LRS General Discussion, page-19288

Point in time assessment
The related inherent challenge is share price volatility between signing of the deal, the expert’s report publication and control passing.

The comparison in a control transaction is the market value of bidder scrip against a fixed estimated value for the target, a point in time assessment. This fails to recognise that most long term investors’ interests are not determined based on the share price at a point in time or even the short period between signing and implementation.

The approach to fairness adopted by experts needs to be able to take into account:Longer time horizons for assessing the consideration, in recognition of potential short-term volatility.The extent of potential correlation between the bidder’s and target’s share price movements (especially for those in the same industry), which is not fully accounted for by comparing a bidder’s share price to a target’s fundamental value.Certain trading pressure that may apply to a bidders’ share price between announcement and implementation, including through the activities of things like arbitrage funds.

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