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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

#361

Post by [deleted] »

sangnoir wrote: post #299
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.

Isn't your sample biased? Distressed companies are more likely to attract takeover attempts (hostile or not) compared to healthy ones; and they are also more likely to tank. As far as I can tell, Twitter is not in financial distress.

[deleted]

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

#362

Post by jcampbell1 »

not2b wrote: post #184

Even before the poison pill was adopted, the evidence is the market wasn't taking Musk's offer seriously. That's because he was offering $54.20 per share (ha ha, 420), but the stock price never closed higher than $48.36. So almost $6/share was left on the table. Part of it is that Musk doesn't have $43B in cash, he'd have to raise it or borrow it. He's worth more than that but it isn't liquid; as an officer of Tesla…

This makes no sense because if the market was 100% confident in Elon’s offer, but saw a 25% chance of a poison pill you would end up at the same place. The market was in fact incorrect in the likelihood of a poison pill, not Elon’s wealth or ability to raise funds.

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

#363

Post by jeremiahhs »

hackernewds wrote: post #130
loceng wrote: post #103

Earlier quoted context omitted.

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

"Elon said" is not a stamp of trust anymore. Elon also said TSLA would accept Dogecoin, which he had accumulated prior to communicating it. Then he sold it off. History should be a lesson here, it's almost Deja Vu with Twitter

Tesla does accept Dogecoin for some items

https://shop.tesla.com/product/s3xy-mug

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

#364

Post by aleister_777 »

woodruffw wrote: post #291
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…

If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder. That opinion would also be consistent with how "fiduciary duty" is interpreted by US regulators: companies are not r…

However, I think it's a harder case to argue when twitter stock closed at $.18 above the price they went public at in 2013. Sounds like whatever it is they have been doing hasn't been in the interest of the average shareholder either.

The stock is toast regardless after this.

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

#365

Post by _jal »

loceng wrote: post #103
alphabetting wrote: post #58

Earlier quoted context omitted.

you want to cash out with a 20% bump and be out of the stock during a huge tech equity downturn when the stock was over 60% higher last year?

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

Poe's law in action.

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

#366

Post by repsilat »

rgbrenner wrote: post #350
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?

That’s not the way it works. So of course it sounds illegal because you’ve made up an illegal scenario. When the board triggers this clause, they may sell shares to existing shareholders at a discount. These are new shares. Companies have every right to sell shares outside of the exchange they’re listed on… and they do that all the time, through employee grants or options, for example. When raising funds they general…

A company can't pay a dividend to some shareholders but not others. This action would effectively be giving in-the-money call options to some shareholders but not others. Probably legal, but pretty dodgy.

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

#367

Post by [deleted] »

repsilat wrote: post #366
rgbrenner wrote: post #350

Earlier quoted context omitted.

That’s not the way it works. So of course it sounds illegal because you’ve made up an illegal scenario. When the board triggers this clause, they may sell shares to existing shareholders at a discount. These are new shares. Companies have every right to sell shares outside of the exchange they’re listed on… and they do that all the time, through employee grants or options, for example. When raising funds they general…

A company can't pay a dividend to some shareholders but not others. This action would effectively be giving in-the-money call options to some shareholders but not others. Probably legal, but pretty dodgy.

[deleted]

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

#368

Post by systemvoltage »

adsteel_ wrote: post #354
eqmvii wrote: post #343

Earlier quoted context omitted.

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.

Are there guardrails on this? This comment makes it sound like the board can print their own money.

So far I've tried to understand the poison pill and there aren't any satisfactory responses, either on HN or elsewhere in the news.

Wikipedia of Shareholder's Rights Plan is skimp in details as well.

Everything I hear ostensibly appears to be "That should be illegal, makes zero sense". So with no good information out there, it seems like no one is an expert at this and making up bullshit.

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

#369

Post by outsb »

rgbrenner wrote: post #350
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?

That’s not the way it works. So of course it sounds illegal because you’ve made up an illegal scenario. When the board triggers this clause, they may sell shares to existing shareholders at a discount. These are new shares. Companies have every right to sell shares outside of the exchange they’re listed on… and they do that all the time, through employee grants or options, for example. When raising funds they general…

There must be some expectation about the rate of share issuance, I think that's what the parent comment is getting at. ESOP pools are well understood (and IIRC defined upfront). Threatening to sell massively discounted shares equivalent to existing shares without even so much as an SEC filing about it (as of a few hours ago), that's the part where it becomes questionable for me. If the new shares are marketable, then this is a defensive measure that actively destroys value for all existing shareholders.

A company cannot issue unlimited shares without concern for existing shareholders - taken to the extreme, doing so reduces the value of all holdings to zero.

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

#370

Post by Ericson2314 »

woodruffw wrote: post #291
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…

If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder. That opinion would also be consistent with how "fiduciary duty" is interpreted by US regulators: companies are not r…

The fate of the company after it has been taken private doesn't matter as far as "fiduciary duty" is concerned.
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