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

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

#311

Post by goodluckchuck »

rad88 wrote: post #276
samhw wrote: post #267

Earlier quoted context omitted.

Yeah, there's no concealment and no beneficial ownership. "I'll vote as part of your bloc" isn't beneficial ownership. ( At most it's delegating the 'control' aspect of the equity, but even that is a stretch - in context, it's clearly a statement of incidental agreement with his opinion on this point, not a total delegation of control no matter what he should choose to do in future.)

No, "I'll vote as part of your bloc just pay me $50M" is obviously not an incidental agreement.

So shareholders aren’t allowed to coordinate?

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

#312

Post by PaulDavisThe1st »

hajile wrote: post #164
tsimionescu wrote: post #60

Earlier quoted context omitted.

> 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…

We are the largest perennially unprofitable company to ever exist. The richest guy in the world offered to invest a fifth of his net worth into the gamble of turning our company profitable while making our shareholders a massive profit. Instead, we poisoned the system knowing that the stock is all but guaranteed to tank massively reducing our market cap and hurting our ability to take out still more loans to continue…

> The richest guy in the world offered to invest a fifth of his net worth into the gamble of turning our company profitable

That's his publically stated claim. Whether that's what is really going on is another question.

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

#313

Post by riazrizvi »

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…

The fiduciary duty of the board is to protect the company as an ongoing concern that seeks to increase its enterprise value, and also to protect the interests of shareholders, including minority shareholders.

This is to prevent say a majority shareholder and/or group of employees from raiding the business of its value.

So a case for a poison pill might be well made to prevent a person from taking a controlling stake to then expose the company’s IP (code base) because they have some agenda, or prevent them running the company into the ground by causing a flight of talent, or by breaking some success formula.

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

#314

Post by pm90 »

rubyist5eva wrote: post #286

I think Elon just wants to destroy Twitter and he's just baiting them into tanking themselves, I have a hard time believing actually wants to own and run it. If he did own it, I wonder if he would unban Donald Trump?

He would absolutely unban everyone. As he has found out he is free to do anything he wants and nobody will get in his way.

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

#315

Post by guelo »

colinmhayes wrote: post #186
loceng wrote: post #103

Earlier quoted context omitted.

Elon said he'd keep as many shareholders as he's legally allowed to.

And also that tesla was going private at $420 a share.

His twitter offer is suspiciously $50 + 420 cents

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

#316

Post by tsimionescu »

nickysielicki wrote: post #41
themitigating wrote: post #37

Earlier quoted context omitted.

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

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.

That is irrelevant. To show a breach of fiduciary duty with this kind of argument, you would basically have to prove that it is objectively impossible for Twitter stock to be worth more than what Musk offered over some horizon. I very much doubt there has ever been a successful case taking this approach.

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

#317

Post by soneca »

FFRefresh wrote: post #242
axg11 wrote: post #129

Earlier quoted context omitted.

The pushback is simple: Twitter stock price was higher than Musk’s offer for most of 2021. We are in a downturn affecting the entire tech industry, and it’s likely that prices will return to previous levels at some point. Elon’s offer is a lowball and Twitter can bring more value to shareholders with or without Elon.

I don't immediately buy the logic of "Stock A hit a peak of $X last year, therefore that is the correct price/valuation, and not the lower price it is right now" If Twitter was worth more, it'd be worth more. With that logic, you should put a huge chunk of your savings into Twitter to benefit from the insight, as it's currently trading at 39% below its 52-week high.

The argument is not that is worth more, it is that it can be worth more in the future than Musk offer. No one can predict the future, but it is a legitimate reason to believe it can be worth more than $54 in the future and pointing that it was worth more last year is just an argument for the belief. Which makes sense to me.

As legitimate as it is to believe that the stock price will never again reach $54.

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

#318

Post by hedora »

defen wrote: post #217
axg11 wrote: post #129

Earlier quoted context omitted.

The pushback is simple: Twitter stock price was higher than Musk’s offer for most of 2021. We are in a downturn affecting the entire tech industry, and it’s likely that prices will return to previous levels at some point. Elon’s offer is a lowball and Twitter can bring more value to shareholders with or without Elon.

> We are in a downturn affecting the entire tech industry, and it’s likely that prices will return to previous levels at some point. So why not take the offer (which is 20% higher than the current market price for the stock) and put the received cashed into other tech stocks? Is Twitter uniquely/excessively down compared to other tech stocks, and due for a bigger rebound?

If this leads to a shareholder lawsuit, the board may need to argue they had non public information suggesting the stock was undervalued.

At that point, they'll need a good lawyer to explain why Twitter chose to omit that information from their SEC filings.

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

#320

Post by friesfreeze »

tuckerman wrote: post #25
xyzzy21 wrote: post #20

Earlier quoted context omitted.

Quoted post unavailable.

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…

Under DE law, my understanding is that you are slightly off on this.

Boards do have a duty to maximize shareholder value. THAT SAID, the business judgement rule provides that judges will not second guess the board absent evidence of gross negligence or total disregard of duty. This is because the Delaware court has decided that judges are not better than boards at evaluating business decisions.

BUT! Overcoming the BJR is very difficult unless management stupidly says the quiet part out loud.

Dodge v. Ford is a celebrated case in this regard because Ford basically said at trial "Yeah my main consideration in taking [specific action] is not maximizing shareholder value" and the judge was like "Haha no, that's not how any of this works - you can't do [specific thing] now." But if Ford was like "Yeah [specific thing] would be GREAT for shareholders" under the BJR the judge would have been like "Okay, great, keep doing what you are doing. How could I possibly know better than you?"

Also there is no "need to do right by the company" - squeezing value out of the company and all of its stakeholders is completely consistent with the duties of the board members. How else would the private equity industry exist? (jk!)

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