Yes I think the project is worth a lot more than even its...

Yes I think the project is worth a lot more than even its current after tax NPV, but anyone attempting a TO would base their offer on the current market price of the company, as a starting point IMO.

If the acquirer offered shareholders the full after tax NPV value of US$405 million (A$547 million) for the project tomorrow, that would equate to 93 cents per share (fully diluted) or a premium of 145% to WAF’s closing price on Friday of 38cents.

An acquirer making a bid tomorrow would want the project at a discount to its current NPV as I doubt they’d want to buy the project based solely on the value of its yet to be proved blue sky potential. Why would the acquire offer the NPV value? They might as well keep that money in the bank where in theory it attracts far less risk.

Also until WAF proves that the project is bankable, by actually being offered the appropriate funding, the NPV value calculated in the FS remains “negotiable/questionable”. I think the acquirer would rely on an in-house estimate of the low range value that might be produced by an expert report to pitch their opening offer price. As I said, as long as the outcome of the expert report concludes the offer is unfair but reasonable the offer can technically be recommended by the directors. You’ll find that more often than not, the acquirer offers some sweeteners in response to the company’s defence of the original offer price. The sweeteners help get the offer to minimum acceptance and get major shareholders onboard. Once major holders have given indicative acceptances and it’s clear the acquirer will reach the minimum acceptance, managment normally capitulate and recommend the offer, as they’ve lost control in any event. Esh