Undisturbed price
M&A / Merger ModelA target's share price before any leak, rumour or approach moved it, used as the reference point for measuring an offer premium.
Also written: unaffected price, undisturbed share price, unaffected share price
An offer premium is only meaningful against a price that does not already contain the offer. By the day before an announcement a target's shares have frequently moved on speculation, a press report or a stake building disclosure, so measuring against the last close understates the premium being paid.
The undisturbed price is the price on the last day before that disturbance, chosen by identifying when the shares detached from their sector on unusual volume. Where the run up was gradual, practitioners often show several references at once: one day, one month and three month averages, and the twelve month high.
It matters because the number gets used. A board weighing an offer, a shareholder deciding whether to accept and an adviser recommending a price all lean on the premium, and moving the reference date can change a headline premium by ten percentage points without changing the offer by a cent.
It is also where a candidate can show judgement. Being able to say that a premium should be quoted against an undisturbed reference, and to explain how you would pick that date, is a more senior answer than reciting a typical premium range.
Worked example
A target trades at €40.00 before any leak. An acquirer offers €50.00, a 25% premium to the undisturbed price.
If the shares had already run to €46.00 on speculation, the identical offer prints as an 8.7% premium to the last close. Nothing changed except the reference point, which is why announcements quote the undisturbed one.