Module II· Valuation — Regional NotesIntermediate
Question
What is a mandatory takeover offer, and what are its valuation implications?
Answer
Mechanics
Under takeover law, anyone reaching 30% of the voting rights in a listed company must, within 4 weeks, make a "mandatory offer" to all remaining shareholders (the EU / UK Takeover Code work the same way). Minimum price: the higher of (a) the 6-month volume-weighted average price, (b) the highest price the bidder paid in the last 6 months. Cash or liquid shares. Acceptance obligation: the bidder must accept all tendered shares. Valuation impact:
- A "mandatory premium" over the market price — often the actual market price sits above the 6M VWAP.
- Cash strain for the bidder — a 30% trigger can require cash for up to 100% of the shares.
- PE strategy: an anti-trigger 29.9% stake — avoids triggering the mandatory offer.
Deep diveShow more details
Example
A PE consortium ran a direct 100% tender rather than a 30%-stake-first approach.
Pitch tip
"The mandatory-offer rule is a strategic lever — a large shareholder at 35–45% can hold de facto control without buying 50%+."