221–230 of 303 posts
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It's amazing. You have to think that $54.20 is a number that Musk insisted on just for a prank. Do we seriously believe that the deal wouldn't have been done at a round $54? If you think it could, that's Musk overspending by >$150M in order to make a pot joke.
The original "Funding Secured" tweet was about taking Tesla private at $420
> 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…
Yes they could. If literally 100% of the shareholders opposed the board, the board would lose indemnification from shareholder lawsuits for any actions it took, up to the difference in value between the tanking share price and Musk's offer. No effing way they would stay obstinately opposed in that case.
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…
This is confusing. During the TWTR discussions, one that regularly came out is the importance of a board's fiduciary duty. Buying 51% doesn't let you take the company private, and merging at 50% of the price seems like a monumentally indefensible decision, especially when it is with the 51% holders company. I find it hard to believe you can get away with that.
The legality of a poison pill is defined by case law of of Unocal vs. Mesa Petroleum. https://en.wikipedia.org/wiki/Unocal_Corp._v._Mesa_Petroleum... . Basically a company can ONLY create a poison pill IF and ONLY IF: * the tactics of the party doing the hostile takeover are "coercive" * the hostile takeover will likely result in dissolution of the company Neither applies to Twitter in any serious sense. Musk's metho…
There were actually threats by pension funds in right wing states to come after twitter if they didn't do the deal and imploded it for political reasons.
The downside to the stock from a) loss of offer, b) sale of musk shares and c) launch of a competing service by musk might have been pretty significant.
The board was in a tough spot. Doesn't look like they were able to negotiate a larger price.
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I don't see much daylight between "utter nonsense" and "that is idiotic".
I think you are being too harsh on parent. How is that worse than people literally calling each other's comments bullshit on HN? Examples: https://news.ycombinator.com/item?id=6805295 https://news.ycombinator.com/item?id=5111959 https://news.ycombinator.com/item?id=6410617 .. and many more
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The poison pill is to make it so that the person can't ever get 51% because it's not good for everyone else. The 'short answer' to the question of 'why no poison pill' is simply because the Board reached some kind of agreement with Musk. I like Musk when he's in his lane, I don't see any good coming from this. Everyone is nuts to talk about 'shareholders' - who cares? As a 'consumer' - I want a good service and cheap…
> Everyone is nuts to talk about 'shareholders' - who cares? As a 'consumer' - I want a good service and cheap (i.e. free) with no ads. I have zero interest in 'shareholders' of a company I'm not a shareholder in, other than legal protections. Shareholders own the company. Which is why people care what they think. I have preferences for how my neighbors manage and maintain their properties, but since I don’t actually…
But it's nuts - why would 'most people' who are likely Twitter 'users' and not 'shareholders' care about someone else's benefit over their own?
Twitter could very well jam up with more ads - as a sure fire way to make more money.
But not I / We are stuck with a crappier product, possibly very crappy i.e. a value transfer from our pockets, to investors.
Shareholders technically 'control' the company, they can do what they want, but what we should want them to do is 'lose money' and give the surpluses to us.
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The poison pill is to make it so that the person can't ever get 51% because it's not good for everyone else. The 'short answer' to the question of 'why no poison pill' is simply because the Board reached some kind of agreement with Musk. I like Musk when he's in his lane, I don't see any good coming from this. Everyone is nuts to talk about 'shareholders' - who cares? As a 'consumer' - I want a good service and cheap…
> As a 'consumer' - I want a good service and cheap (i.e. free) with no ads. And I want world peace, people to start using their turn signals, and a pony. We can want whatever we like. Doesn’t mean the world is going to, or even capable of delivering it.
There is value on the table, Musk is going to try to take some away, probably in a zero-sum way.
Musk could very well jam Twitter full of ads, making it sheite for us, but more money for him.
Nobody should want that but literally a single person: Elon Musk. Everyone else, who uses Twitter, should be against it.
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>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.
I never disputed poison pills being legal, only one comment's justification for that conclusion.
It's not responsive to simply assert that poison pills are "settled law", since I wasn't ever disputing that, and no clear-headed, good-faith reading of my post would attribute such a remark to me.
And yet ... not only do some of you think the above reply is somehow responsive (or not a strawman), you seem to think I'm wrong to simply point out how it isn't.
Someone want to tell me what's going on? Is there some deep insight I can't seem to fathom from tptacek's non-repsonsive, dismissive reply that makes it all somehow worthwhile?
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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…
> The poison pill dilutes everyone’s shares. This is factually incorrect. The poison pill is specifically designed to dilute the hostile actor's shares, while leaving everyone else mostly untouched (depending on the pill's mechanisms). > The hostile actor could / would dump their shares after the hostile take over attempt. That would crash the price. They could, but would they? This would hurt them, too, so it rarely…
The important way to think about it is not price-per-share but price-per-percent. The share price on the market likely would fluctuate. It would be diluted as you pointed out, but if the attacker really wanted to own it, they're going to have to be the highest bidder on the market for a majority of the shares. They already have to over-value those shares, since that share that brings them >50% is WAY more valuable to them than every share leading up to it.
If Elon owned 15% and wanted to reach 50%, he has to buy 35% of the shares to reach control (50%). If you double the number of shares of existing shareholders but not Elon, then Elon would own 7.5%. Now he has to buy 42.5% of the company. Assuming the absolute value of the company didn't change, Elon will have had to buy 15%+42.5%=57.5 of the company just to buy what was 50% yesterday. This effectively adds a 7.5% premium to buy a controlling amount, and that premium is divided up among shareholders who sold out post poison pill.
Oh, and along the way, the demand to buy all those shares means that the attacker has to be the highest bidder. And that kind of demand would create a massive shift in the market. If enough of shareholders thought the price was too low, (or realistically a small fraction of them, since companies like index funds managers don't actively trade shares), they wouldn't sell to the attacker and the attack wouldn't be possible - so an attack has a huge upwards pressure on the price. every share gets more expensive than the last.
> it seems unlikely that a failed takeover would change the stock price for longer than a news cycle. All the fundamentals are unchanged, so it's more likely the price would return to what it was before.
Elon is basically a meme, just look at this tweets affect on the markets for things like crypto. Elon being associated with something makes it more valuable. When Elon announced he was getting involved and buying shares, they went up in price double-digit percents. If he said "jk i don't think twitter is valuable" AND dumped a huge load onto the market at once, the price would certainly crater for a while, even if, yes, one day it may return to "normal". But few investors would be happy to stomach that crash, especially since the board is judged in part on share price.
* technically you need >50%, but the math is way rounder and easy to rationalize to use 50 not 51.
* also, I don't know the details about the specific poison pill for twitter, but I'm just picking nice numbers for the math purposes
* this is also a big critique of passively managed funds economically - they limit the market dynamic and force buying/holding of companies that "the market" otherwise doesn't value
>> What caused the board to change the direction 180 and now closing the deal with Musk? He secured financing for the deal.
"Funding secured" They also probably wanted to buy time for a counter-offer to show up at a higher price.