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Every company I know of that did a poison pill to prevent a takeover wound up tanking within a year or two and the shareholders wound up with sand. As a Twitter shareholder myself, the board is making a big mistake. As a legal matter, I don't understand how a board could sell shares to other shareholders at a lower price than to the entity wanting to buy shares to gain control.
And then the board and executive get sued for failing to maximize shareholder value. It's literally a violation of federal law.
Earlier quoted context omitted.
The board of a public company cannot reasonably claim that they’re worth twice(!) what the market currently values their company at simply because they feel it’s true. Unless they have advertising contracts and growth metrics in the pipeline that represent a reasonable doubling of revenue and value, they’re acting legally irresponsibly. Justifying this is difficult. This is objectively a good offer.
The literal value is their share price x total shares. The notional value is at best the NPV of future profit streams. However Twitter's track record on profits are dismal so the claim is dubious legally.
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Would the naysayers say a site was "biased" if it claimed "this is a direct threat to our democracy"?
Every company I know of that did a poison pill to prevent a takeover wound up tanking within a year or two and the shareholders wound up with sand. As a Twitter shareholder myself, the board is making a big mistake. As a legal matter, I don't understand how a board could sell shares to other shareholders at a lower price than to the entity wanting to buy shares to gain control.
The market has been so weird recently that stock splits - which according to previous theoretical belief do not create shareholder value - have in fact increased the share price for extended periods. So issuing stock for whatever reason (high price, poison pill) could be seen as shareholder maximizing.
One could say diluting the stock so that a particular personality cannot buy the whole company could be shareholder maximizing as it would entrench ESG held values -- emboldening new shareholders to purchase the stock (saving the stock price).
And point of information, by diluting rather than selling already owned shares, control is not ceded to the potential acquirer -- unless the potential acquirer doesn't care about the poison pill and will pay the premium for the new issue as well.
This is quite fun to watch.
I don’t understand how any board can implement a “poison pill”, not just Twitter but Netflix and others, and not be found working against the interest of shareholders. Can anyone help me understand? You’re categorically changing the profile of the stock. This has a chilling effect on large investors, including but not limited just to Musk, right? Vanguard, for example, has just had its range of further investment lim…
I wonder if Twitter would be in the right to deactivate musk’s account. They’re a company & he’s clearly trying to cause them harm. I see no reasons as to why it wouldn’t be justified. (Hilarious too, I might add.
Because he's a near-10% shareholder and accounts like his are a major driver of new account growth. I wonder if this episode has impacted growth or engagement metrics any. Hard to imagine it hasn't
Every company I know of that did a poison pill to prevent a takeover wound up tanking within a year or two and the shareholders wound up with sand. As a Twitter shareholder myself, the board is making a big mistake. As a legal matter, I don't understand how a board could sell shares to other shareholders at a lower price than to the entity wanting to buy shares to gain control.
Predictably stupid. They're going to come back and say the company is worth >$70B.
That's how the game is played. If you want to take over a company without the consent of its executives, it's going to be a fight and you're probably going to lose.