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Thanks, I forgot about that. But I found this from Investopedia about stock price and mergers/acquisitions: In most cases, the target company's stock rises bec

by hahajk 5y ago

Thanks, I forgot about that. But I found this from Investopedia about stock price and mergers/acquisitions: In most cases, the target company's stock rises because the acquiring company pays a premium for the acquisition, in order to provide an incentive for the target company's shareholders to approve the takeover. Simply put, there's no motive for shareholders to greenlight such action if the takeover bid equates to a lower stock price than the current price of the target company. [1] If the buying firm doesn’t need approval from the Class A shareholders, what would be their incentive to buy those Class A stocks at a premium? [1] https://www.investopedia.com/ask/answers/203.asp https://www.investopedia.com/ask/answers/203.asp

JumpCrisscross 5y ago
> If the buying firm doesn’t need approval from the Class A shareholders, what would be their incentive to buy those Class A stocks at a premium? Supervoting stock usually converts into regular stock on transfer. For example, Rent the Runway says "future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes" [0]. Delaware law is also developed in protecting minority investors' rights [1]. (The situation varies from state to state [2].) [0] https://www.sec.gov/Archives/edgar/data/1468327/000119312521291103/d194411ds1.htm https://www.sec.gov/Archives/edgar/data/1468327/000119312521... S-1, page 59 [1] https://corpgov.law.harvard.edu/2018/04/26/controlling-shareholder-transactions/ https://corpgov.law.harvard.edu/2018/04/26/controlling-share... [2] https://www.stimmel-law.com/en/articles/corporate-struggles-who-has-what-power-when-push-comes-shove https://www.stimmel-law.com/en/articles/corporate-struggles-...

by hahajk 5y ago

JumpCrisscross 5y ago

> If the buying firm doesn’t need approval from the Class A shareholders, what would be their incentive to buy those Class A stocks at a premium? Supervoting stock usually converts into regular stock on transfer. For example, Rent the Runway says "future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes" [0]. Delaware law is also developed in protecting minority investors' rights [1]. (The situation varies from state to state [2].) [0] https://www.sec.gov/Archives/edgar/data/1468327/000119312521291103/d194411ds1.htm https://www.sec.gov/Archives/edgar/data/1468327/000119312521... S-1, page 59 [1] https://corpgov.law.harvard.edu/2018/04/26/controlling-shareholder-transactions/ https://corpgov.law.harvard.edu/2018/04/26/controlling-share... [2] https://www.stimmel-law.com/en/articles/corporate-struggles-who-has-what-power-when-push-comes-shove https://www.stimmel-law.com/en/articles/corporate-struggles-...