholders. After completion, which is expected to be in August 2020, SSR will be dissolved and SAR will be the surviving entity. 
With SSR/SAR price ratio currently at 0.85, we take a look at the details to evaluate the likelihood of this Deal going through.

Japan-listed small-cap REITs Sakura Sogo Reit (3473 JP) (SSR) and Star Asia Investment (3468 JP) announced on 2nd March they had agreed to combine in an Absorption-type Merger. The exchange ratio will be 0.89 SAR shares per SSR share.
The Deal comes after a 10-month-long dispute between the two parties. 
In May 2019,  SSR's shareholder Lion Partners which is also part of the Star Asia Group proposed a merger between SSR and SAR citing governance failures and declining business performance as reasons. 
In a hostile reaction to this, SSR's board described this proposal as a "abusive, coercive" and "deceptive" attempt by SAR to exploit the loopholes of the “Deemed Approval System” in Japanese Investment Trusts to circumvent more-stringent takeover requirements. 
They also went a step further to find an alternative acquisition proposal from Mirai Corp (3476 JP)(MC) to avoid having to merge with SAR. However, SSR's defense failed and they finally reached a settlement with SAR in August 2019. After several months of negotiations, SSR and SAR finally agreed to this Deal. 
This Deal is conditional on receiving approvals from both Target shareholders and Acquirer shareholders. After completion, which is expected to be in August 2020, SSR will be dissolved and SAR will be the surviving entity. 
With SSR/SAR price ratio currently at 0.85, we take a look at the details to evaluate the likelihood of this Deal going through. 

Sakura Sogo REIT Merger Attractive, Trading Wide