A regulatory development in Japan

Japan’s Financial Services Agency is examining a long-standing loophole in the tender offer rules. Currently, an acquirer can buy any amount of shares in a company on-market without having to tender for the whole company.

A tender offer is only required when a 33% or more stake is bought off-market. This contrasts with jurisdictions such as the UK, where an acquirer must make a full tender offer upon reaching a certain threshold, irrespective of how the shares were acquired. ... more

Vigilance is required

The start of the year has already brought five $100 million-plus Japanese takeovers, representing a decade-plus high for the month of January. It contrasts with a 36% year-on-year slowdown in global M&A. What is behind the uptick? ... more

Metrica Partners will not tender its funds’ shares in SK Chemicals to SK Discovery

• SK Discovery’s tender offer price is very low, representing a 74% discount to net assets.
• SK Chemicals has still not adequately compensated its shareholders for the split-off of SK Bioscience. The Korean regulator has recognised how split-offs can hurt the interests of investors.
• Only a wholesale restructuring can restore the market’s trust in SK Chemicals.

LINE must postpone the squeeze-out EGM

Mr. LEE Hae-Jin Chairman of the Board LINE Corporation JR Shinjuku Miraina Tower 23F 4-1-6 Shinjuku Shinjuku-ku Tokyo 160-0022 Japan

Dear Mr. Lee,

Metrica Partners Pte. Ltd. (“Metrica”) is the manager of, and adviser to multiple funds that own shares in LINE Corp. (“LINE”).

We refer to yesterday’s announcement by LINE, showing that a majority of independent shareholders joined Metrica in refusing to tender their shares into the Joint Tender Offer by SoftBank and NAVER. ... more

Singapore fund manager says Line tender offer price is too low

Bloomberg featured our views on the squeeze-out of LINE Corp shareholders (with no shareholder vote) by SoftBank Group and NAVER Corp.: ... more

Metrica Partners will not tender into the LINE Joint Tender Offer and urges other shareholders to consider following

Metrica Partners Pte. Ltd. (“Metrica”) is the manager of, and adviser to multiple funds (the “Metrica funds”) that own shares in LINE Corp. (“LINE”, Securities Code: 3938). LINE is currently the subject of a tender offer (“the Joint Tender Offer”) by SoftBank Corp. (“SoftBank”, Securities Code: 9434) and NAVER Corporation (‘NAVER”, Securities Code: 035420), which is to be followed by a business integration with Z Holdings (Securities Code: 4689) (the “Business Integration”).

Metrica will not be tendering the shares held by the Metrica Funds into the Joint Tender Offer, and furthermore, it intends to dissent to the subsequent Share Consolidation and exercise its appraisal rights:

• Metrica considers that the procedures leading up to the LINE Board’s decision to recommend the Joint Tender Offer fall short of the required standard of fairness.
  • The Special Committee has not demonstrated a sufficient degree of independence from the transaction.
  • One of the acquirers ultimately ends up with much higher value from the Business Integration than the price offered to minority shareholders of LINE. The excess value is a tangential benefit deriving more from financial engineering rather than from synergies related to the Business Integration, in Metrica’s view.
  • The other acquirer is a major client of the financial advisor, which may affect the perceived independence of its valuation of the target company.
  • The deal is missing a minimum acceptance condition, depriving shareholders of an important opportunity to exercise their rights.
• Metrica believes that the Joint Tender Offer price of JPY 5,380 is inadequate.
  • It represents a very low premium when compared with historical precedents.
  • It is below the mid-point of the financial advisor’s DCF valuation, which does not incorporate any projected synergies.
  • The valuation has not been updated to reflect the pandemic’s favourable impact on LINE’s business, nor the substantial increase in comparable company valuation multiples.
  • The joint acquirers are privatising the company just before the point at which it turns profitable on an operating basis, according to management’s own forecasts.

Metrica’s reasoning behind the above conclusions is as follows: ... more