4 ms·

In what world is a 38% premium not well above market value? If you pay $1.38m for a $1m house, you are definitely paying well above market value.

by samtp 3y ago

JauntTrooper 3y ago
Market value and fair value aren't necessarily the same thing. The 38% is just the one day premium. The offer was at a discount to the stock price less than six months earlier. It was possible that the stock price had overreacted to a tech sell off, and if the market had rebounded by the summer the bid could have looked genius. Market pricing in M&A is somewhat opaque and different than trading prices because it's based partly on synergy value to a bidder. To use your house example, if the house next door was willing to pay $1.5 million for your house, then the $1.38M is not above market even if Zillow and the list price say it's $1 million. There were other potential suitors for Twitter, like Microsoft, Disney, Salesforce and private equity. They might have valued it more than Musk based on the benefits it brought their firms. Twitter would be a lot more valuable inside Amazon, Google or Meta but there were probably antitrust issues there. Plus Twitter's board and management team had access to a lot of material non public information that investors did not. Even if you thought the market price in early April accurately reflected all the public info on Twitter, the Board was looking at 5 year projections and much more detailed pricing/demand/customer info. The Delaware Courts give a lot of deference to board judgment in these situations, and Twitter's board would have been well within their rights to say "no, that 38% is not good enough" if that was their conclusion after a good faith and reasonable process.
- fundad 3y ago
  Twitter’s board exited. Post-ZIRP they knew fair value wasn’t higher than the offer so they took the money.
- badrequest 3y ago
  Does doing mental gymnastics like this strengthen your brain?
  - rrrrrrrrrrrryan 3y ago
    20% - 50% is the typical premium paid to take a public company private.
  - JauntTrooper 3y ago
    No, but it's my day job.
    - ipaddr 3y ago
      Where did you hear Disney wanted to buy twitter?
deleted 3y ago
[deleted]

In what world is a 38% premium not well above market value? If you pay $1.38m for a $1m house, you are definitely paying well above market value.

by samtp 3y ago

In what world is a 38% premium not well above market value? If you pay $1.38m for a $1m house, you are definitely paying well above market value.

JauntTrooper 3y ago

Market value and fair value aren't necessarily the same thing. The 38% is just the one day premium. The offer was at a discount to the stock price less than six months earlier. It was possible that the stock price had overreacted to a tech sell off, and if the market had rebounded by the summer the bid could have looked genius. Market pricing in M&A is somewhat opaque and different than trading prices because it's based partly on synergy value to a bidder. To use your house example, if the house next door was willing to pay $1.5 million for your house, then the $1.38M is not above market even if Zillow and the list price say it's $1 million. There were other potential suitors for Twitter, like Microsoft, Disney, Salesforce and private equity. They might have valued it more than Musk based on the benefits it brought their firms. Twitter would be a lot more valuable inside Amazon, Google or Meta but there were probably antitrust issues there. Plus Twitter's board and management team had access to a lot of material non public information that investors did not. Even if you thought the market price in early April accurately reflected all the public info on Twitter, the Board was looking at 5 year projections and much more detailed pricing/demand/customer info. The Delaware Courts give a lot of deference to board judgment in these situations, and Twitter's board would have been well within their rights to say "no, that 38% is not good enough" if that was their conclusion after a good faith and reasonable process.

fundad 3y ago
Twitter’s board exited. Post-ZIRP they knew fair value wasn’t higher than the offer so they took the money.
badrequest 3y ago
Does doing mental gymnastics like this strengthen your brain?
- rrrrrrrrrrrryan 3y ago
  20% - 50% is the typical premium paid to take a public company private.
- JauntTrooper 3y ago
  No, but it's my day job.
  - ipaddr 3y ago
    Where did you hear Disney wanted to buy twitter?

deleted 3y ago

[deleted]