5 ms·

> I mean, Google could come right now and offer to buy SNAP for 10x what its currently valued at and Evan Spiegel could say no, even though its almost a certain

> I mean, Google could come right now and offer to buy SNAP for 10x what its currently valued at and Evan Spiegel could say no, even though its almost a certainty that the company will never be worth that much. Even worse, Google could offer to buy SNAP by only purchasing the shares that Evan Spiegel holds. If the Class A shares have no voting rights, and you want to buy the company, why even tender to buy the Class A shares? Just buy Evan's shares, at whatever price you and he agree to, and the Class A shares come along for the ride. Are there SEC regulations preventing a purchaser from doing that? It seems like the SNAP stock classification system is really setup nicely for a hostile takeover that completely screws the Non-Voting shareholders.

bradleyjg 9y ago
Not SEC regulations, but Delaware corporate law rules. I don't remember all the details because law school was too long ago. Something to do with the Revlon doctrine, probably.
- SilasX 9y ago
  Based on my skimming, Revlon is about directors' obligation to go for a high buyout price in sinking-ship conditions, rather then dig in their heels and poison-pill. The GP's point was about being able to buy control from buying only a tiny sliver of the shares, AIUI. Edit: Or your point is that the share A class is the poison pill? I'm in over my head here...
lmm 9y ago
> If the Class A shares have no voting rights, and you want to buy the company, why even tender to buy the Class A shares? Just buy Evan's shares, at whatever price you and he agree to, and the Class A shares come along for the ride. The Class A shares' owners will still own them, they'll still have rights, the company directors will still have obligations to them. If the company were to sell its business then the cash from that sale would belong to the company. If they then wound up the company they would have to distribute the company's assets (i.e. the sale cash) evenly among all shareholders. If they tried to sell the company for a low price and were paid separately by the buyer there are laws about that.
ThrustVectoring 9y ago
There are minority shareholder rights. It's unfortunately a case of "you have to sue people who do that" instead of "it doesn't work", though.

bradleyjg 9y ago

Not SEC regulations, but Delaware corporate law rules. I don't remember all the details because law school was too long ago. Something to do with the Revlon doctrine, probably.

SilasX 9y ago
Based on my skimming, Revlon is about directors' obligation to go for a high buyout price in sinking-ship conditions, rather then dig in their heels and poison-pill. The GP's point was about being able to buy control from buying only a tiny sliver of the shares, AIUI. Edit: Or your point is that the share A class is the poison pill? I'm in over my head here...

lmm 9y ago

> If the Class A shares have no voting rights, and you want to buy the company, why even tender to buy the Class A shares? Just buy Evan's shares, at whatever price you and he agree to, and the Class A shares come along for the ride. The Class A shares' owners will still own them, they'll still have rights, the company directors will still have obligations to them. If the company were to sell its business then the cash from that sale would belong to the company. If they then wound up the company they would have to distribute the company's assets (i.e. the sale cash) evenly among all shareholders. If they tried to sell the company for a low price and were paid separately by the buyer there are laws about that.

ThrustVectoring 9y ago

There are minority shareholder rights. It's unfortunately a case of "you have to sue people who do that" instead of "it doesn't work", though.