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

Think Childcare (TNK AU): Busy Bees Delivers a Knock-Out Bid

Think Childcare (TNK AU) : Takeover Proposal From Alceon Group Seems Light

Think Childcare (TNK AU): Competitive Bid by Busy Bees

Quiddity M&A: Australia Foreign Investment Reforms

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<p>On 16 November 2020, Australia-based Childcare company <a href="https://www.smartkarma.com/entities/think-childcare-ltd" target="_blank" data-smartkarma-citation="entities:18899:1" rel="noopener">Think Childcare (TNK AU)</a> received a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02308970-3A555430?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">Non-binding Indicative Proposal</a> at an Offer Price of A$1.35/share from the PE arm of <a href="https://www.alceon.com.au/" target="_blank" rel="noopener">Alceon Group</a> which is an Australian independent multi-strategy alternative investments firm. </p><p>In my insight <a href="https://www.smartkarma.com/insights/think-childcare-tnk-au-takeover-proposal-from-alceon-group-seems-light" target="_blank" data-smartkarma-citation="insights:45429" rel="noopener">Think Childcare (TNK AU) : Takeover Proposal From Alceon Group Seems Light</a>, I concluded that this Offer Price of A$1.35 seemed light on a growth-adjusted basis and when compared against the valuations of other local and global peers.  I mentioned the possibility of bumpitrage but low liquidity made it iffy and I was not bullish on the trade.</p><p>A week later, on 23rd Nov 2020, TNK received a <em><strong><a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02311977-3A556064?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">competitive bid</a></strong></em> at an Offer Price of A$1.75/share from Busy Bees Early Learning Australia Pty Ltd which is the Australian arm of multinational child care firm Busy Bees Nursery Group which is backed by Ontario Teachers’ Pension Plan (OTPP) and Temasek.</p><p><em>I got bullish</em> and discussed this competitive situation in <a href="https://www.smartkarma.com/insights/think-childcare-tnk-au-competitive-bid-by-busy-bees" target="_blank" data-smartkarma-citation="insights:45609" rel="noopener">Think Childcare (TNK AU): Competitive Bid by Busy Bees</a> pointing out the implications of Alceon's matching right and since TNK's share price of A$1.60 translated to a <em>very</em> attractive spread given the high likelihood of a further overbid, I was Bullish on the stock.</p><blockquote><p><strong>THE TRADE: I would be LONG now.</strong> I expect TNK shareholders to receive at least A$1.75/share at the end of this competitive situation and I also expect TNK to trade much closer to terms once there is more clarity on Alceon's stance in the next 5 days. <strong>(<a href="https://www.smartkarma.com/insights/think-childcare-tnk-au-competitive-bid-by-busy-bees" target="_blank" rel="noopener">written 23 Nov 2020</a>)</strong></p></blockquote><p>Although initially Alceon let their matching right lapse, a month later, on 24th December 2020, they launched a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02326507-3A558868?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">revised non-binding and indicative proposal</a> matching that of Busy Bees' non-binding bid (A$1.75/share) and also announced they had acquired a relevant interest of 19.23% in TNK.  </p><p>Today, Busy Bees <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02332137-3A559736?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">revised their competitive bid</a> to A$2.10/share -  a 20% bump from the previous bid level. </p><p>TNK shares last closed at A$2.00. </p><div><p><em>More below the fold. </em></p></div><hr><div><div><div class="content-remarks"><p>For more information about M&amp;A rules, regulations, and practices in Australia, please refer to <a href="https://www.smartkarma.com/insights/quiddity-australia-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:30118" rel="noopener">Quiddity Australia M&amp;A Guide 2019</a> and <a href="https://www.smartkarma.com/insights/quiddity-m-a-australia-foreign-investment-reforms" target="_blank" data-smartkarma-citation="insights:40210" rel="noopener">Quiddity M&amp;A: Australia Foreign Investment Reforms</a> </p></div></div></div>

On 16 November 2020, Australia-based Childcare company Think Childcare (TNK AU) received a Non-binding Indicative Proposal at an Offer Price of A$1.35/share from the PE arm of Alceon Group which is an Australian independent multi-strategy alternative investments firm. In my insight Think Childcare (TNK AU) : Takeover Proposal From Alceon Group Seems Light, I concluded that this Offer Price of A$1.35 seemed light on a growth-adjusted basis and when compared against the valuations of other local and global peers.  I mentioned the possibility of bumpitrage but low liquidity made it iffy and I was not bullish on the trade.A week later, on 23rd Nov 2020, TNK received a competitive bid at an Offer Price of A$1.75/share from Busy Bees Early Learning Australia Pty Ltd which is the Australian arm of multinational child care firm Busy Bees Nursery Group which is backed by Ontario Teachers’ Pension Plan (OTPP) and Temasek.I got bullish and discussed this competitive situation in Think Childcare (TNK AU): Competitive Bid by Busy Bees pointing out the implications of Alceon's matching right and since TNK's share price of A$1.60 translated to a very attractive spread given the high likelihood of a further overbid, I was Bullish on the stock.THE TRADE: I would be LONG now. I expect TNK shareholders to receive at least A$1.75/share at the end of this competitive situation and I also expect TNK to trade much closer to terms once there is more clarity on Alceon's stance in the next 5 days. (written 23 Nov 2020)Although initially Alceon let their matching right lapse, a month later, on 24th December 2020, they launched a revised non-binding and indicative proposal matching that of Busy Bees' non-binding bid (A$1.75/share) and also announced they had acquired a relevant interest of 19.23% in TNK.  Today, Busy Bees revised their competitive bid to A$2.10/share -  a 20% bump from the previous bid level. TNK shares last closed at A$2.00. More below the fold. For more information about M&amp;A rules, regulations, and practices in Australia, please refer to Quiddity Australia M&amp;A Guide 2019 and Quiddity M&amp;A: Australia Foreign Investment Reforms 

Think Childcare (TNK AU): Bigger Bid by Busy Bees