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No, a board is mandated to act in the best interests of the shareholders. That might be different than just maximizing the share price. They may believe this is

No, a board is mandated to act in the best interests of the shareholders. That might be different than just maximizing the share price. They may believe this is a bad idea for the company as a whole, and that long term, it's objectively better for the company to not be owned by Musk.

compsciphd 4y ago
isn't musks offer to buy out all the shareholders. i.e. lets take a crazy example. you have a company that is worth $1mil and we only imagine that it can be worth $100mil (based on the size of the market we are addressing). someone comes and offers $200mil but we know he will shut the company down (i.e. liquidate all its assets, or even simply the desire to destroy the company). While this might be sad for the company, why is it not in the interests of the shareholders to take the offer? so if Musk is willing to offer more than shareholders expect to see in the forseable future, why does it matter what will happen to the company after that? their interest in the company ends when their shares are purchased.
- LocalPCGuy 4y ago
  > willing to offer more than shareholders expect to see in the forseable future That is your assertion/opinion (yes, shared by many, sure). But it's not the only opinion in this case, and so I don't think the analogy holds. Sure, I could see in the abstract times where an offer it just unavoidably good, and so it would not be in the best interest of shareholders to take it. But in this specific instance, there is a lot to be said on both sides of the offer (taking vs. rejecting it). I would also argue that, depending on the purpose and goals of the company, knowing that a person intends to shut it down would be a reason to value existing (in order to continue carrying out their purpose) over money.
- jungturk 4y ago
  Sure - if an offer is greater than the conceivable return then of course you take it, but Musk's offer is less than the stock traded at 6 months ago and 30% below the stock's all-time-high from 14 months ago.
  - LocalPCGuy 4y ago
    It's also not just about $$. In your scenario, it's just negotiating. It's possible the Twitter board and shareholders are just unwilling to ever sell, regardless of the money involved. (I don't know if that'd ever be the case, just that is is possible, and possible within fiduciary responsibilities.)
- dundarious 4y ago
  Musk is trying to buy everyone out because he wants to influence the direction of Twitter. Why not ascribe a similar set of motivations to the other current shareholders? If that is a motivation for them, then shareholder profit is not the only relevant sense of shareholder value. This isn't an argument for the poison pill clause, but is an answer to the following quoted question. It is funny to see this motivation of most existing shareholders ignored in order to bring into being analogous motivations of another. Especially when Musk's offer for Twitter has been in order to change it promote certain values, but conspicuously, better profits has not been one of those touted values. > While this might be sad for the company, why is it not in the interests of the shareholders to take the offer? I will sabotage my own argument somewhat though and say that I believe the economic motive dominates over time and is almost always (in macro and micro) the primary force.

compsciphd 4y ago

isn't musks offer to buy out all the shareholders. i.e. lets take a crazy example. you have a company that is worth $1mil and we only imagine that it can be worth $100mil (based on the size of the market we are addressing). someone comes and offers $200mil but we know he will shut the company down (i.e. liquidate all its assets, or even simply the desire to destroy the company). While this might be sad for the company, why is it not in the interests of the shareholders to take the offer? so if Musk is willing to offer more than shareholders expect to see in the forseable future, why does it matter what will happen to the company after that? their interest in the company ends when their shares are purchased.

LocalPCGuy 4y ago
> willing to offer more than shareholders expect to see in the forseable future That is your assertion/opinion (yes, shared by many, sure). But it's not the only opinion in this case, and so I don't think the analogy holds. Sure, I could see in the abstract times where an offer it just unavoidably good, and so it would not be in the best interest of shareholders to take it. But in this specific instance, there is a lot to be said on both sides of the offer (taking vs. rejecting it). I would also argue that, depending on the purpose and goals of the company, knowing that a person intends to shut it down would be a reason to value existing (in order to continue carrying out their purpose) over money.
jungturk 4y ago
Sure - if an offer is greater than the conceivable return then of course you take it, but Musk's offer is less than the stock traded at 6 months ago and 30% below the stock's all-time-high from 14 months ago.
- LocalPCGuy 4y ago
  It's also not just about $$. In your scenario, it's just negotiating. It's possible the Twitter board and shareholders are just unwilling to ever sell, regardless of the money involved. (I don't know if that'd ever be the case, just that is is possible, and possible within fiduciary responsibilities.)
dundarious 4y ago
Musk is trying to buy everyone out because he wants to influence the direction of Twitter. Why not ascribe a similar set of motivations to the other current shareholders? If that is a motivation for them, then shareholder profit is not the only relevant sense of shareholder value. This isn't an argument for the poison pill clause, but is an answer to the following quoted question. It is funny to see this motivation of most existing shareholders ignored in order to bring into being analogous motivations of another. Especially when Musk's offer for Twitter has been in order to change it promote certain values, but conspicuously, better profits has not been one of those touted values. > While this might be sad for the company, why is it not in the interests of the shareholders to take the offer? I will sabotage my own argument somewhat though and say that I believe the economic motive dominates over time and is almost always (in macro and micro) the primary force.