I don't think it's as nefarious as that. What people are calling the "public" position here is the value of preferred stock sold in a financing, and the "internal" valuation is the value of common stock. They're different things - the preferred stock has downside protection and other special rights that make it more valuable than the common stock so it should have a different price. These internal valuation reports pretty explicitly calculate the value of the common stock as a discount applied to the preferred stock price, due to the rights and liquidation preferrence and the fact that the common is not freely tradable.
The shareholder's control over Twitter is not as direct as you are suggesting. Even if 100% of shareholders were supportive of Elon's deal, they could not immediately force the board to accept the offer. If the board refused to approve the deal, the shareholders' mechanism of control would be to elect new directors. But the company's bylaws do not allow for that to be done immediately. They would have to vote at the next annual meeting. And I believe Twitter has the protection of a staggered board of directors, meaning that only a portion of the board is up for election in any year. The end result is that it would take several years for the shareholders to elect a new board in place to then vote in favor of the sale.
> The shareholder's control over Twitter is not as direct as you are suggesting. Even if 100% of shareholders were supportive of Elon's deal, they could not immediately force the board to accept the offer.
Yes they could. If literally 100% of the shareholders opposed the board, the board would lose indemnification from shareholder lawsuits for any actions it took, up to the difference in value between the tanking share price and Musk's offer. No effing way they would stay obstinately opposed in that case.
The classified board structure is available for you to read about in their public filings and the Twitter investor relations site. It's not fanciful or nonsense - it's a commonly used takeover defense that Twitter put into effect several years ago. I don't know why Twitter's board accepted the deal, I'm just talking about the defenses in place and how they all worked. Apologies if that offended you somehow.
Whoa - you've repeatedly broken the site guidelines in this thread. Can you please review them and stick to them, regardless of how wrong someone else is or you feel they are? That's really important for preventing, or at least staving off, the decline of this forum.
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.
> 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.
> The deal was first rejected by the board. And then the deal was approved by the board.
Source?? The deal was never rejected by the board. Instituting a poison pill was not a rejection. Twitter made it clear with the poison pill anouncement that they had not decided on Musks offer yet.
> The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders,” the company said in a press release.
> Twitter noted that the rights plan would not prevent the board from accepting an acquisition offer if the board deems it in the best interests of the company and its shareholders.
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.
Um, I'm afraid you might be the one getting flagged :)
Shareholder pressure, which was rumored to include governors and ag's in states with pension investments in twitter who don't like twitter, was out there.
They risked a decline of twitter's stock price if Elon withdrew his offer AND sold his (largish) block of shares AND announced a competing service with some of his billions.
Twitter has its HQ in SF, but that doesn't mean it can blow florida pension money because they don't like musk.
So yes, the board, taking into consideration shareholders and their duty there, may have been in a tough spot. It certainly doesn't seem like they got any increase in price.
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.
This is totally false. The board owes a fiduciary duty to shareholders. It is almost certain that if they imploded the deal for political reasons that places like florida would have sued.
The fiduciary duty exceeds expressed shareholder preferences -- if the board believes that a particular action is not likely to improve value, they don't have to do it, even if all their shareholders tell them to (though, of course, they might be likely to be voted out in the next election for same).
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.
seems like the springing requirement to negotiate a paid license after $1m in revenue is just destined to be forgotten. it will come up two rounds later in diligence and be a minor pain to deal with. I'd probably avoid using something licensed under this just to avoid the headache later. or would prefer to pay for a commercial license upfront even.
For what it's worth, I also advise startups. If you find a way to reliably force startup founders in high growth to stop, think, and remember a bunch of legal things they were supposed to do two rounds ago, please e-mail me immediately!
The Big Time License certainly hasn't solved that one yet. But we did consider the problem. It's part of the motive behind the extra-long, 128-day grace period that only applies to companies that start small and grow big. That's point 1 in the "Big Business" section.
I think the article is overstating the scope of the coalition a bit. If I understand correctly, it's talking about the format and transportability of the cap table, but not doing anything to change how broadly a company will choose to make the cap table available. So not really transparent, but more importantly avoiding vendor lock-in.
Small point only the lawyers will care about - they say they are using Goodwin form documents instead of Orrick form documents. Will make it much nicer to work with companies incorporated on Stack than the others.
The Privacy Shield framework that was just declared invalid by the EU included a requirement that US companies make themselves available for arbitration of disputes brought by EU data subjects. GDPR by itself doesn't include that concept. But if GDPR is going to be enforceable, the negotiation around a successor to Privacy Shield should probably include it.
When term sheets say they are non-binding, they will usually say "except the sections about confidentiality and exclusivity". So those will be the only parts that actually are enforceable promises.
But the exclusivity period is typically 30-45 days. There would have needed to be some particular reason for six months, given how far off-market it is.
Term sheets do away for the need to speculate about whether there is a binding obligation or not - they always explicitly say that they are not binding, and then both parties sign and agree to that.
Industry standards are though that once the term sheet is signed, the deal is 99% sure to happen, unless there are serious problems discovered in due diligence.
