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This is simply wrong. The board outright rejected musk's offer and instituted a poison pill to prevent a hostile takeover of twitter by musk. So elon simply byp

by qiskit 4y ago

This is simply wrong. The board outright rejected musk's offer and instituted a poison pill to prevent a hostile takeover of twitter by musk. So elon simply bypassed the board of directors and went to the major shareholders. It is the major shareholders who has final say, not the board of directors. Elon convinced enough of the major shareholders to accept his deal and once that happened, the board of directors has no real say. They have to do what the major shareholders say since the major shareholders are the ones who hire and fire the board of directors. > I.e. the board was saying “you can only buy Twitter if we say so” The board say "you can't buy twitter". So elon just talked to the board's bosses ( major shareholders ) and the board's bosses said "elon can buy twitter".

deleted 4y ago
[deleted]
jalonso510 4y ago
This is not correct. The board negotiated a deal with Elon after putting the poison pill into effect. If Elon had made a deal directly with the stockholders, that would have triggered the poison pill. He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board.
- bigiain 4y ago
  > but the deal he agreed to was approved by the board. Yeah, probably as qiskit suggested, because the major shareholders told the board to pull their heads in and take the money.
  - dundarious 4y ago
    Given the context of this discussion is a question about why the poison pill didn’t prevent this bid from succeeding, I think it doesn’t matter whether the board accepted because of negotiations with Musk (willingly) or because of shareholder pressure (through gritted teeth). The point is, the board approved the deal so the poison pill didn’t trigger. If they rejected the deal, the poison pill would still be a factor. At least that’s my understanding.
- qiskit 4y ago
  > The board negotiated a deal with Elon after putting the poison pill into effect. There was no "negotiation" with the board. Elon just made an unsolicited offer and said take it or leave it. The board "left it" and yet here we are. > If Elon had made a deal directly with the stockholders, that would have triggered the poison pill. What? That's not how poison pills work. Poison pills exist to prevent hostile takeovers. It isn't there to prevent someone from talking to the stockholders. If the stockholders agree to the deal, it is no longer a hostile takeover. > He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board. Yes. The deal was first rejected by the board. And then the deal was approved by the board. Why do you think that was? What made the board change their minds? I wonder. You might have a point if elon raised his offer from $54.20 to a much higher number. But all reporting indicates he didn't change his offer. Of course the deal was approved by the board. My point is that the shareholders made them approve the deal.
  - dogecoinbase 4y ago
    I know it's a big ask, but it would be kind of nice if HN added a flag context situation so one could flag a comment as "has literally no idea about how corporations work" rather than just a generic flag.
    - potsandpans 4y ago
      as someone with limited understanding of how corporations work, i had a hard time understanding who was factually correct in the exchange.
      - dogecoinbase 4y ago
        So, as a rough, the board determines what happens, and the shareholders can notionally replace the board. The board _can_ listen to the shareholders, but are by no means obligated to and in the case of Twitter in particular, the board elections happen on a staggered rotating basis so even a majority shareholder could not immediately replace enough of the board to obtain a majority.
- farmerstan 4y ago
  Lol this is completely wrong.
agar 4y ago
There's a bit of nuance here. Major shareholders wouldn't say "elon can buy twitter." Major shareholders don't care who owns Twitter. They don't give permission. They only care about the return on their investments. They often represent limited partners or are part of a stock fund, and have their own fiduciary responsibilities. Or they just want to make their own money. In this instance, major shareholders would go to the Board and say, "show me your plan to increase the stock price to over $54/share within 12 months." This could be by finding another buyer, having a roadmap to introduce new products/enter a new market, raise prices, or even acquire another company. Shareholders would evaluate the execution risk of said plan vs. the zero risk of "Elon gives me $54/share tomorrow" and decides what is best for them. The shareholder then weighs in to the board: "I don't believe in your plan, if it comes to a vote I will vote in favor of Elon's offer." Repeat that for all of the major shareholders. In this specific case, from everything I've read Twitter had no compelling roadmap, no other buyers willing to make an immediate offer, no strategy, troubled leadership, a 10% decline in stock price, and prevailing economic headwinds. No one believed they could beat Elon's offer. So the board looks at the intent of the preponderance of the shareholders and rapidly realizes that they would lose any battle for control of the company. It would cause huge distraction and possibly open them up to lawsuits for not meeting their fiduciary responsibilities. The board then goes back to Elon and decides to accept the offer.
- nullc 4y ago
  Yep. Also: When people point out that twitter traded more in the past-- what matters isn't twitter's absolute price, but twitter's price relative to some benchmark. For example, if you use META as the benchmark then Elon's offer is 143% of Twitter's all time high. Meta alone is perhaps not really the fairest benchmark, but his offer is 86% of the ATH if you just use the Nasdaq composite as a benchmark which is still pretty good. A fair 'synthetic twitter' would probably price the offer somewhere between these two. I would have liked to produce a better synthetic benchmark than just those two options, but didn't really feel like doing two hours of programming and data collection just for a HN post-- what I would have done is grabbed the historical prices for all high volume US equities and ETFs and found a set of coefficients (including allowing negative ones, e.g. shorted stocks) for all equities except twitter that predicted twitter with the lowest L2 norm, and maybe applied some L0 penalty to make the collection sparse and reduce the overfit. Perhaps I'd just try all $stocks choose 5 subsets with 5 stocks and choose the best-- l2 fits are fast, and I doubt 5 stocks can meaningfully overfit a couple years of data. Why is a benchmarked price the right way to reason about this? Because a substantial part of twitter's price is the overall market, a substantial portion is its sector, etc. To the extent the investors want that non-twitter-specific exposure they can get it in other ways (e.g. by buying synthetic twitter or just a market index). If you could sell twitter today for 143% of the benchmark rate, then put the income into the benchmark then sell the benchmark later when its value goes up-- you'd do much better than just holding on to twitter for the same amount of time, unless something changed about twitter to make it perform a lot better relative to the benchmark. From that perspective twitter's roadmap would need to be pretty good to overcome the offer.
fleddr 4y ago
Mysterious why you get downvoted so much. Musk has spent the last days talking to other big shareholders as is widely reported in mainstream news. It's not some far fetched conspiracy theory. Yes, technically it is correct that this combined shareholder pressure does not oblige the board to comply, but for sure this adds a ton of pressure. Even more so given the malperformance of Twitter as a company. Add to that the weakness of the board which has zero founders, and none owning any meaningful amount of shares themselves.

by qiskit 4y ago

deleted 4y ago

[deleted]

jalonso510 4y ago

This is not correct. The board negotiated a deal with Elon after putting the poison pill into effect. If Elon had made a deal directly with the stockholders, that would have triggered the poison pill. He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board.

bigiain 4y ago
> but the deal he agreed to was approved by the board. Yeah, probably as qiskit suggested, because the major shareholders told the board to pull their heads in and take the money.
- dundarious 4y ago
  Given the context of this discussion is a question about why the poison pill didn’t prevent this bid from succeeding, I think it doesn’t matter whether the board accepted because of negotiations with Musk (willingly) or because of shareholder pressure (through gritted teeth). The point is, the board approved the deal so the poison pill didn’t trigger. If they rejected the deal, the poison pill would still be a factor. At least that’s my understanding.
qiskit 4y ago
> The board negotiated a deal with Elon after putting the poison pill into effect. There was no "negotiation" with the board. Elon just made an unsolicited offer and said take it or leave it. The board "left it" and yet here we are. > If Elon had made a deal directly with the stockholders, that would have triggered the poison pill. What? That's not how poison pills work. Poison pills exist to prevent hostile takeovers. It isn't there to prevent someone from talking to the stockholders. If the stockholders agree to the deal, it is no longer a hostile takeover. > He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board. Yes. The deal was first rejected by the board. And then the deal was approved by the board. Why do you think that was? What made the board change their minds? I wonder. You might have a point if elon raised his offer from $54.20 to a much higher number. But all reporting indicates he didn't change his offer. Of course the deal was approved by the board. My point is that the shareholders made them approve the deal.
- dogecoinbase 4y ago
  I know it's a big ask, but it would be kind of nice if HN added a flag context situation so one could flag a comment as "has literally no idea about how corporations work" rather than just a generic flag.
  - potsandpans 4y ago
    as someone with limited understanding of how corporations work, i had a hard time understanding who was factually correct in the exchange.
    - dogecoinbase 4y ago
      So, as a rough, the board determines what happens, and the shareholders can notionally replace the board. The board _can_ listen to the shareholders, but are by no means obligated to and in the case of Twitter in particular, the board elections happen on a staggered rotating basis so even a majority shareholder could not immediately replace enough of the board to obtain a majority.
farmerstan 4y ago
Lol this is completely wrong.

agar 4y ago

There's a bit of nuance here. Major shareholders wouldn't say "elon can buy twitter." Major shareholders don't care who owns Twitter. They don't give permission. They only care about the return on their investments. They often represent limited partners or are part of a stock fund, and have their own fiduciary responsibilities. Or they just want to make their own money. In this instance, major shareholders would go to the Board and say, "show me your plan to increase the stock price to over $54/share within 12 months." This could be by finding another buyer, having a roadmap to introduce new products/enter a new market, raise prices, or even acquire another company. Shareholders would evaluate the execution risk of said plan vs. the zero risk of "Elon gives me $54/share tomorrow" and decides what is best for them. The shareholder then weighs in to the board: "I don't believe in your plan, if it comes to a vote I will vote in favor of Elon's offer." Repeat that for all of the major shareholders. In this specific case, from everything I've read Twitter had no compelling roadmap, no other buyers willing to make an immediate offer, no strategy, troubled leadership, a 10% decline in stock price, and prevailing economic headwinds. No one believed they could beat Elon's offer. So the board looks at the intent of the preponderance of the shareholders and rapidly realizes that they would lose any battle for control of the company. It would cause huge distraction and possibly open them up to lawsuits for not meeting their fiduciary responsibilities. The board then goes back to Elon and decides to accept the offer.

nullc 4y ago
Yep. Also: When people point out that twitter traded more in the past-- what matters isn't twitter's absolute price, but twitter's price relative to some benchmark. For example, if you use META as the benchmark then Elon's offer is 143% of Twitter's all time high. Meta alone is perhaps not really the fairest benchmark, but his offer is 86% of the ATH if you just use the Nasdaq composite as a benchmark which is still pretty good. A fair 'synthetic twitter' would probably price the offer somewhere between these two. I would have liked to produce a better synthetic benchmark than just those two options, but didn't really feel like doing two hours of programming and data collection just for a HN post-- what I would have done is grabbed the historical prices for all high volume US equities and ETFs and found a set of coefficients (including allowing negative ones, e.g. shorted stocks) for all equities except twitter that predicted twitter with the lowest L2 norm, and maybe applied some L0 penalty to make the collection sparse and reduce the overfit. Perhaps I'd just try all $stocks choose 5 subsets with 5 stocks and choose the best-- l2 fits are fast, and I doubt 5 stocks can meaningfully overfit a couple years of data. Why is a benchmarked price the right way to reason about this? Because a substantial part of twitter's price is the overall market, a substantial portion is its sector, etc. To the extent the investors want that non-twitter-specific exposure they can get it in other ways (e.g. by buying synthetic twitter or just a market index). If you could sell twitter today for 143% of the benchmark rate, then put the income into the benchmark then sell the benchmark later when its value goes up-- you'd do much better than just holding on to twitter for the same amount of time, unless something changed about twitter to make it perform a lot better relative to the benchmark. From that perspective twitter's roadmap would need to be pretty good to overcome the offer.

fleddr 4y ago

Mysterious why you get downvoted so much. Musk has spent the last days talking to other big shareholders as is widely reported in mainstream news. It's not some far fetched conspiracy theory. Yes, technically it is correct that this combined shareholder pressure does not oblige the board to comply, but for sure this adds a ton of pressure. Even more so given the malperformance of Twitter as a company. Add to that the weakness of the board which has zero founders, and none owning any meaningful amount of shares themselves.