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

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

#91

Post by LocalPCGuy » Fri, Apr 15, 2022, 8:24 PM UTC

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.

No, a board is mandated to act in the best interests of the shareholders. That might be different than just maximizing the share price. They may believe this is a bad idea for the company as a whole, and that long term, it's objectively better for the company to not be owned by Musk.

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

#92

Post by dasil003 » Fri, Apr 15, 2022, 8:25 PM UTC

tsimionescu wrote: post #52

gobengo wrote: post #47

Earlier quoted context omitted.

it's radical to equate dollar values with objective goodness

Fiduciary duty, such as it is, only extends to dollar value; and there is no other criteria to sue the board over. Note that I'm all for companies having much more legal responsibility to other stakeholders, not just shareholders, but that is somewhat irrelevant for a discussion of whether the board could be successfully sued over adopting this decision.

True, but the GP's phrasing of "equate dollar values" implies a sort of cut and dried interpretation. A mechanical calculation of a short-term price snapshot is not the only thing that matters. If the board has good reason to believe that Musk will be bad for the stock price in the long-term then there wouldn't be any breach of fiduciary duty.

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

#93

Post by elcomet » Fri, Apr 15, 2022, 8:26 PM UTC

justapassenger wrote: post #72

14 wrote: post #53

Earlier quoted context omitted.

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.

What ? Even if you're a long time investor, having an instant 25% guaranteed profit is good as you can sell part of the stock and diversify.

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

#94

Post by tuckerman » Fri, Apr 15, 2022, 8:26 PM UTC

tsimionescu wrote: post #60

tuckerman wrote: post #25

Earlier quoted context omitted.

The idea that the board's fiduciary means they must maximize profits at the expense of all else is a bit of a myth. Yes, they need to look out for their shareholders but they also need to do right by the company, and companies can be formed for any legal purpose and everyone (the company and the shareholders) values things differently. It's generally been upheld that the board has a lot of autonomy and, outside of gr…

> Yes, they need to look out for their shareholders but they also need to do right by the company, and companies can be formed for any legal purpose and everyone (the company and the shareholders) values things differently The board has a lot of leeway into how they achieve profit for the shareholders, but all decisions they make must be nominally in the interest of that goal (assuming we're discussing a for-profit c…

At least in Delaware law, a board's fiduciary duty involves a duty of care, loyalty, and good faith. While acting to maximize their personal interests or egregiously working against profits could be considered a breach, not trying to maximally make profits probably wouldn't be.

All of this would need to be litigated on a case-by-case basis, but many modern cases have found that companies can freely act to maximize the wages of their employees at the expense of dividends or act charitably even when there aren't tax breaks.

That said, I'm not sure this really even applies in the case of Twitter---I think its not unreasonable to argue that the innate value of Twitter is so much higher than what Musk is offering that its better for the shareholders to wait even thinking purely in terms of profits (I would probably personally disagree with that, but I don't think its any more unreasonable than plenty of other valuations I see)

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

#95

Post by paxys » Fri, Apr 15, 2022, 8:26 PM UTC

14 wrote: post #64

Anyone care to speculate what his plan B would look like? Could he make a twitter clone/replacement then offer existing members $50 for their username and password plus x amount of engagement on his new site?

Anyone can make a Twitter clone/replacement. Getting hundreds of millions of users to switch over is more complicated than just handing them $50, and even that is logistically impossible to do.

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

#96

Post by tomComb » Fri, Apr 15, 2022, 8:28 PM UTC

themitigating wrote: post #48

oh_sigh wrote: post #42

Earlier quoted context omitted.

Getting paid a 25% premium for my stock sounds pretty good to me.

What if the stock goes higher in the future?

I'm sorry that sort of argument makes no sense. Anything could happen in the future, but the price today is what the market judges it to be worth.

The historical price is irrelevant as well. Looking at the historical price is the same sort of thinking that leads to "throwing good money after bad".

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

#97

Post by LocalPCGuy » Fri, Apr 15, 2022, 8:28 PM UTC

tsimionescu wrote: post #60

tuckerman wrote: post #25

Earlier quoted context omitted.

The idea that the board's fiduciary means they must maximize profits at the expense of all else is a bit of a myth. Yes, they need to look out for their shareholders but they also need to do right by the company, and companies can be formed for any legal purpose and everyone (the company and the shareholders) values things differently. It's generally been upheld that the board has a lot of autonomy and, outside of gr…

> Yes, they need to look out for their shareholders but they also need to do right by the company, and companies can be formed for any legal purpose and everyone (the company and the shareholders) values things differently The board has a lot of leeway into how they achieve profit for the shareholders, but all decisions they make must be nominally in the interest of that goal (assuming we're discussing a for-profit c…

Achieve profit is not the same thing as provide value or best interest of. It could be. It does not have to be.

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

#98

Post by tsimionescu » Fri, Apr 15, 2022, 8:28 PM UTC

dasil003 wrote: post #92

tsimionescu wrote: post #52

Earlier quoted context omitted.

Fiduciary duty, such as it is, only extends to dollar value; and there is no other criteria to sue the board over. Note that I'm all for companies having much more legal responsibility to other stakeholders, not just shareholders, but that is somewhat irrelevant for a discussion of whether the board could be successfully sued over adopting this decision.

True, but the GP's phrasing of "equate dollar values" implies a sort of cut and dried interpretation. A mechanical calculation of a short-term price snapshot is not the only thing that matters. If the board has good reason to believe that Musk will be bad for the stock price in the long-term then there wouldn't be any breach of fiduciary duty.

That's not exactly true, as Musk's offer is to buy the company outright, making it private (and thus buying out all shareholders), as I understand - so there is no concept of how Musk's ownership would affect the stock price. Still, the board can easily argue "we believe shareholders will be able to achieve higher profits in the future by maintaining their ownership than by selling all stock at Musk's offered price today".

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

#99

Post by mdoms » Fri, Apr 15, 2022, 8:29 PM UTC

philistine wrote: post #77

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.

Elon's offer is not a hostile takeover, it is just that - an offer.

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

#100

Post by rufus_foreman » Fri, Apr 15, 2022, 8:30 PM UTC

philistine wrote: post #77

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.

Elon's offer is not a hostile offer. He has made an offer, management has not yet rejected it. It is just an offer to purchase the company, as of now.

If the offer is rejected and Elon continues to attempt to gain control of the company, that would be an attempt at a hostile takeover.