27 dollars a share - respectable bid for felix, page-21

"The SP has been below the t/o price. This is the clear evidence that:"

The SP is always going to be below the t/o price due to the cost of money. Futhermore of course there is a chance that they won't get FIRB approval, there always has been.

"1. The market expects there is a risk from FIRB
2. The chances of a counter bid is low."

That's not quite correct though there is a relationship.

Formula:
Takeover price * Chance deal with YHZ + alt takeover price * chance of that deal + short term value of FLX without a deal * chance of that.

Let's try

18 *.5 + 25 * .2 + 12 * .3
= 17.6 where stock was a few days ago

18 * .35 + 25 * .2 + 12 * .45
= 16.7 where the stock is now

Did the chance of FIRB approval really just drop by 30% in 2 days? That seems unlikely.

In fact no FIRB approval makes a counter MORE likely as YHZ would lose their right to match competing bids.

It's worth pointing out that I think the forumla should use the long term value of FLX discounted back to today which is much closer to high 20's.

18 * .35 + 25 * .4 + 25 * .25
= 22.50 - Of course FLX isn't trading anywhere near that price but if it did I'd be looking to sell unless the probabilities changed dramatically.