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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

#391

Post by TigeriusKirk »

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…

After they've been bought out, the performance of of the company is of no concern to the former shareholders.

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

#392

Post by ryoshu »

dijit wrote: post #89
ryoshu wrote: post #69

Earlier quoted context omitted.

If North Korea offered $60 billion to buy Twitter would Twitter be forced to sell? Not comparing Musk to NK, but money isn't the only consideration when an offer to sell comes in.

North Korea is under heavy sanctions and is thus a poor choice. But if France put a bid on twitter, they would be forced to entertain the offer.

If the China Investment Corporation offered $60 billion to take Twitter private would Twitter be forced to entertain the offer?

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

#393

Post by ericmay »

Tyr42 wrote: post #346
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?

I think that's not how it works. Imagine there are 1000 shares and Elon got 150 of them, bought at $50 so he owns 15%. If the board now sells 1000 new shares to people who aren't Elon, he now only owns 7.5%. It's not that you resell to the board

Yea but that creates downward pressure in the shares too, so there’s a natural limit. Elon could just keep buying more and the market value of the company won’t change. If it did change I.e. you could issue more shares without changing the value of the asset you could just do that all the time from the standpoint of the company and raise infinite money.

So it’s a question of balance. Twitter can raise the fundamental value of Twitter a little bit but there’s no way they can raise it too much without driving the price down and then just having more shares available at lower prices, so like you could just buy 2 shares and spend the same amount of money.

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

#394

Post by SilasX »

prepend wrote: post #375
samhw wrote: post #272

Earlier quoted context omitted.

Unless I'm missing something, 'leveraged buyout' doesn't specify that it's Twitter's equity which has to be leveraged. Off the top of my head, I think Elon Musk has some other bits and pieces which he could scrounge together for collateral.

No, leveraged buyout means you use the equity of the company purchased as the backing for the loan. If you borrow from somewhere else it’s just a buyout.

Hm, that doesn’t sound right, and Wikipedia agrees with my understanding, that an LBO means the buyer borrows money for it:

>> A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company.

Note how the second sentence says that the assets of the purchased company can be part of the arrangement, but the “L” in LBO means the buyer’s borrowing, however they accomplish that.

https://en.wikipedia.org/wiki/Leveraged_buyout

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

#395

Post by JumpCrisscross »

mike_d wrote: post #239
hedora wrote: post #161

Earlier quoted context omitted.

Wait, if some ETF accidentally exceeds 15%, then what? First of all, that'll screw over a bunch of small investors, right? Second, could Elon swoop in at that point? Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.

> Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%. You might want to speak with a lawyer who is familiar with inchoate crime. What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.

> since you intend to conceal beneficial ownership of shares

Promising voting rights doesn't change beneficial ownership. Twitter would have precedent, however, to find "conscious parallelism" and thus "a de facto control bloc" between the commenter and Musk, and thus bundle them for purposes of the poison pill's activation [1].

Still, not a crime. Civil dispute under corporate law.

[1] https://www.yalelawjournal.org/comment/unpacking-wolf-packs

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

#396

Post by Kye »

guyzero wrote: post #390
onelovetwo wrote: post #330

Earlier quoted context omitted.

from my understanding they've been going downhill for quite some time.

"I don't like it" != financial distress. From Twitter's 2021 10K: "FY 2021 Highlights Total revenue was $5.08 billion, an increase of 37%, compared to 2020." 2021 net losses were $221M, which is a big improvement on $1.135B in 2020. Honestly seems like things are really shaping up @ Twitter.

I'm curious to see how this holds up without the events of January 6th driving so many ad impressions.

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

#397

Post by scythe »

mcintyre1994 wrote: post #31
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.

I think the most famous counter-example would be Netflix in 2012 https://www.bbc.co.uk/news/business-20214401

Icahn was claiming that Netflix was undervalued. To be fair, he was also angling for an acquisition. But a bid like that usually has a half-life; the market trends to a good price — and indeed, Netflix doubled in value by mid-2013.

Elon is arguing that Twitter is mismanaged. He already probably pushed them on the edit button, even though they claimed he didn't. If he's right — and Goldman Sachs seems to agree — he could have an easier go of it next year.

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

#399

Post by onelovetwo »

guyzero wrote: post #390
onelovetwo wrote: post #330

Earlier quoted context omitted.

from my understanding they've been going downhill for quite some time.

"I don't like it" != financial distress. From Twitter's 2021 10K: "FY 2021 Highlights Total revenue was $5.08 billion, an increase of 37%, compared to 2020." 2021 net losses were $221M, which is a big improvement on $1.135B in 2020. Honestly seems like things are really shaping up @ Twitter.

https://twitter.com/cameron/status/1514977953079209985

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

#400

Post by roughly »

rosndo wrote: post #226
hedora wrote: post #161

Earlier quoted context omitted.

Wait, if some ETF accidentally exceeds 15%, then what? First of all, that'll screw over a bunch of small investors, right? Second, could Elon swoop in at that point? Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.

An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter. Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases? >Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%. Such an arrangement would make Elon the beneficial owner of your shares.

> An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter.

No, but an ETF has a defined investment strategy, and if enough money comes into the ETF, it could potentially trigger this.

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