3 ms·

If I read this correctly, basically if someone acquires 15% of the stock, then all of the other shareholders have to option to buy more stock at half-price. Is

If I read this correctly, basically if someone acquires 15% of the stock, then all of the other shareholders have to option to buy more stock at half-price. Is that correct? Where do these shares come from--are they just considered newly minted shares? If so, couldn't something like this backfire or otherwise be circumvented? You're Musk and you want Twitter so you've started by buying 10% of the stock. Can't you just setup several shell companies, each of them also buying significant stakes each (say, 10% each). You're still going to eventually get enough to gain control... Heck, you could even then trigger the right outlined here by having Musk go over 15% and exercise your 100% of your rights in shell companies, potentially diluting other shareholder's overall stake in the company since not 100% of them will exercise the right (although I suppose that would be a bad/expensive idea if these share newly-minted shares). (???)

berberous 5y ago
Do you really think these poison pills are not thought through? Yes, they are newly minted shares. The poison pill applies to any person, entity or group. If Elon has other shell companies, or even just people acting in concert with him, they are all excluded from the right to buy. They all get diluted.
- pzh 5y ago
  Doesn’t that assume that Twitter actually knows that Elon is behind them? They could simply be other investors who have already decided to sell to Elon.
  - berberous 5y ago
    Sure, but that would be illegal and won’t happen. The SEC has filing requirements and the poison pill, if triggered, probably requires certain representations to be made (e.g. the buyer of the newly minted shares does not hold more than X% when aggregated with anyone they are acting in concert with).
- SilasX 5y ago
  But then he can just keep on buying those shares secondhand, right? (Or, since they’re fungible, “buy more shares”.)

berberous 5y ago

Do you really think these poison pills are not thought through? Yes, they are newly minted shares. The poison pill applies to any person, entity or group. If Elon has other shell companies, or even just people acting in concert with him, they are all excluded from the right to buy. They all get diluted.

pzh 5y ago
Doesn’t that assume that Twitter actually knows that Elon is behind them? They could simply be other investors who have already decided to sell to Elon.
- berberous 5y ago
  Sure, but that would be illegal and won’t happen. The SEC has filing requirements and the poison pill, if triggered, probably requires certain representations to be made (e.g. the buyer of the newly minted shares does not hold more than X% when aggregated with anyone they are acting in concert with).
SilasX 5y ago
But then he can just keep on buying those shares secondhand, right? (Or, since they’re fungible, “buy more shares”.)