5 ms·

It's pretty nontrivial to buy a majority interest in any public company. It's not like you can just spend 1/2 the current market cap to acquire it, the price wi

It's pretty nontrivial to buy a majority interest in any public company. It's not like you can just spend 1/2 the current market cap to acquire it, the price will shoot up drastically as soon as the market is aware of someone (especially Apple) trying to do it.

deleted 3y ago
[deleted]
speedylight 3y ago
As long as the cost is less than what apple makes from the watches annually, it would still be worth it, no?
- ornornor 3y ago
  Sometimes companies have poison pill provisions and similar that makes it veeeeery expensive to do a hostile takeover.
  - dangus 3y ago
    Expensive for Apple? This is a $17 billion annual revenue product category for them. Masimo's market cap is $6 billion.
    - prawn 3y ago
      I guess the consideration wouldn't be the value of whole product category, but related to changes to manufacture/schedule and changes to sales if they dropped that particular feature?
    - ffgjgf1 3y ago
      > $17 billion annual revenue Only a proportion of that is net income > market cap is $6 billion. Even if > 50% enough stocks are on the market how much do you think Apple would end up paying $12 billion? $16? $20? $25? How many years would it take them to earn that back? You can’t really buy companies directly on the stock market, the price will just start going up exponentially. Also they’d be rewarding patent trolls which creates incentives for other companies to behave the same way so that Apple would acquire them
- niij 3y ago
  Why annually?
- notatoad 3y ago
  pulse oximeter isn't really an essential feature though. the value to apple is not the total value of the apple watch, it's the marginal difference from what they'd make from selling the watch with that feature disabled in territories where the masimo patent is upheld. which is probably pretty trivial
RadixDLT 3y ago
its too expensive (150 per share and going up), apple would need to spend billions
- CrazyStat 3y ago
  Price per share is meaningless without also saying how many shares there are, in which case you might as well just use the market cap (about 6b, in Masimo’s case).
- pertymcpert 3y ago
  Why did you use share price and not market cap?
grecy 3y ago
> the price will shoot up drastically as soon as the market is aware of someone Will that still happen if you put in a single order to buy 51% of all the shares at a price a little above the current market value ? That trade will be complete before the market "sees" you are trying to buy a ton.
- speedylight 3y ago
  That’s kind of what I had in mind, I don’t really know if it’s feasible or not but if I had billions of dollars deposited in my Robinhood account just made the order for that many shares, would it not go through?
  - ladberg 3y ago
    It would not go through: you can only buy as many shares at once as other people are currently offering at that specified price, which would be negligible compared to the total amount of shares.
  - rvnx 3y ago
    Typically this is what you see on a stock: > Bid [500 x $64.39], [$64.42 x 100] Ask < It means that someone currently offers to buy 500 shares at the price of $64.39. It means that someone currently offers to sell 100 shares at the price of $64.42. In practice, it means that you can buy 100 shares at the price of $64.42, then, after, it will move to the next price level. => You can see the "depth" of offers, it's called Level 2 book: Ask offers: $64.42 x 100 $64.43 x 200 $64.46 x 100 $65.00 x 600 $97.00 x 100 $999.99 x 100 => If you try to buy 400 shares, it will cost you: 100 shares x $64.42 = $6 442 200 shares x $64.43 = $12 886 100 shares x $64.46 = $6,446 Divided by 400 shares. It means ~$64.435 per share, though you saw $64.42 as price. If you send very large volumes, you quickly eat these price levels. In our example, if you try to buy 2000 shares, you will get only 1200 shares. You will have paid an average price of $145.39 per share. So, yes it may not go through because, it is possible that there are not enough people interested to sell their share (that there is not enough depth, or not at an acceptable price). And also, the SEC has certain rules (uptick rules, etc) that makes the stock to be frozen in case the price varies too much.
jojobas 3y ago
In addition the float (the freely traded portion of the shares) might be well below what's needed to acquire the majority.

deleted 3y ago

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speedylight 3y ago

As long as the cost is less than what apple makes from the watches annually, it would still be worth it, no?

ornornor 3y ago
Sometimes companies have poison pill provisions and similar that makes it veeeeery expensive to do a hostile takeover.
- dangus 3y ago
  Expensive for Apple? This is a $17 billion annual revenue product category for them. Masimo's market cap is $6 billion.
  - prawn 3y ago
    I guess the consideration wouldn't be the value of whole product category, but related to changes to manufacture/schedule and changes to sales if they dropped that particular feature?
  - ffgjgf1 3y ago
    > $17 billion annual revenue Only a proportion of that is net income > market cap is $6 billion. Even if > 50% enough stocks are on the market how much do you think Apple would end up paying $12 billion? $16? $20? $25? How many years would it take them to earn that back? You can’t really buy companies directly on the stock market, the price will just start going up exponentially. Also they’d be rewarding patent trolls which creates incentives for other companies to behave the same way so that Apple would acquire them
niij 3y ago
Why annually?
notatoad 3y ago
pulse oximeter isn't really an essential feature though. the value to apple is not the total value of the apple watch, it's the marginal difference from what they'd make from selling the watch with that feature disabled in territories where the masimo patent is upheld. which is probably pretty trivial

RadixDLT 3y ago

its too expensive (150 per share and going up), apple would need to spend billions

CrazyStat 3y ago
Price per share is meaningless without also saying how many shares there are, in which case you might as well just use the market cap (about 6b, in Masimo’s case).
pertymcpert 3y ago
Why did you use share price and not market cap?

grecy 3y ago

> the price will shoot up drastically as soon as the market is aware of someone Will that still happen if you put in a single order to buy 51% of all the shares at a price a little above the current market value ? That trade will be complete before the market "sees" you are trying to buy a ton.

speedylight 3y ago
That’s kind of what I had in mind, I don’t really know if it’s feasible or not but if I had billions of dollars deposited in my Robinhood account just made the order for that many shares, would it not go through?
- ladberg 3y ago
  It would not go through: you can only buy as many shares at once as other people are currently offering at that specified price, which would be negligible compared to the total amount of shares.
- rvnx 3y ago
  Typically this is what you see on a stock: > Bid [500 x $64.39], [$64.42 x 100] Ask < It means that someone currently offers to buy 500 shares at the price of $64.39. It means that someone currently offers to sell 100 shares at the price of $64.42. In practice, it means that you can buy 100 shares at the price of $64.42, then, after, it will move to the next price level. => You can see the "depth" of offers, it's called Level 2 book: Ask offers: $64.42 x 100 $64.43 x 200 $64.46 x 100 $65.00 x 600 $97.00 x 100 $999.99 x 100 => If you try to buy 400 shares, it will cost you: 100 shares x $64.42 = $6 442 200 shares x $64.43 = $12 886 100 shares x $64.46 = $6,446 Divided by 400 shares. It means ~$64.435 per share, though you saw $64.42 as price. If you send very large volumes, you quickly eat these price levels. In our example, if you try to buy 2000 shares, you will get only 1200 shares. You will have paid an average price of $145.39 per share. So, yes it may not go through because, it is possible that there are not enough people interested to sell their share (that there is not enough depth, or not at an acceptable price). And also, the SEC has certain rules (uptick rules, etc) that makes the stock to be frozen in case the price varies too much.

jojobas 3y ago

In addition the float (the freely traded portion of the shares) might be well below what's needed to acquire the majority.