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The idea of the ”poison pill” is to make it possible for board members to strenghten their ownership by issuing new shares to existing owners with a discount in
by eurasiantiger 5y ago
The idea of the ”poison pill” is to make it possible for board members to strenghten their ownership by issuing new shares to existing owners with a discount in the event that one single outside entity buys a significant portion of the shares.
It is artificial dilution, which in practice makes it possible for the board to cause heavy short-term losses to anyone attempting a hostile takeover: the market reaction to dilution is predictably a lowering of the going price of the stock unless the news comes with significant and credible hype about future profits.
The risk of this happening is what is thought to stave off the takeover.
- shadowgovt 5y agoIn essence. The thing to keep in mind in all of this is none of this was ever about what's best for the users (current ownership vs. new ownership). It was always about whether the existing owners would get screwed in the takeover. User welfare barely enters into the story. This is France and Germany hammering out the details of who owns Alsace–Lorraine; Twitter users themselves are just Alsace–Lorraine peasant-farmers.
- anamax 5y ago> make it possible for board members to strengthen their ownership by issuing new shares to existing owners This poison pill does not strengthen Twitter board members' ownership because they don't own much Twitter stock.
- phendrenad2 5y agoSeems like it's a standard practice, and the news just overhyped the whole thing.