Element Fleet Management, the Canadian fleet-services company, proposed on Sunday to buy Australia's FleetPartners Group for A$3.80 per share in cash, an equity value of about A$820 million, through an Australian Scheme of Arrangement [1].

The number worth studying is the other one. Element says it will raise the price to A$4.00 per share if, and only if, FleetPartners' board signs a process deed granting three weeks of hard exclusivity, with no fiduciary out, by 5 pm Sydney time on Tuesday, August 11 [1].

Hard exclusivity without a fiduciary out is the strictest version of the arrangement: for three weeks the board could not negotiate with, or even respond to, a rival bidder, regardless of what that rival offered. The 20-cent difference across the company's shares comes to roughly A$43 million. That is the price Element has put on closing the auction [1].

There is an auction to close. SG Fleet bid A$3.60 per share after the market closed on July 31, and FleetPartners' board unanimously rejected it, saying the offer, in the board's words, undervalues the Company and is not in the best interests of FleetPartners shareholders [2]. The company says it remains free to consider, evaluate and engage with other parties, including SG Fleet [2].

The arithmetic on the premiums is straightforward. Against the undisturbed price of A$2.83 on July 31, Element's A$3.80 is a 34.3 percent premium, and the conditional A$4.00 is 41.3 percent. SG Fleet's rejected A$3.60 was 27.2 percent. Each step up buys something specific: SG Fleet's bid bought a rejection, Element's base bid buys a seat, and the top price buys silence [1][2].

Steel-manning the structure: exclusivity deeds are standard tools, and a bidder spending on due diligence has a real interest in not being used as a stalking horse. The version with no fiduciary out is the part that shifts risk onto shareholders, because it removes the board's ability to act on a better offer during the window.

The deadline resolves overnight US time. The board's answer, whichever way it goes, is the story we will follow up [1].