Best and final. Read the footnote.

What happened

"Best and final" had a busy week. Two bidders used the phrase, and only one of them meant it.

• Ingenia Communities. On Monday 26 October, AVID Property Group bid $5.35 cash a security plus up to 5c in distributions, about $2.2 billion. Its backers are a sovereign wealth fund and a global sponsor reported to be Brookfield. Ingenia gave AVID six weeks of soft exclusivity and shut Warburg Pincus out of the data room. On Tuesday Warburg came back at $5.45 plus up to 5c, about $2.24 billion. Ingenia's board said that could be a superior proposal and gave AVID until Sunday 1 November to match it.
• Accent Group. On Wednesday, Frasers Group declared its 65c takeover offer "best and final" and said it "will not be increased". The offer runs to 29 January. Accent's directors face re-election at the AGM on 20 November, which they have framed as a vote of confidence.
• Challenger. The board rejected Dai-ichi Life's non-binding $11.80 a share as "not at a level it could recommend" and said it would keep talking. The shares closed at $11.85, above the offer.
• Reliance Worldwide. Brookfield's scheme booklet was registered on Friday: US$3.38 cash, about A$4.81 at the latest exchange rate. The vote is on 4 December and payment on 18 December.

The footnote

Warburg had already called its price final. On 15 October it declared $5.25 "best and final in the absence of a superior proposal". AVID's bid was the superior proposal, so the footnote did the work.

In takeovers, a bidder that calls its price last and final is generally held to it, unless it spelt out the exceptions at the time. That is ASIC's truth-in-takeovers policy. Warburg spelt out its exception. Frasers didn't, so at Accent, 65c now has to win on persuasion alone.

The Ingenia ladder

• September: Warburg Pincus, $4.75
• September: Warburg, $5.05 (rejected on 21 September)
• 28 September: Warburg, $5.25 (declared best and final on 15 October)
• 26 October: AVID, $5.35
• 27 October: Warburg, $5.45

Cash prices per security, before permitted distributions. Undisturbed, Ingenia closed at $3.65 on 4 September.

One company, three buyers

Neither bidder wants all of Ingenia. Warburg would keep the land lease communities and pass the holiday parks to Discovery Parks and Ingenia Gardens to LDR Capital. AVID would move the holiday parks to Tasman Holiday Parks. Both want Ingenia to walk away from its $992 million acquisition of Peet, which would cost a $10 million reverse break fee.

The mid-market read

Warburg's latest cash price is 49% above Ingenia's undisturbed close, and its last 20 cents arrived within a day of a rival turning up. A second bidder is worth more than any adjective in a sale memorandum. Three lessons that scale down:

1. Read the qualifiers. "Best and final" is only as final as its exceptions. Ask what would change it.
2. Keep exclusivity soft. Ingenia's six weeks for AVID came with a fiduciary out and a matching right, which let a better offer in without breaching the deal.
3. Price your exit from the last deal. Peet's $10 million reverse break fee was agreed before anyone knew there would be an auction. Break fees and matching rights decide endgames, so negotiate them as if one is coming.

And Challenger shows the other side: a board can say no when the share price is already above the offer.

What to watch

• AVID's answer. Its deadline to match was Sunday.
• The RBA on Tuesday 3 November, after September quarter CPI of 1.3%: 4.3% over the year on the monthly measure, 3.6% trimmed mean.
• Accent's AGM on 20 November and Reliance's scheme vote on 4 December.

General information only, not financial product advice. Bid values are as announced or reported and can differ by measure.