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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?

#241

Post by smabie »

jollybean wrote: post #227
bigiain wrote: post #106

Earlier quoted context omitted.

> 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.

I agree, but that's besides the point. 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.

Why do you think Elon is more likely to make the product worse than the current management?

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

#242

Post by LatteLazy »

I don't think you can just "take a poison pill" as a board.

The board are required to act in shareholders best interests. Taking poison pills is not usually in their interest. So you have to do it before their are a lot of shareholders (while you're still privately held) or you need a very good excuse. Doing it during a takeover is especially questionable. So the board would open themselves up to personal liability...

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

#243

Post by zmgsabst »

Rastonbury wrote: post #238
zmgsabst wrote: post #119

Earlier quoted context omitted.

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…

Regarding #2, it isn't so simple for the board, they have large institutional shareholders and sovereign wealth funds, including activist Elliot Management who can sue the board if they think the board is accepting a offer too low. Elliot[1] famously sued the country of Argentina and seized one of their warships when they defaulted on their debt which Elliot owned, they're the ones who pushed for Dorsey's exit, inter…

Elliot Management had an approximately 9% stake when they went after Dorsey [1], but have since liquidated it and own (if any) a significantly smaller portion. They’re not in the top few investors, anymore. [2]

The Twitter board was sued last year due to their deals with Elliot Management — and may not want to face a second, concurrent lawsuit about breach of duty. [3]

[1] https://www.forbes.com/sites/abrambrown/2021/04/01/jack-dors...

[2] https://www.investopedia.com/articles/insights/060916/top-3-...

[3] https://www.ft.com/content/5f3dd95f-8a7c-4f39-991a-87b2bc056...

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

#244

Post by smsm42 »

tptacek wrote: post #190
mylons wrote: post #134

Earlier quoted context omitted.

1: yes. you get cash for your shares. 2: the board is representative of the share holders, like your US Congress person. they have a fiduciary responsibility to give the share holders value. the only reasonable way they could blow up this deal is if twitter had an incredible roadmap with a very good path to matching the value or exceeding the value of Elon's offer. no such roadmap exists, apparently.

The board could very easily have blown up the deal, which is proceeding only because they've consented to it. The game plan is simple: they do nothing, Musk executes a tender offer (which has a good chance of failing, so there's an out), the board says "nice job, but we're holding out for more money, check in with us next year", Musk launches a proxy fight, but it goes nowhere because Twitter has a staggered board an…

Technically they could, but once fiduciary duty is considered, and also given recent drops and maybe less than spectacular q1 results which as I understand are to come soon, they probably decided they shouldn't, as this may expose them to torches and pitchforks from shareholders that are less ideologically driven than they are.

Yes, Musk's bid may be overpaying, but in that case board's duty is to grab the money - and that's probably why he is overpaying.

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

#245

Post by jollybean »

smabie wrote: post #241
jollybean wrote: post #227

Earlier quoted context omitted.

I agree, but that's besides the point. 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.

Why do you think Elon is more likely to make the product worse than the current management?

Twitter can make a lot more money 'right now' by focusing a lot more on ads.

Changing a few features here and there otherwise, will not somehow magically engender a ton more users.

So the 'low hanging fruit' for investors to 'unlock value' is really about ads.

More ads generally makes the product worse for users.

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

#246

Post by throwawaythekey »

jdasdf wrote: post #237
throwawaythekey wrote: post #147

Earlier quoted context omitted.

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.

Do you have a primary source for that? I don't mean news reports saying that, i mean actual legal documentation saying that's how it works? Because there's a lot of misinformation going around, and a lot of new outlets confusing cause and effect.

Took a bit of digging but I found the SEC filing [1] and the press release [2]. I'll quote from the press release because it is more easily understood. I condensed it a bit but the gist should be clear.

> In general terms, it works by imposing a significant penalty upon any person or group that acquires 15 percent or more of the shares of Common Stock without the approval of the Board.

> the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more... in a transaction not approved by the Board

> each right will entitle its holder (other than the person... triggering the Rights Plan, whose rights will become void...) to purchase.... additional shares of common stock

The SEC filing is a bit dense but then if you scroll down to a bit you get

> entitle the holder thereof to purchase, for the Exercise Price, a number of shares of common stock of the person engaging in the transaction having a then-current market value of twice the Exercise Price.

[1] https://www.sec.gov/Archives/edgar/data/0001418091/000119312... [2] https://www.prnewswire.com/news-releases/twitter-adopts-limi...

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

#247

Post by saagarjha »

mise_en_place wrote: post #214
WalterBright wrote: post #191

Earlier quoted context omitted.

I had some stock long term in Tiffany. Last year, Tiffany was bought by some outfit, and I received cash for the stock. I found out about it by looking at the statement and wondering where that cash came from :-/ I have some TWTR, and I expect the same thing will happen.

Similar thing happened to me when AMD acquired Xilinx. I got AMD stock and some cash. These types of transactions are usually automated, by an entity like DTCC I would guess.

Didn't XLNX turn into AMD directly at some fixed rate?

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

#248

Post by fleddr »

qiskit wrote: post #88
colechristensen wrote: post #29

The poison pill was intended to prevent a takeover without the board’s approval (buying 51% on the open market) The board is negotiating an approved takeover which is entirely different I.e. the board was saying “you can only buy Twitter if we say so” There was no reversal of intentions

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…

Mysterious why you get downvoted so much.

Musk has spent the last days talking to other big shareholders as is widely reported in mainstream news. It's not some far fetched conspiracy theory.

Yes, technically it is correct that this combined shareholder pressure does not oblige the board to comply, but for sure this adds a ton of pressure. Even more so given the malperformance of Twitter as a company.

Add to that the weakness of the board which has zero founders, and none owning any meaningful amount of shares themselves.

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

#249

Post by jembiblio »

zwily wrote: post #165
krick wrote: post #155

Earlier quoted context omitted.

2. That doesn't answer my question. Actually, I'm not even sure how it attempted to. I specifically mentioned the "market price". I don't really know how these US congress persons work, and you may as well imply that the idea that they "represent" you is as much bullshit, as Musk-assigned board member represent real shareholders (and I have no problem with this implication), but there surely must be difference (and i…

There are stipulations that come with buying shares. In fact when you buy shares, they’re never even actually in your name. They’re like 3 steps removed from you via various holding companies that are basically a bunch of various crap. One of the stipulations of being a shareholder is that you may be forced to sell your shares under certain circumstances. Nothing illegal about it, even if you don’t like it.

It's interesting to read how a takeover works from a US public markets perspective because the situation is completely different in the UK.

Takeovers of UK-listed companies are subject to the Takeover Code [0] which is administered by an independent body called the Takeover Panel. The Takeover Code is actually a surprisingly readable document which sets out all the rules that the bidder, the target and the shareholders must follow. A "mandatory" takeover in the UK is triggered when a shareholder goes over a 30% shareholding - they are then obliged to make an offer for the stock that they do not own at the highest price they have paid in the previous 12 months.

Shareholders cannot be forced to sell until the bidder has received acceptances of more than 90% of the shares to which the offer relates. The board of the target will offer shareholders an opinion on the takeover price - they can either recommend or reject the offer. Typically, when boards recommend an offer then shareholders will accept but there is certainly no obligation to.

Interestingly, the Takeover Panel used to have no legal enforcement powers (I'm not sure exactly what their status is these days). To ensure compliance with the rules there was a punishment called 'cold-shouldering' - basically if you breached the Takeover Code in an egregious way, the Takeover Panel could instruct market participants to stop dealing with the guilty party. This has only been used in very rare circumstances [1].

[0] https://www.thetakeoverpanel.org.uk/wp-content/uploads/2022/...

[1] https://www.thetakeoverpanel.org.uk/the-code/compliance/cold...

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

#250

Post by bezospen15 »

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?”

Welp billionaires are the new hostile takeover. They can just straight up buy anything they want and skip the 51% vote stuff.

This needs to be prevented in the future. The racist racist at right just bought Twitter because they're tired of being silenced. Users will just go elsewhere, rip Twitter and thanks for making Elon poor, he was getting annoying.

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