What is a ‘fair’ transaction?
A transaction is considered ‘fair’ if the value of what you are being offered (cash, shares or a combination of both) is equal to or greater than the value of the shares the company gains (and you give up) as a result of the transaction.
If the expert thinks that the value of what is being offered is less, the report will note that the transaction is ‘not fair’.
What is a ‘reasonable’ transaction?
If a transaction is considered ‘fair’, it is also considered to be ‘reasonable’. However, if an expert considers a transaction to be ‘not fair’, they will look at other factors beyond value to determine whether it is ‘reasonable’. These factors may still make the transaction beneficial to shareholders.
For example, in a takeover bid the share price offered may be considered ‘not fair’. However, an expert may consider the bid to be ‘reasonable’ because there are unlikely to be any alternative bidders and the share price may fall if the takeover bid is unsuccessful.
Our IER’s are issued through Danieli Advisory who is an authorised Representative of Alpha Securities. Please see our Financial Service Guide for more information.
Transactions that may require an IER include:
- Takeover bids
- Compulsory acquisitions and buy-outs
- Schemes of arrangement
- Related party transactions
- Capital reorganisations
Some companies may choose to commission an independent expert report even if they are not legally required to.
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