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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?

#141

Post by mabbo »

jmyeet wrote: post #137
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…

Sorry but this is utter nonsense. 51% of a company is not some magic ticket that allows you to do basically anything (including screwing the other 49%). It just doesn't work that way. There are certain thresholds that allow you to do more and more things but if you're in control of a company you still have a fiduciary duty to the other shareholders, even small minority shareholders. This is why minority shareholder l…

You may very well be right. As I said in another reply, I'm mostly quoting a delicious bit of writing Matt Levine published last week.

I suspect that none of what I said is easy or even likely- but I do believe the risk of such things is real and that's why the board set up a poison pill, to ensure they got a real deal and not something more aggressive.

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

#142

Post by dang »

jmyeet wrote: post #137
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…

Sorry but this is utter nonsense. 51% of a company is not some magic ticket that allows you to do basically anything (including screwing the other 49%). It just doesn't work that way. There are certain thresholds that allow you to do more and more things but if you're in control of a company you still have a fiduciary duty to the other shareholders, even small minority shareholders. This is why minority shareholder l…

> Sorry but this is utter nonsense.

Can you please make your substantive points without name-calling? There's a site guideline that asks you to do just that.

"When disagreeing, please reply to the argument instead of calling names. 'That is idiotic; 1 + 1 is 2, not 3' can be shortened to '1 + 1 is 2, not 3."

https://news.ycombinator.com/newsguidelines.html

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

#143

Post by dang »

qiskit wrote: post #126
jalonso510 wrote: post #123

Earlier quoted context omitted.

The classified board structure is available for you to read about in their public filings and the Twitter investor relations site. It's not fanciful or nonsense - it's a commonly used takeover defense that Twitter put into effect several years ago. I don't know why Twitter's board accepted the deal, I'm just talking about the defenses in place and how they all worked. Apologies if that offended you somehow.

Quoted post unavailable.

Whoa - you've repeatedly broken the site guidelines in this thread. Can you please review them and stick to them, regardless of how wrong someone else is or you feel they are? That's really important for preventing, or at least staving off, the decline of this forum.

https://news.ycombinator.com/newsguidelines.html

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

#144

Post by saalweachter »

jmaygarden wrote: post #99
tptacek wrote: post #93

Earlier quoted context omitted.

Shareholders are discriminated against all the time; companies have "preferred" and "common" shareholders. Meanwhile: nobody is actually discriminated against, because it's economically irrational to buy more than the shareholder rights plan trigger; from some light reading, it looks like no poison pill has ever been triggered (the whole point of the poison pill plan is to prevent that from happening).

As far as I know, the only instance of a poison pill being triggered was Versata Enterprises, Inc. in December 2008. TL;DR: A competitor (Selectica, Inc.)--wishing to purchase Versata--bought over 5% of the shares. The IRS considers this an ownership change, and it imposes a penalty to discourage trading of Net Operating Loss (NOL) carryovers. A poison pill was in place to prevent this tax issue. The board executed t…

Do you mean held up or upheld?

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

#145

Post by fennecfoxen »

dang wrote: post #142
jmyeet wrote: post #137

Earlier quoted context omitted.

Sorry but this is utter nonsense. 51% of a company is not some magic ticket that allows you to do basically anything (including screwing the other 49%). It just doesn't work that way. There are certain thresholds that allow you to do more and more things but if you're in control of a company you still have a fiduciary duty to the other shareholders, even small minority shareholders. This is why minority shareholder l…

> Sorry but this is utter nonsense. Can you please make your substantive points without name-calling? There's a site guideline that asks you to do just that. " When disagreeing, please reply to the argument instead of calling names. 'That is idiotic; 1 + 1 is 2, not 3' can be shortened to '1 + 1 is 2, not 3. " https://news.ycombinator.com/newsguidelines.html

If that guideline is meant to cover the words “utter nonsense” it is not intuitive to anyone

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

#146

Post by jmyeet »

dang wrote: post #142
jmyeet wrote: post #137

Earlier quoted context omitted.

Sorry but this is utter nonsense. 51% of a company is not some magic ticket that allows you to do basically anything (including screwing the other 49%). It just doesn't work that way. There are certain thresholds that allow you to do more and more things but if you're in control of a company you still have a fiduciary duty to the other shareholders, even small minority shareholders. This is why minority shareholder l…

> Sorry but this is utter nonsense. Can you please make your substantive points without name-calling? There's a site guideline that asks you to do just that. " When disagreeing, please reply to the argument instead of calling names. 'That is idiotic; 1 + 1 is 2, not 3' can be shortened to '1 + 1 is 2, not 3. " https://news.ycombinator.com/newsguidelines.html

What "name-calling" would that be exactly?

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

#147

Post by throwawaythekey »

jdasdf wrote: post #96
colonwqbang wrote: post #78

Earlier quoted context omitted.

Sure, I accept that it's legal in the US. It just seems strange that there isn't some rule saying that the board has to treat shareholders more or less equally. Since the board is elected by the shareholder votes it seems weird that they can just redistribute voting power at will. What if there was some minority shareholder that the other owners disliked for some reason, could they force them out too? Or this power i…

They are treating them equally. Elon has just as much of a right to purchase those shares at the same price as any other shareholder.

The whole point of the poison pill is that the hostile shareholder is not treated equally. He would not have the opportunity to buy the discounted/newly created shares that would be triggered by him purchasing stock. In essence upon hitting the trigger he would be diluted differently to other stockholders.

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

#148

Post by lettergram »

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…

The poison pill dilutes everyone’s shares. The hostile actor could / would dump their shares after the hostile take over attempt. That would crash the price.

Alternatively, the board would keep creating shares as the hostile actor attempted to buy more. Keeping the price the same or higher. Eventually the hostile actor would still take the company but at a much higher initial cost. Once purchased they could still do a merger (51%).

At the end of the day it simply forces the hostile actor (in the sense of buying shares) to pay more.

In this case, the board basically had to sell. Else they’d open themselves to lawsuits anyway. If Musk had a failing bid. He’d dump 10% and instantly the price would be down 40-60%, plus people would lose confidence and drop further. Then the board would be open to failing to do their job as representatives of the share holders.

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

#149

Post by BLKNSLVR »

zmgsabst wrote: post #119
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?”

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 t…

3a. Saw Netflix, panicked.

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

#150

Post by dundarious »

bigiain wrote: post #107
jalonso510 wrote: post #104

Earlier quoted context omitted.

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.

> but the deal he agreed to was approved by the board. Yeah, probably as qiskit suggested, because the major shareholders told the board to pull their heads in and take the money.

Given the context of this discussion is a question about why the poison pill didn’t prevent this bid from succeeding, I think it doesn’t matter whether the board accepted because of negotiations with Musk (willingly) or because of shareholder pressure (through gritted teeth). The point is, the board approved the deal so the poison pill didn’t trigger. If they rejected the deal, the poison pill would still be a factor.

At least that’s my understanding.

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