4 ms·

IIRC that's not how the poison pill is set up. I believe it allows eligible shareholders to purchase $420 worth of new shares at a 50% discount per share of com

IIRC that's not how the poison pill is set up. I believe it allows eligible shareholders to purchase $420 worth of new shares at a 50% discount per share of common stock they own (?), or allows the board to effectively double the number of outstanding shares for everyone but the entity (entities?) triggering the poison pill. No existing shares change hands. This means that the poison pill would not allow Elon to purchase large quantities of Twitter at a discounted price through the poison pill itself. Edit: Missed a provision of the poison pill allowing for doubling of existing shares without shareholders needing to purchase anything. Also try to clarify that the $420 of new stock may be per existing share owned, if I'm reading these documents correctly.

cwp 5y ago
That's gotta tank the share price, though, right? Some shareholders will sell to avoid the dilution, and others will buy, but from the company rather than the market. So the market sees a bunch of sellers and few buyers.
- aw1621107 5y ago
  I honestly don't know the answer to your question; this is well outside my knowledge base. Looking at the 8-K Twitter filed [0]. It looks like the stock that shareholders may purchase through the poison pill are 1/1000 of a different class of stock (Series A Participating Preferred Stock, as opposed to common stock), though the intent is that that small fraction should be about the same value as a share of common stock. I have no clue what the effects on the market may be for this option. Also, I admittedly missed another provision of the poison pill - the board also has the ability to exchange an unexercised right for 1 share of common stock, effectively doubling outstanding shares for eligible shareholders without them needing to make an additional purchase. This may be more [0]: https://www.sec.gov/ix?doc=/Archives/edgar/data/1418091/000119312522107462/d296740d8k.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1418091/0001...
- Traster 5y ago
  It's a strictly good deal for everyone except Musk. The price of the new shares are 50% of the price of the current shares and the dilution is 85% (not 100%) . So keeping everything else equal, if before the acquisition there were 100 shares at $10 each, the market cap would be $1,000. If someone hits 15% suddenly you can buy at $5. The market cap stays the same (nothing about the business has changed) but suddenly there are 185 shares. So the new price per share on the open market is 1,000/185 or $5.41. So just buy the extra shares you can buy and you should be able to sell them on the open market for a profit. The only person who loses out is Musk, would now owns ~half as much of Twitter as he did before.

cwp 5y ago

That's gotta tank the share price, though, right? Some shareholders will sell to avoid the dilution, and others will buy, but from the company rather than the market. So the market sees a bunch of sellers and few buyers.

aw1621107 5y ago
I honestly don't know the answer to your question; this is well outside my knowledge base. Looking at the 8-K Twitter filed [0]. It looks like the stock that shareholders may purchase through the poison pill are 1/1000 of a different class of stock (Series A Participating Preferred Stock, as opposed to common stock), though the intent is that that small fraction should be about the same value as a share of common stock. I have no clue what the effects on the market may be for this option. Also, I admittedly missed another provision of the poison pill - the board also has the ability to exchange an unexercised right for 1 share of common stock, effectively doubling outstanding shares for eligible shareholders without them needing to make an additional purchase. This may be more [0]: https://www.sec.gov/ix?doc=/Archives/edgar/data/1418091/000119312522107462/d296740d8k.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1418091/0001...
Traster 5y ago
It's a strictly good deal for everyone except Musk. The price of the new shares are 50% of the price of the current shares and the dilution is 85% (not 100%) . So keeping everything else equal, if before the acquisition there were 100 shares at $10 each, the market cap would be $1,000. If someone hits 15% suddenly you can buy at $5. The market cap stays the same (nothing about the business has changed) but suddenly there are 185 shares. So the new price per share on the open market is 1,000/185 or $5.41. So just buy the extra shares you can buy and you should be able to sell them on the open market for a profit. The only person who loses out is Musk, would now owns ~half as much of Twitter as he did before.