Fairness opinions in the context of tender offers on the Polish capital market

Abstract

The Act on Public Offering imposed a requirement on the management boards of publicly traded companies to present their statement on the announced tender offers. The management board has the possibility to engage a third party to assess the financial terms in the tender offer. These assessments are customarily called fairness opinions. The previous publications on fairness opinions only to a small extent dealt with those in the context of tender offers on the Polish capital market, they lacked detailed analyses, and, moreover, taking into account the rapidly changing finance world, the presented conclusions may have become obsolete. The purpose of this study is to learn about the popularity of fairness opinions in the context of tender offers on the Polish capital market, the main advisors involved in issuing them, and their importance for the offered premia. The abovementioned goal was achieved by analyzing data on tender offers on the Polish capital market. The analysis was performed on the basis of publicly available data for tender offers announced in the period from 1 January 2016 to 31 December 2021 (based on current reports of the companies on which tender offers were announced). The analysis showed the growing popularity of fairness opinions compared to previously published studies. Management boards especially appreciate the expert opinions in the case of the largest transactions on the Polish capital market. The fairness opinion market is highly concentrated, most of them were issued by three entities. Engaging international investment banks is rare but recorded in case of top transactions. The ultimate premium offered in tender offers in which management decided to mandate a third party to prepare fairness opinion is on average higher than in tender offers without fairness opinion, however the difference is not statistically significant.