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Twitter board adopts poison pill after Musk’s $43B bid to buy company

cnbc.com

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Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#71

Post by philistine »

teeray wrote: post #55
themitigating wrote: post #37

Earlier quoted context omitted.

You're claiming that Musk's purchase of twitter is objectively good for shareholders

The board’s mandate is to maximize shareholder value. They have an offer that will objectively maximize that value. To scorn it in favor of intangibles is to act against the interest of shareholders.

According to your logic, any offer to go private above market value must be accepted. That's not the case. Stockholders might be interested in owning Twitter stock for a long time. Elon's offer might not make financial sense for them.

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#72

Post by justapassenger »

14 wrote: post #53
themitigating wrote: post #48

Earlier quoted context omitted.

What if the stock goes higher in the future?

What if the stock crashes in the future? Having a guarantee profit sounds like a pretty good deal for some.

Guaranteed profit at the point in time is great for speculators. If you're doing long term investment, realizing profit at random point in time, isn't really that attractive.

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#74

Post by philistine »

14 wrote: post #53
themitigating wrote: post #48

Earlier quoted context omitted.

What if the stock goes higher in the future?

What if the stock crashes in the future? Having a guarantee profit sounds like a pretty good deal for some.

Not for Twitter's board. They want more, and good for them. In the history of hostile acquisitions, the first offer is never the final one.

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#75

Post by and-not-drew »

anonymouse008 wrote: post #36
WalterBright wrote: post #17

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.

Read some Matt Levine, he's way more articulate and makes finance quite fun. But if I were to take a stab at it: 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…

> 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

You're right that theoretically, they shouldn't create value, but I think even back to the 80s and 90s it's been shown that companies that go through a split tend to out perform the market for years after the split. The main reason isn't that the split creates value, but rather that companies who go though a stock split are usually successful and already on a trajectory to beat the market, split or not.

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#76

Post by nickysielicki »

philistine wrote: post #67
nickysielicki wrote: post #41

Earlier quoted context omitted.

Given that it’s at a share price premium for 90%+ of the lifetime of the stock since IPO, yes. Most shares were bought below the price Musk is asking.

The board has declared the price offered to be too low. You say it's high enough, but I doubt you own as much stock as the people on the board.

To be clear, they haven’t actually rejected the offer yet, they’ve simply limited the ability of Musk to acquire a majority stake in the case that they reject.

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#77

Post by philistine »

nickysielicki wrote: post #29

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…

Elon's offer is at the same time an hostile offer, and conditional on obtaining financing from banks. This is never heard of in the history of hostile acquisitions, and is a BIG risk for the board to entertain any attempt by anyone to buy Twitter before they know what their loan percentages are.

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#78

Post by AlbertCory »

nickysielicki wrote: post #29

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…

You can read "Barbarians at the Gate" for some 1980s history of corporate raiding. Back then, it was pure greed and ego. So unlike today [smile emoji].

The "poison pill" defense is very old. I'm not going to defend or attack it; it is what it is.

I WILL observe that, once a stock is "in play" it usually gets acquired, or at least gets a bunch of new board members.

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#79

Post by avs733 »

teeray wrote: post #55
themitigating wrote: post #37

Earlier quoted context omitted.

You're claiming that Musk's purchase of twitter is objectively good for shareholders

The board’s mandate is to maximize shareholder value. They have an offer that will objectively maximize that value. To scorn it in favor of intangibles is to act against the interest of shareholders.

The boards mandate is one of fiduciary duty. Bluntly, that is not a mandate to maximize shareholder value, especially in the short term.

They do not have an offer that will maximize shareholder value - they have an offer that will increase it.

Words have meaning and concepts have definitions. They are not arbitrary of flexible for the sake of making the argument you want.

The BOD's responsibility is to the company, a public company's responsibility is to the shareholders - this difference matters.

Cornell's legal information institute provides a nice and cited set of definitions (albeit in legalese) - https://www.law.cornell.edu/wex/fiduciary_duty

Re: Twitter board adopts poison pill after Musk’s $43B bid to buy company

#80

Post by SnowHill9902 »

systemvoltage wrote: post #28
maxclark wrote: post #9

Predictably stupid. They're going to come back and say the company is worth >$70B.

What are the options for Elon Musk if he really wanted to counter this poison pill?

He could use the infamous antidote clause.
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