The main point to note is that most bids are made at a premium to book value to tempt existing equity holders to part with their paper. However, if a company is being valued below book value in the first place, then we can get a double whammy of gains when it is taken over. That's because we benefit from both the share price discount to book value, implicit in the price we paid when we first acquired the shares, being realised as well as the premium to book value the acquirer is willing to pay.
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