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Will be interesting to see if Musk has found a way around the poison pill. There are several theoretical techniques to avoid triggering them but as far as I kno
by spikels 4y ago
Will be interesting to see if Musk has found a way around the poison pill. There are several theoretical techniques to avoid triggering them but as far as I know none have been tried in practice. There is also the issue of whether a company would actually follow thru and implement a poison pill as there would be lots of fallout.
Anyone have a sense of what might happen?
- rangersanger 4y agoCheck out Matt Levine. He has a great series explaining some potential possibilities. https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...
- spikels 4y agoUnfortunately paywalled and not sure which Levine article you mean. Edit: And as best I can tell Levine has been wrong on this situation at every step…
- vageli 4y agoLikely this one: https://www.bloomberg.com/opinion/articles/2022-04-20/elon-checks-his-pockets https://www.bloomberg.com/opinion/articles/2022-04-20/elon-c.... FWIW I believe you can read his content for free if you subscribe to his newsletter (or bloomberg's newsletter?).
- colinmhayes 4y ago> And as best I can tell Levine has been wrong on this situation at every step Perhaps when it comes to the sincerity of Elon's actions, but I'm not aware of when he's been wrong when it comes to Elon's legal options.
- rangersanger 4y agoYeah, OP was asking for legal options and this spells them out. Additionally, Levine has been wrong about which option Elon will pick, but he's also generally been spot on about listing all potential options and also saying "this guy is unpredictable, so who knows."
- slenk 4y agoWhat is the poison pill?
- ceejayoz 4y agoIf someone buys more than 15% of shares, they can issue more shares to other people to dilute them.
- emteycz 4y agoI don't understand how that's not financial fraud.
- runako 4y agoWhat would be fraudulent about that? Companies issue & retire shares all the time, for lots of reasons.
- emteycz 4y agoYeah but they usually don't do it with the express purpose of screwing over an investor - and when they do, there are consequences (like FB).
- runako 4y agoYou're not making a case for this being fraud. Why would this be fraud rather than a sharp-elbow business tactic? "Fraud" has a concrete meaning; for this to be a fraud, one would need to be able to identify precisely of what Musk has been defrauded.
- mypalmike 4y agoThe poison pill clause is part of the shareholder contract, often specified in the articles of incorporation.
- danieldisu 4y agoOh, if they execute the poison pill there will be consequences, just not legal ones. Trust is a big part of stock value, if you don't trust the board is time to sell...
- xadhominemx 4y agoHe hasn’t which is why he’s angling for a tender offer
- spikels 4y agoAre you thinking a tender offer somehow overcomes the poison pill?
- xadhominemx 4y agoYes, if he launches a tender the offer goes to the shareholders. He wouldn’t need to build a larger stake himself.
- kpommerenke 4y agoA tender offer is a means of building a large stake, so the poison pill would still be active. Therefore, he will not launch a tender offer.
- lkfsfldkjfslk 4y agoI hesitate to speculate on what Musk will do specifically, but often in a poison pill situation a tender offer will be contingent on the removal of the poison pill. The point of the tender offer is not to buy the shares immediately, but to incentivize shareholders to put pressure on the board to remove the poison pill, then complete the tender offer it's removed.
- deleted 4y ago[deleted]
- xadhominemx 4y agoIncorrect.
- spikels 4y agoI don’t think this is correct.
- ceejayoz 4y agoThe poison pill can be trivially (for certain definitions of trivial) avoided by having several allies buy 14% of shares each, I presume.
- xadhominemx 4y agoYou presume incorrectly. Any coordination would make Elon and his allies a “group” which would mean they are collectively treated as an individual.
- ceejayoz 4y agoHow do you prove people are in a group of this nature?
- xadhominemx 4y agoYou check to see if they are communicating.
- ceejayoz 4y agoHow do you that without a search warrant?
- rootusrootus 4y agoAsk, I guess. The people doing the communicating are perhaps committing fraud and endangering their own wealth and freedom if they lie. I'm willing to bet the SEC has regulations that apply to this situation already.
- deleted 4y ago[deleted]
- xadhominemx 4y agoIf three large shareholders came in with a similar agenda but did not disclose group status, the SEC would investigate. First, the SEC would request that they turn over communications records. 99.9% of the time, they would. If they didn’t, the SEC would seek a warrant.
- baby-yoda 4y agoI was wondering about this - what's to stop him from creating 3 permanently sealed South Dakota trusts, acquiring 14% in each, and combined with his personal share calling a vote and immediately rejecting the poison pill and firing the board?
- rootusrootus 4y agoIIRC Twitter already has rules about shareholder votes, and it couldn't happen until next year at the earliest. There's no provision for shareholders to call for a vote at any random time.
- deleted 4y ago[deleted]
- tptacek 4y agoThe lawyers thought about that the day poison pills were invented. It's in the very first lines of the shareholder rights agreement.
- boringg 4y agoWait what is a permanently sealed South Dakota trust? And how do I get one of those interesting sounding mechanisms.
- dahfizz 4y agoHas the board formally rejected his offer yet? The poison pill only applies to a hostile takeover - i.e. if Elon just starts buying up all the shares in the market. If the board accepts his offer to buy the company, the poison pill does not take effect.