This innovative tender offer, for a stake currently valued at around $29 million, was announced by Start-up to the ASX on 10 November 2010.

The tender offer is being implemented under rarely-used ASIC Regulatory Guide 102, which enables the Australian Securities & Investments Commission (ASIC) to provide tenderers relief from the takeover provisions that normally limit the acquisition of more than 20 per cent of the voting shares in a company.

Effectively, the relief enables a tenderer to submit a tender offer for and, if successful, secure a stake of more than 20 per cent without the requirement for majority shareholder approval, so long as it makes a full takeover bid for the company at the tender price immediately after securing the stake, thus protecting the position of other shareholders.

DibbsBarker assisted Start-up throughout this process, which included the preparation of tender documents and obtaining indicative advice from ASIC as to the prospects of granting relief to tenderers.

DibbsBarker special counsel Michael Hodgson, who specialises in corporate M&A transactions, advised Start-up on this offer. He said the main attraction of this process for Start-up was that it enabled them to put their whole stake up for sale without raising takeover issues.

"Start-up were keen to exit and realise their investment, and this process ensures that minority shareholders have the option to receive the same price as they do, including any control premium," said Hodgson.

Hodgson also said this tender process was particularly suited to institutional investors holding significant parcels in small to medium-listed companies who believe the company's value is not fully reflected in the share price and seek to realise their investment.

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"In the post-GFC environment, there are plenty of companies - including in the life sciences space - that have not been rewarded by the local market for their progress and where international investors could provide capital and support to spur further growth.

"As such, we would recommend that venture capitalists and other institutional investors in these types of companies give consideration to using this tender process to realise their investment in a way that avoids the uncertainty, delay and expense of shareholder approval and potentially benefits all shareholders."

According to DibbsBarker, the Start-up proposal is only the second of its kind in Australia in recent years after the Regulatory Guide was introduced in 1995.

In 2007, a group of shareholders in timber supplier Auspine invited tenders for a 25 per cent stake, ultimately leading to Auspine being taken over by Gunns Limited.

Last year, DibbsBarker advised Start-up in its sale of shares in Arana Therapeutics Limited to US pharmaceutical company Cephalon, Inc.