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This article focuses on problems faced by Australian shareholders in a takeover situation. The problems include determining the value of the consideration offered by the bidding party, establishing when the consideration will be paid, and understanding the regulations, procedures and practices involved in takeover bids. Two features of a takeover offer are usually of interest to all shareholders: they wish to know the price offered for their shares, and should the offer be accepted, they wish to know when the consideration will be received. Valuation of the offer is a simple procedure when the consideration proposed consists entirely of cash. But when it consists of shares in the offeror company, or a combination of cash and shares, shareholders are placed in the situation of having to value both sets of shares in order to evaluate the offer. It is unlikely, of course, that shareholders would accept any value imputed to the shares by the offer or without evidence to support such an opinion. In any case, an independent valuation is available for shares in a listed company.

This article discusses the factors influencing the outcome of take-over offers of shareholders. The factors considered are the premium included in the offer price in relation to re-offer prices, disclosed net tangible asset backing per share and the reaction of the directors of the offeree company to a take-over offer. No clear relationship was found that existed between the size of premiums included in the offer price and the outcome of the offers. The support of, or opposition to, a take-over offer by the directors of an offeree does not influence the outcome.