4 ms·

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 m

by cwp 4y 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 4y 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 4y 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.

by cwp 4y ago

aw1621107 4y 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 4y 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.