Eight targets were the subject of a competitive bid
process in 2015 (representing 13 of the 40 deals in our sample).
There was no clear common factor which contributed to the success
of a deal in a competitive scenario which once again raises the
question of whether it is just a matter of 'highest price
Unsurprisingly from the target's perspective, a competitive
bidding process brought bigger price increases, with bidders
increasing their prices (as against the amount initially proposed
or offered) by 18% in competitive deals as opposed to 11% for
Unlike in previous years where regulatory conditions or other
factors affecting the certainty of deals appeared to weigh heavily
on directors' decisions, in 2015 the bid price appeared to be
the key influencing factor in each board's decision to support
an offer (including favouring scrip over cash where the implied
value of scrip was greater). In addition to price, we also looked
at other tactics adopted in competitive situations:
Of the five initial bids that were launched with a pre-bid
stake of greater than 10%, a subsequent bid was successful in three
of those cases, with one battle (over Asciano) still to be decided.
However, it should be noted that in two of those three successful
subsequent bids, the initial bidder's pre-bid stake largely
comprised of an interest through a pre-bid agreement which
effectively lapsed when the superior offer emerged. In the other
deal, Anchorage and Affinity Education used a novel structure to
ensure rival bidder G8 Education's pre-bid stake would not, of
itself, block the transaction.*
In 2015, first in was not necessarily best dressed. Bidding
first did not have a statistical impact on the prospects of success
with three initial bidders in the seven deals (with known results)
being successful, three of the subsequent bidders being successful
and one deal (over Armour Energy) where both bidders failed.
Where two competing bidders offered different forms of
consideration (cash versus scrip, or a combination of cash and
scrip), the cash bid won the day in three of the five deals. This
is consistent with results in our previous deal surveys.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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