4 ms·

I'm not going to speak to the legal technicalities, but I can tell you some major differences in the situations. - The poison pill is aimed at any investor try

by HWR_14 5y ago

I'm not going to speak to the legal technicalities, but I can tell you some major differences in the situations. - The poison pill is aimed at any investor trying to gather control, not a specific one. (At least legally) - The poison pill is 100% avoidable. It triggers off some future event. This is similar to many other grandfather clauses like building codes, where things are changed going forward. - 49% bought in thinking they were getting a share and a say in the company. Diluting them away is stealing and fraud (morally, not legally.) So, for instance, would be selling all the companies assets to Company 2 run by the same CEO and board (and who own 100% of Company 2) and letting Company 1 go bankrupt. The situation is actually identical if Elon were to suddenly tomorrow purchase up to 49%. In that case, it would be the 51% diluting the 49%.

pas 5y ago
> The poison pill is 100% avoidable Can you please elaborate on this? How can it be avoided?
- slg 5y ago
  It prevents a hostile takeover. It doesn't prevent the company from agreeing to be sold. It theoretically offers protections to negotiate a sale without the buying party having the ability to circumvent that negotiation.
- HWR_14 5y ago
  The poison pill (in Twitters case) dilutes any shareholder who acquires more than 15%. (In practice, it's not automatic, but it's what happens). No shareholder currently owns more than 15%. Therefore if anyone doesn't want to trigger this (like Elon Musk) he can avoid dilution by not buying any more shares. It's there to say "no individual can legally own more than 15% of Twitter" as someone is starting to buy Twitter up. Not say "we're going to explicitly screw Elon Musk after he bought 25% of Twitter."
  - maratc 5y ago
    Can Elon and three of his "friends" own each 14.9999% of Twitter without triggering the poison pill, so getting to 59.999%?
    - lazyeye 5y ago
      Or could Elon setup 4 separate companies/trusts that each own 15%?
      - HWR_14 5y ago
        No. The law understands those are 4 companies all operating for Elon's benefit
    - tptacek 5y ago
      Long story short: the lawyers thought about this decades ago. See the definition of "Acquiring Person" in the rights agreement; it's the first definition in the document.
      - maratc 5y ago
        Would it change anything if Elon already (indirectly) controlled more than 15% as a poison-pill-anticipation measure, but just said he controls less?
        HWR_14 5y ago
        If he lied when they were setting up the poison pill, Twitter'd probably win the inevitable court case, and he'd get in trouble for misrepresenting his position.
        maratc 5y ago
        In my hypothesis, which is of course entirely hypothetical, he didn't lie when he said "I control 12% of Twitter".
GauntletWizard 5y ago
> So, for instance, would be selling all the companies assets to Company 2 run by the same CEO and board (and who own 100% of Company 2) and letting Company 1 go bankrupt. IANAL, but this is actually theft - Minority shareholders have rights if a company is liquidated, and the courts are smart enough to recognize "Reorganize all assets under a new company owned only by the majority shareholder" as being that liquidation. As far as I'm aware, States Attorney General are the ones to prosecute this crime, so file a complaint there.
- HWR_14 5y ago
  I would imagine there is definitely a course of civil action. I honestly don't know (but assume) that criminal action would probably depend on exactly how it was done. After all, Holmes's Theranos trial turned on federal wire fraud charges.
  - GauntletWizard 5y ago
    Absolutely - Everything is legal until you're caught. How easy it is to catch you and how easy it is to prove in a court of law are what matters. As today's Money Stuff[1] opines - This kind of transaction can be really easily made legal, while still giving investors the middle finger. If the company is worth X, you takeover the board and carry out a merger that cashes out minority stakeholders for $1, you're liable for X. If the company is worth X, you takeover the board, and carry out a merger that cashes out minority shareholders for X * .8, you've got a good chance of getting away with it - The standards is "business judgment" vs "fiduciary duty". Companies have fiduciary duty to all shareholders. Sometimes that means that the board gets to dissolve the company for a lot less than it's worth. [1] https://www.bloomberg.com/opinion/articles/2022-04-18/twitter-has-a-poison-pill-now https://www.bloomberg.com/opinion/articles/2022-04-18/twitte...

by HWR_14 5y ago

pas 5y ago

> The poison pill is 100% avoidable Can you please elaborate on this? How can it be avoided?

slg 5y ago
It prevents a hostile takeover. It doesn't prevent the company from agreeing to be sold. It theoretically offers protections to negotiate a sale without the buying party having the ability to circumvent that negotiation.
HWR_14 5y ago
The poison pill (in Twitters case) dilutes any shareholder who acquires more than 15%. (In practice, it's not automatic, but it's what happens). No shareholder currently owns more than 15%. Therefore if anyone doesn't want to trigger this (like Elon Musk) he can avoid dilution by not buying any more shares. It's there to say "no individual can legally own more than 15% of Twitter" as someone is starting to buy Twitter up. Not say "we're going to explicitly screw Elon Musk after he bought 25% of Twitter."
- maratc 5y ago
  Can Elon and three of his "friends" own each 14.9999% of Twitter without triggering the poison pill, so getting to 59.999%?
  - lazyeye 5y ago
    Or could Elon setup 4 separate companies/trusts that each own 15%?
    - HWR_14 5y ago
      No. The law understands those are 4 companies all operating for Elon's benefit
  - tptacek 5y ago
    Long story short: the lawyers thought about this decades ago. See the definition of "Acquiring Person" in the rights agreement; it's the first definition in the document.
    - maratc 5y ago
      Would it change anything if Elon already (indirectly) controlled more than 15% as a poison-pill-anticipation measure, but just said he controls less?
      - HWR_14 5y ago
        If he lied when they were setting up the poison pill, Twitter'd probably win the inevitable court case, and he'd get in trouble for misrepresenting his position.
        maratc 5y ago
        In my hypothesis, which is of course entirely hypothetical, he didn't lie when he said "I control 12% of Twitter".

GauntletWizard 5y ago

> So, for instance, would be selling all the companies assets to Company 2 run by the same CEO and board (and who own 100% of Company 2) and letting Company 1 go bankrupt. IANAL, but this is actually theft - Minority shareholders have rights if a company is liquidated, and the courts are smart enough to recognize "Reorganize all assets under a new company owned only by the majority shareholder" as being that liquidation. As far as I'm aware, States Attorney General are the ones to prosecute this crime, so file a complaint there.

HWR_14 5y ago
I would imagine there is definitely a course of civil action. I honestly don't know (but assume) that criminal action would probably depend on exactly how it was done. After all, Holmes's Theranos trial turned on federal wire fraud charges.
- GauntletWizard 5y ago
  Absolutely - Everything is legal until you're caught. How easy it is to catch you and how easy it is to prove in a court of law are what matters. As today's Money Stuff[1] opines - This kind of transaction can be really easily made legal, while still giving investors the middle finger. If the company is worth X, you takeover the board and carry out a merger that cashes out minority stakeholders for $1, you're liable for X. If the company is worth X, you takeover the board, and carry out a merger that cashes out minority shareholders for X * .8, you've got a good chance of getting away with it - The standards is "business judgment" vs "fiduciary duty". Companies have fiduciary duty to all shareholders. Sometimes that means that the board gets to dissolve the company for a lot less than it's worth. [1] https://www.bloomberg.com/opinion/articles/2022-04-18/twitter-has-a-poison-pill-now https://www.bloomberg.com/opinion/articles/2022-04-18/twitte...