This is the first blog entry for the West Files – watch out for more insights and breaking news from Michael West.

The crash in Sundance shares is a salutary reminder, indeed a costly reminder for would-be arbitrageurs, that a proposal ain’t a bid.

It’s a far cry from a fair dinkum bid in fact – the difference between all and nothing. So, when the regulator sallied forth with its insider trading case against Sundance’s shady suitor, Hanlong, there was nothing to hold up the stock price.

Same deal with Bannerman Resources. Sundance dropped 15 per cent, Bannerman 10 per cent.

Takeover bidders have smartened up over the years. With little risk and even less commitment a predator can launch a “non-binding indicative proposal” to harass and flush out its prey.

Most of these proposals fall by the wayside. Private equity tilts at Tassal and Spotless spring to mind. Then there is QBE’s tilt at IAG a couple of years ago. That went nowhere.

Some subsequently turn into full bids, such as the SAB offer for Foster’s. But the point is, you can’t bet on a proposal, at least with any surety – even if the financial media is calling it an offer or a takeover as they often do.

Like a share buy-back – where a company can announce its intention but never buy a share – the purveyor of a takeover proposal has no legal obligation whatsoever to proceed