Share Price, page-8665

And I have stated that the current share price is critical to the premium paid.
Historically for companies with an orphan drug the takeover premium is 75-100%, but there are outliers up to 250%.
The problem here is that our enthusiastic holders look at this data and immediately think that NEU will have to be a minimum of a 250% premium. I’m just trying to keep the feet on the ground and go with the average.
Having been involved in many acquisitions I can say categorically that premiums on the last traded price and short term (say 10 and 30 day) VWAP are definitely taken into account when coming up with a takeover offer. Of course a valuation is done first but what goes into that is something that can vary considerably between different investment banks and companies.
At the end of the day if a Big Pharma values Neuren at say $100 do you think that is the price they will offer in a takeover? Not a chance in a million years. They will offer a premium that conforms with the averages. If they want the company enough that premium will be higher, but guaranteed they will want as big a slice of that valuation in their back pocket as possible when negotiating with the Company (and that is the standard practice in the US rather than go hostile).
And for the directors receiving a takeover offer the critical thing to recommend or reject an offer will relate to the premium paid and how that compares with historical takeovers of similar companies. This is standard stuff in the advisors report to directors of companies that are under offer. In some ways the premium becomes more important than the company internal valuation as it’s difficult to defend an offer that’s pitched in the premium sweet spot. This is also how the majority of investors will see it and will be critical to whether they are willing to accept an offer.