NWE - Week starting 13th February, page-181

Hi Digger 13,
This is standard industry practice. The target of a takeover contracts with a financial consultant or usually house broker, to advise the client, in this case NWE how to extract maximum price for their shares from the party trying to take them over, in this case Minres and also advise them what might be a fair and reasonable share price.

A fee is charged for this service by the 'advisor' which can range from 2-5% of the value of the total takeover transaction.

My understanding of how this might apply to the current Minres takeover of NWE is as follows, but more learned posters may correct any errors or assumptions I may have made.

For the Minres-NWE takeover , the more shares the takeover party Minres 'buys' by cash or share swap aka 'paper', paper in this case, the greater the fee to the 'advisor'. Based on the $11 million fee, and back calculating, if Minres gains 100% of NWE, assuming the total takeover has a value of ~$450 million, then the $11 million fee amounts to ~ 2.5% fee or commission to the advisor.

Takeover targets often cynically take the view, if the party making the take over is successful in gaining 100%, then the take over party is in effect paying the success fee contracted by the takeover target and the shareholders of the target have extracted the maximum price for their shares. Well that's how the script is supposed to read,

Just my take on the matter. DYOR.