Investors: The price from the takeover bid for "Protan" is unfair

The price of the mandatory takeover bid of "Protan" Bucharest (symbol: PRON) was not fairly set, the Association of Capital Market Investors (AIPC) considers. The AIPC claims that the price set by the independent evaluator, (8.6 lei/share) is nealry half of the average price over the last 12 months (15.28 lei).

The Capital market legislation requires mandatory takeover offers to be made at the highest price of the three figures obtained using three different methods, including the two above.

The AIPC press release states: "The fact that the average trading price was not taken into account has influenced the price of the offer, meaning that instead of placing it somewhere near 15.28 lei (which is what the average price is), it is 8.6 lei/share.

According to the document in the tender offer, the price would have been set by independent evaluator S.C. Fairvalue Consulting SRL in compliance with the regulation of the CNVM no. 1/2006 (see insert).

We are stupefied at the manner in which the independent evaluator, without any legal basis, decides to consider as < irrelevant > the average trading price of the last 12 months prior to the submission of the tender offer documentation. Nowhere in the legislation of the stock market are there any provisions concerning the situations where the average trading price should be disregarded. Also, the legislation in effect, does not include any mentions of the fact that in setting the price of the mandatory takeover bid, the independent evaluator is allowed to disregard certain criteria clearly specified in art. 68 paragraph 4 of the Regulation of the CNVM no. 1/2006, as well as in art. 204 paragraph 2 of the Law no. 297/2004 concerning the capital market".

Investors warn that this sets up a dangerous precedent: "the independent evaluators, with the approval of the CNVM, can decide not to abide by certain provisions of the law, by being allowed to arbitrarily deem them irrelevant".

The AIPC also states that there are 36 cases where the mandatory takeover bids were not made.

The Association demands that the CNVM urgently present the legal provisions which provided the legal foundation for the approval of the interpretation of the evaluator which maintains that the average trading price is irrelevant.

On Wednesday, Phoenix Farm, which owns 76.07% of the shares of "Protan", a company which is currently insolvent, has launched a public takeover bid for 23.93% of the company which it doesn't yet control, for a total amount of 3.84 million lei. The public takeover offer is scheduled to take place between May 15th - June 5th, 2012.

The capital market law requires the shareholders who directly or indirectly own over 33% of the shares of a company to conduct a mandatory public takeover bid.