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Ask HN: What happened to Twitter poison pill?

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Re: Ask HN: What happened to Twitter poison pill?

#111

Post by hammock »

agency wrote: post #103
hammock wrote: post #102

Earlier quoted context omitted.

Your reply merely clarifies that this sale is not a hostile takeover. It doesn’t seem to answer the question, “What caused the board to change the direction 180 and now closing the deal with Musk?”

The pill was put in place to prevent a hostile takeover, not to prevent any sale. Twitter accepting the offer does not constitute a 180.

A week ago, the Twitter board rejected Musk’s offer to buy Twitter for $54.20 a share.

Today, the board accepted Musk’s offer to buy Twitter for $54.20 a share.

What is that if not a 180?

Re: Ask HN: What happened to Twitter poison pill?

#112

Post by ajross »

> Last week it was said that Twitter's directors will take a poison pill instead of selling Twitter to Elon Musk.

No, it wasn't. What they did was change the governance rules to create a poison pill to minimize the possibility of a hostile takeover. Musk's offer was an offer made "to" the board, it wasn't an attempt to actually buy >50% of the company on the open market. In point of fact, "true" hostile takeovers are pretty much impossible owing to exactly this ability of boards of directors to allocate new shares (though the details vary between companies, some have limited rulemaking, some have very large individual shareholders who might act in concert, etc...).

This kind of stuff is just general prudence on the part of the board when it looks like a takeover attempt might be in progress. It doesn't constrain their ability to negotiate on behalf of all the shareholders.

Re: Ask HN: What happened to Twitter poison pill?

#114

Post by qiskit »

jalonso510 wrote: post #104
qiskit wrote: post #88

Earlier quoted context omitted.

This is simply wrong. The board outright rejected musk's offer and instituted a poison pill to prevent a hostile takeover of twitter by musk. So elon simply bypassed the board of directors and went to the major shareholders. It is the major shareholders who has final say, not the board of directors. Elon convinced enough of the major shareholders to accept his deal and once that happened, the board of directors has n…

This is not correct. The board negotiated a deal with Elon after putting the poison pill into effect. If Elon had made a deal directly with the stockholders, that would have triggered the poison pill. He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board.

> The board negotiated a deal with Elon after putting the poison pill into effect.

There was no "negotiation" with the board. Elon just made an unsolicited offer and said take it or leave it. The board "left it" and yet here we are.

> If Elon had made a deal directly with the stockholders, that would have triggered the poison pill.

What? That's not how poison pills work. Poison pills exist to prevent hostile takeovers. It isn't there to prevent someone from talking to the stockholders. If the stockholders agree to the deal, it is no longer a hostile takeover.

> He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board.

Yes. The deal was first rejected by the board. And then the deal was approved by the board. Why do you think that was? What made the board change their minds? I wonder. You might have a point if elon raised his offer from $54.20 to a much higher number. But all reporting indicates he didn't change his offer.

Of course the deal was approved by the board. My point is that the shareholders made them approve the deal.

Re: Ask HN: What happened to Twitter poison pill?

#115

Post by weezin »

abfan1127 wrote: post #21

can someone explain why you'd spend $210/share rather than just buy on the open market at ~$50/share now? Are the $210 shares better in some way? Why would the $210 price double?

If I had to guess it was probably 8 shares total for the price of 4.

Re: Ask HN: What happened to Twitter poison pill?

#116

Post by SilasX »

tptacek wrote: post #91
SilasX wrote: post #84

Earlier quoted context omitted.

>It just seems strange that there isn't some rule saying that the board has to treat shareholders more or less equally. AIUI, there is such a rule, and, FWIW, that’s why I found the OP’s explanation[1] somewhat dubious. Deliberately sabotaging the corporation for the benefit of another one that the 51%er owns … seems like the kind of thing that the courts would strike down. [1] https://news.ycombinator.com/item?id=31…

Poison pills have been settled law in the US for decades.

Which must be why I didn’t object to that part, only to the (explanation of the legal) justification given. Could you give my comment a re-read and ensure you were replying to the right one?

Re: Ask HN: What happened to Twitter poison pill?

#117

Post by qiskit »

jalonso510 wrote: post #108
qiskit wrote: post #74

> What caused the board to change the direction 180 and now closing the deal with Musk? Enough of the large shareholders behind the scenes backed the deal for whatever reason. Who, what and why? We'll never get the real story. Not in any newspaper, blog or whatever. I'm sure we'll get some fanciful stories, but that's all it'll be. Fanciful stories. The board of directors aren't the ones that have the final say. It's…

The shareholder's control over Twitter is not as direct as you are suggesting. Even if 100% of shareholders were supportive of Elon's deal, they could not immediately force the board to accept the offer. If the board refused to approve the deal, the shareholders' mechanism of control would be to elect new directors. But the company's bylaws do not allow for that to be done immediately. They would have to vote at the…

No post body was provided.

Re: Ask HN: What happened to Twitter poison pill?

#118

Post by agency »

hammock wrote: post #111
agency wrote: post #103

Earlier quoted context omitted.

The pill was put in place to prevent a hostile takeover, not to prevent any sale. Twitter accepting the offer does not constitute a 180.

A week ago, the Twitter board rejected Musk’s offer to buy Twitter for $54.20 a share. Today, the board accepted Musk’s offer to buy Twitter for $54.20 a share. What is that if not a 180?

Last week’s offer was a non-binding proposal (from someone with a track record of saying “funding secured” for going private transactions that were not in fact secured). The pill forced Elon to come back with a real offer that disclosed specifics about the financing. It may be the same price but it’s not the same offer as last week.

Re: Ask HN: What happened to Twitter poison pill?

#119

Post by zmgsabst »

hammock wrote: post #102
mabbo wrote: post #63

During a hostile takeover, someone buys 51% of the shares. They then elect a board of people who will approve whatever they want. Then they can do things like 'merge' the company with some other company they own at a board-approved value-per-share. That value will be much lower than what they paid per share when buying it on the open market, but not so low that the government gets involved. Eg: Musk buys the shares a…

Your reply merely clarifies that this sale is not a hostile takeover. It doesn’t seem to answer the question, “What caused the board to change the direction 180 and now closing the deal with Musk?”

I think two things happened:

1. Elon Musk proved he was serious by arranging the funding.

2. Elon Musk threatened to sue the board for breach of fiduciary duty — claiming the sale was a good price and shareholders were harmed by not taking it.

And possibly a quiet third:

3. Twitter asked around and no one else was willing to offer a higher price — particularly given the downward trend of markets at present.

I think the board caved when it became clear they’d be personally liable if they refused on purely political grounds.

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