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

Post by micromacrofoot » Fri, Apr 15, 2022, 11:41 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.

Post by adsteel_ » Fri, Apr 15, 2022, 11:41 PM UTC

eqmvii wrote: post #343

the_svd_doctor wrote: post #337

Earlier quoted context omitted.

Same. If I own 10% of a company, how can the board just decide through some mechanism that I now really own like 8% ?

They can always do that, by just issuing more shares. In fact, if you buy X shares, the percentage of the company you own could well decline over time. Or increase, in the case of stock buybacks.

Post by JumpCrisscross » Fri, Apr 15, 2022, 11:42 PM UTC

cmdli wrote: post #351

codedokode wrote: post #333

I don't really understand how this "poison pill" is legal. Imagine that you own a stock that can be sold at free market at $10/share. Then the board decides that whoever buys those shares will have to resell them to board members at $1. This means that now the price of those shares drops to $1 and you have lost $9 per share. How this can be legal?

Poison pill shares are new shares, issued by the company and then sold to existing shareholders (with the exception of anybody who owns more than say, 15%). Since these shares are sold at a discount to the current market price, it is arguable that existing shareholders are benefiting as they now get more shares at a cheaper price, while also screwing over anybody who is trying to get >15%. Now, you may argue that it…

Post by philosopher1234 » Fri, Apr 15, 2022, 11:43 PM UTC

propogandist wrote: post #125

fairity wrote: post #66

People are overlooking the fact that a poison pill will likely increase the price of Musk's final offer, and in doing so will maximize shareholder value. Put another way, Musk may be willing to pay a lot more than a 25% premium for Twitter (he already said he doesn't care about price). Without this poison pill, Musk can force a takeover by accumulating shares. With this poison pill, the board has leverage to maximize…

or the stock can be dumped with public fanfare, bringing it to a fantastically low price. Then, it can be purchased back, even with the 25% premium, likely for the same total price.

Post by friesfreeze » Fri, Apr 15, 2022, 11:43 PM UTC

tuckerman wrote: post #332

friesfreeze wrote: post #320

Earlier quoted context omitted.

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 BJ…

I said this below but I don't think Dodge v. Ford is particularly really plays much into modern case law outside of the judgement rule. To my knowledge, it's never been cited in Delaware (against the board at least). A case that stands out more to me (being both more modern as well as at the federal level) is Burwell v. Hobby Lobby: "While it is certainly true that a central objective of for-profit corporations is to…