Determine Takeover Premiums As You Will, But Make Sure You Explain Why

The Takeovers Panel has recently handed down another decision in InterMet Resources Limited [2008] ATP 17 which, consistent with its previous decisions in Programmed Maintenance Services Limited 02 [2008] ATP 9 and Magna Pacific (Holdings) Limited [2007] ATP 02, confirms the Panel's view that bidders and targets should not be limited in the ways in which they calculate premiums implied by takeover offers. The Panel confirmed that it will leave bidders and targets free to calculate premiums using share prices at different times and by using different valuation methodologies (such as a VWAP compared with a quoted price on a single day) provided that where comparisons are made on a basis that is not 'like for like', an explanation of why a particular valuation methodology was chosen must be given.