Elon makes all-cash offer to take Twitter private

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Bob Knights Paper Hands
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In reply to BMX Bandit • 9:54a, 4/16/22
BMX Bandit said:
Based in the Unocal Corp. v. Mesa Petroleum, I don't thick the derivative case will get far right now. After Musk is rejected it might, but business judgment rule is very hard to get around, especially in Delaware.

Does the fact that he made an offer approximately 20% above the then share price and 80% above what GS, Twitter's consulting advisor, publicly states as their price target, or the fact that Unocal v. Mesa was based on asset value compared to the purchase offer price, while here Twitter holds little in hard assets they can reasonably prove are worth above the offer make this different? It would definitely seem different to a layman like me.
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FrioAg 00
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10:06a, 4/16/22
AG
Poison pills result in 2 things, (1) a company with infusion of cash and (2) current investors anxious about giving more capital to hold the same company with the same board/mgmt

Now, if access to capital was what was driving the underperformance in the first place this can be a positive solution for shareholders.

If, by contrast, the underperformance was driven by the strategies, objectives and execution of the leadership team - it usually doesn't take long to see that continue and the leash from shareholders is super short

More often than not these are a temporary delay
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Bob Knights Paper Hands
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In reply to FrioAg 00 • 10:08a, 4/16/22
Don't they have to let shareholders vote on this before they can execute it unless they already have a huge shelf offering that previously approved?
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FrioAg 00
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10:15a, 4/16/22
AG
Not sure, I believe that actually depends what is written in their own bylaws /articles of incorporation

My bet would be the board can do this unilaterally - it's fairly common protection against takeover and the company wants the ability to move quickly
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richardag
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In reply to hph6203 • 10:15a, 4/16/22
hph6203 said:
Everyone. That's not a choice, it's a mandate.
So they are mandated to purchase shares? I am confused.
Among the latter, under pretence of governing they have divided their nations into two classes, wolves and sheep.”
Thomas Jefferson, Letter to Edward Carrington, January 16, 1787
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hph6203
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In reply to richardag • 10:23a, 4/16/22
AG
Exercising the option is a guaranteed instantaneous return. Failing to exercise the option is a guaranteed instantaneous loss. They are not actually mandated, but they'd be stupid not to.
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FrioAg 00
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In reply to hph6203 • 10:30a, 4/16/22
AG
I believe that is right in most cases, but this might be different. The stock rose so much after Elon started buying, both before and after it went public (indicating insiders knew it was happening)

What will underlying valuations on the core assets do once Elon is stopped at least temporarily? If the drop is bigger than the discount offered for the recapitalization then you might actually see it fail.
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fasthorse05
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10:34a, 4/16/22
Just out of curiosity, if I own 100,000 shares(or how ever many shares it takes) of Twitter, and give my proxy votes to Musk, does Musk have a controlling interest if he got 50.01%?
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DallasAg 94
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In reply to fasthorse05 • 11:02a, 4/16/22
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Waffledynamics
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11:04a, 4/16/22
AG
What % chance do y'all think Musk has of actually getting Twitter?
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richardag
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In reply to hph6203 • 11:12a, 4/16/22
hph6203 said:
Exercising the option is a guaranteed instantaneous return. Failing to exercise the option is a guaranteed instantaneous loss. They are not actually mandated, but they'd be stupid not to.
Thanks for the response.
Among the latter, under pretence of governing they have divided their nations into two classes, wolves and sheep.”
Thomas Jefferson, Letter to Edward Carrington, January 16, 1787
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DallasAg 94
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In reply to Bob Knights Paper Hands • 11:17a, 4/16/22
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In reply to hph6203 • 11:19a, 4/16/22
AG
hph6203 said:
Exercising the option is a guaranteed instantaneous return. Failing to exercise the option is a guaranteed instantaneous loss. They are not actually mandated, but they'd be stupid not to.


How should Vanguard feel about potentially having to double down? And won't they be on the outside looking in since they already own 10%? They can't really double down, they can only increase 50% without going over 15% themselves.
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Ags4DaWin
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In reply to sharpdressedman • 11:23a, 4/16/22
sharpdressedman said:
My corporate lawyer neighbor told me that the "poison pill" approved by Twitter's BOD will preclude any hostile takeover via stock acquisition. I did some reading and found the following:

"Poison pills are often used to defend against hostile takeovers.
According to Twitter's plan, if Musk or any other person or group acquires at least 15 percent of Twitter's stock, the poison pill will trigger.
At that point, every other shareholder, aside from Musk, would be allowed to purchase new shares of Twitter at half the going market price, which stood at $45.08 at the closing bell on Thursday.
The flood of half-price shares would effectively dilute Musk's ownership stake, making it massively more expensive for him to build up a controlling position. Twitter said its board had voted unanimously in favor of the plan, which will remain in effect until April 14, 2023."

https://theconservativetreehouse.com/blog/2022/04/15/twitter-responds-to-elon-musk-proposal-by-creating-poison-pill/#more-231787

EM surely anticipated this. I am very curious about his "Plan B." Any comments/speculations will be appreciated.



so the solution is musk has a silent partner who is ready to buy up the half priced shares.
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hph6203
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In reply to FrioAg 00 • 11:23a, 4/16/22
AG
The stock rose while Elon was buying, because Elon buying imbalances supply and demand. He has to induce sale side by offering a higher price. It did not require knowledge from insiders for that to happen.

The temporary stalling of Elon acquiring more shares of the stock does not really impact the exercisability of the option. The share price may fall on speculation that Elon will no longer be buying Twitter, if he doesn't the options will never be issued. If he continues his ownership acquisition he has to disclose it to the public (within 2 days once he crosses 10% ownership). If he reaches 15% ownership they will have a strike price on the option appropriate for the offer rate and for the dilution they want.

Even if he tries to acquire 15% within the disclosure window, the move will be obvious based upon volume trading of the stock. We will probably have an inclination that he or someone else is acquiring large percentages of the stock before it's ever disclosed.
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richardag
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In reply to DallasAg 94 • 11:26a, 4/16/22
DallasAg 94 said:
Bob Knights Liver said:
Don't they have to let shareholders vote on this before they can execute it unless they already have a huge shelf offering that previously approved?
Kind of... the Board has the power to respond quickly. In order to facilitate a vote, you have to compile and mail out a packet.

Many times, yes, they put it before the shareholders. However, institutional investors own enough of Twitter that the peons are meaningless.

According to Yahoo! Finance:

83.73% of Shares are held by Institutions
8.79% Vanguard Group
8.76% Morgan Stanley
6.48% Blackrock
4.45% State Street
-------------------------
28.48%

Consider Musk with his 9+%
Don't all the funds have to send out letters or digital requests to the fund holders for their vote?
Among the latter, under pretence of governing they have divided their nations into two classes, wolves and sheep.”
Thomas Jefferson, Letter to Edward Carrington, January 16, 1787
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hph6203
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In reply to Ags4DaWin • 11:28a, 4/16/22
AG
The shares aren't half priced, they are valued proportional to their ownership stake. They are creating more shares, which results in a lower stock price. When the price falls due to options being exercised you have to buy more shares to get the same ownership percentage.

He may be able to have multiple people purchase multiple sets of <15% (ideally <5%) to gain majority control, but it is damn near impossible to do that without the move being known to the market and the market will respond. How valuable is the last share that creates a 50.01% ownership stake? Pretty ****ing valuable.
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Ags4DaWin
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In reply to hph6203 • 11:36a, 4/16/22
yeah...just finished reading up on it.

I did not realize that this strategy included issuance of new shares.

however since this strategy is absically 40 years old you had to figure that elon was readybfor them to trigger this.....wonder what his play is.

after reading that article it is very clear that twitter from a financial perspective is a ****ty investment because it has no way to monetize.

The investors are all those people who have an interest in controlling thd information flow and narrative.
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aTm2004
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In reply to Sea Speed • 11:42a, 4/16/22
AG
Sea Speed said:
I legitimately think this is the start of something massive in the US. Whether its for the better or not is yet to be seen. The curtain has been pulled back, but it is still a massive uphill battle obviously.

On that note, how much security does elon have? I've been watching space x videos and his security wasn't readily visible. Could be they dont hover while in space x controlled areas, but some of the stuff I watched wasn't necessarily behind the gates, so to speak.

I understand he is the richest man in the world and has a LOT of stroke, but upsetting th apple cart for others that have a whole lot of power is certainly hazardous to your health.

I wouldn't be shocked to learn he's bought dirt on powerful and influential politicians and has it kept safely somewhere. [/tin foil hat off]
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Dr. Horrible
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In reply to richardag • 11:49a, 4/16/22
richardag said:
DallasAg 94 said:
Bob Knights Liver said:
Don't they have to let shareholders vote on this before they can execute it unless they already have a huge shelf offering that previously approved?
Kind of... the Board has the power to respond quickly. In order to facilitate a vote, you have to compile and mail out a packet.

Many times, yes, they put it before the shareholders. However, institutional investors own enough of Twitter that the peons are meaningless.

According to Yahoo! Finance:

83.73% of Shares are held by Institutions
8.79% Vanguard Group
8.76% Morgan Stanley
6.48% Blackrock
4.45% State Street
-------------------------
28.48%

Consider Musk with his 9+%
Don't all the funds have to send out letters or digital requests to the fund holders for their vote?
Nope.
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RikkiTikkaTagem
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11:56a, 4/16/22
AG
Plan B may be somebody else coming in at 15%, triggering the poison pill and Elon buying up all the shares he can that are now at half price. This person and Elon get enough for 50% and Elon buys back his shares from the plan B person at a premium when its all said and done. Plan B person makes out well. Elon gets what he wants. Only a couple of people though have 5.4 billion to swing around like that.
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richardag
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In reply to Dr. Horrible • 12:09p, 4/16/22
Dr. Horrible said:
richardag said:
DallasAg 94 said:
Bob Knights Liver said:
Don't they have to let shareholders vote on this before they can execute it unless they already have a huge shelf offering that previously approved?
Kind of... the Board has the power to respond quickly. In order to facilitate a vote, you have to compile and mail out a packet.

Many times, yes, they put it before the shareholders. However, institutional investors own enough of Twitter that the peons are meaningless.

According to Yahoo! Finance:

83.73% of Shares are held by Institutions
8.79% Vanguard Group
8.76% Morgan Stanley
6.48% Blackrock
4.45% State Street
-------------------------
28.48%

Consider Musk with his 9+%
Don't all the funds have to send out letters or digital requests to the fund holders for their vote?
Nope.
Thanks for the information, getting a lesson I am.
Among the latter, under pretence of governing they have divided their nations into two classes, wolves and sheep.”
Thomas Jefferson, Letter to Edward Carrington, January 16, 1787
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Kenneth_2003
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In reply to richardag • 12:12p, 4/16/22
AG
richardag said:
DallasAg 94 said:
Bob Knights Liver said:
Don't they have to let shareholders vote on this before they can execute it unless they already have a huge shelf offering that previously approved?
Kind of... the Board has the power to respond quickly. In order to facilitate a vote, you have to compile and mail out a packet.

Many times, yes, they put it before the shareholders. However, institutional investors own enough of Twitter that the peons are meaningless.

According to Yahoo! Finance:

83.73% of Shares are held by Institutions
8.79% Vanguard Group
8.76% Morgan Stanley
6.48% Blackrock
4.45% State Street
-------------------------
28.48%

Consider Musk with his 9+%
Don't all the funds have to send out letters or digital requests to the fund holders for their vote?


You own the fund. The fund owns the underlying shares.

My understanding at least.
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DallasAg 94
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In reply to richardag • 12:13p, 4/16/22
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DallasAg 94
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12:29p, 4/16/22
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In reply to DallasAg 94 • 1:02p, 4/16/22
AG
DallasAg 94 said:
The play here, for Elon is to start selling his 9%. And he may have already started.

Maintain the Cash offer of $54.20.

Stock was $40'ish before he bought. It is currently at $45.

12M shares was a typical day.
268M traded on 4/4
260M traded on 4/12

Elon sells his shares and all of those institutions that came in to support Twitter start losing their Ass. People start to panic and the Board now has to explain why a $54 offer isn't good.

Stock drops back down. Twitter announces Earnings in early May... then, Elon has his posse does a #wallstreetbets them.


Then he could lower his offer to $44.20
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sharpdressedman
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In reply to Premium • 1:39p, 4/16/22
Premium said:
So could 10 of Elon's friends sit on the sideline with $1Billion in stock - 5% or so each… and then let Elon trigger the poison pill allowing them to buy at half price. So Elon will cut his value to 7.5% but his 10 friends nearly double their positions at half price. Net they would then own over 50%. All at a lower valuation than $43 Billion.

I think Elon would purposely lose $2 Billon to blow it up. And if coordinated well, he could very well be left standing with owning the company.
Very clever and, seemingly, equally doable. Thanks for your comment.
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will25u
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1:41p, 4/16/22
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sharpdressedman
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In reply to Ags4DaWin • 1:42p, 4/16/22
Ags4DaWin said:
sharpdressedman said:
My corporate lawyer neighbor told me that the "poison pill" approved by Twitter's BOD will preclude any hostile takeover via stock acquisition. I did some reading and found the following:

"Poison pills are often used to defend against hostile takeovers.
According to Twitter's plan, if Musk or any other person or group acquires at least 15 percent of Twitter's stock, the poison pill will trigger.
At that point, every other shareholder, aside from Musk, would be allowed to purchase new shares of Twitter at half the going market price, which stood at $45.08 at the closing bell on Thursday.
The flood of half-price shares would effectively dilute Musk's ownership stake, making it massively more expensive for him to build up a controlling position. Twitter said its board had voted unanimously in favor of the plan, which will remain in effect until April 14, 2023."

https://theconservativetreehouse.com/blog/2022/04/15/twitter-responds-to-elon-musk-proposal-by-creating-poison-pill/#more-231787

EM surely anticipated this. I am very curious about his "Plan B." Any comments/speculations will be appreciated.



so the solution is musk has a silent partner who is ready to buy up the half priced shares.
Thank you. I think you and Premium presently have the most viable, winning strategies for EM to succeed.
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aggiehawg
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1:47p, 4/16/22
AG
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hph6203
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1:49p, 4/16/22
AG
This thread is an exercise in exposing market illiteracy.
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Hydrocele_aggie
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In reply to hph6203 • 1:52p, 4/16/22
hph6203 said:
This thread is an exercise in exposing market illiteracy.


Yeah I'm sure you are a regular warren Buffett smh
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hph6203
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In reply to Hydrocele_aggie • 1:57p, 4/16/22
AG
There's a large gap between Warren Buffet and a person suggesting that Elon getting another person to trigger the option issuance and buying the company at a discount. It is a fundamental lack of understanding of the mechanisms at play.

The options issuance dilutes the ownership interest of the individual that triggers the issuance. It causes a premium to purchasing the stock to that individual. It does not make the company cheaper to buy.

Elon forcing a reduction of the share price doesn't do anything. The market is aware of the share price pre-Musk purchase, they know it post-Musk purchase. The stock price deflating due to his sale adds no substantive information.
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fka ftc
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1:58p, 4/16/22
Elon has already won the game, its just a matter of how he wins. Once he took 5% stake then was able to quickly get that to 9% before it bubbling up to public knowledge was the winning play.

Either he gets control of company and delivers on his promise of free speech which likely increases Twitters reach and reinvigorates its use and he capitalizes on the stock going up.

Or he gets the board and exec mgmt replaced with a team more amenable to him and he stays a shareholder that benefits.

Or he goes scorched earth and likely still makes money on his purchase, then starts his own platform having completely exposed Twitter and ending their run.

In the end, Elon wins.
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Kenneth_2003
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In reply to hph6203 • 1:59p, 4/16/22
AG
hph6203 said:
This thread is an exercise in exposing market illiteracy.


I'm certainly no expert, but if some of the ideas proposed on this thread didn't land people with an immediate need for ateam of high prices defense attorneys to deal with a loamy of SEC violations is be very shocked.
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