Twitter buy out
Can someone explain me in plain English how did Twitter buy out materialize? I am not very finance savvy. - How does a person buys another company? Do they buy 51% of shares from the market, and hence become the owner? - Couldn’t Twitter have said no to being sold? - Why did Twitter go after Musk, when he was trying to back off? They could have let him back off. Happy to read an article online if there is a good one explaining basics.
1. He put in an offer to buy above market. 2. They could’ve but since the offer was so far above market, they would’ve been sued by shareholders since the company has to act in shareholder’s best interest 3. Because they wanted to force the transaction to go through; it was highly lucrative for shareholders.
Musk bought out all the shares w/ his cash, loans against his Tesla shares, and Saudi money. When he later tried to back out, Twitter forced the deal bc Musk was WAY overpaying for the deal (far more than current/projected market value), and it was a fantastic payday for shareholders. Public companies are required to act in their shareholders’ interest. Shareholders would’ve sued Twitter (and won) if Twitter backed out.
1. In this case, Twitter went private. So musk and company bought all the shares and delisted the company to be private. The way it worked is, he made an offer, board eventually agreed, I believe there was a shareholder vote too and approved. Once final paperwork and $$$ in place, brokerages took your shares and gave you agreed upon price. And now legally musk and company owns Twitter as a private business. 2. Initially they said no, but once musk proposed a premium that they thought was better than their projected long-term value, the board had an obligation to act in the shareholder's best interest. Or else they could get sued. 3. Because musk was walking away from a deal he signed and pursuing legal means to close the deal was again in their shareholders best interest. So they had to pursue it. Else they would've been sued.
1. Parag initially resisted the buy out because his ass hasn’t warmed up the CEO seat. 2. Likely some activists & board convinced Parag it’s a good deal. 3. The entire stock market was tanking and Elon figured he’s over paying, and tried to pull out. 4. Parag sticked it to Elon & Elon had no choice. Parag & gang probably know full well what’s going to happen once Elon takes over. But hey they get a big payout so who cares. 5. Now everyone blames Elon heartless.
My name is Jon Ice 🧊 and I know a few things. 1- every company is on sale if you pay the right price. 2- Twitter’s market cap was evaluated close to $44bn based on their $54/share(I guess). Which was a way too good offer to ignore for Twitter. 3- Elon being a rich crazy person announced that he will cleanse Twitter. (He started the paperwork too) 4- recession took control of the market and Twitter shares dropped ~~ evaluation dropped (its now worth less than what Elon promised to buy $44bn). Elon like any businesses man with a decent math knowledge would know that it’s a bad deal now so he decides to chicken out. 5- Twitter filed a lawsuit and called Elon a chicken shit. Elon finally agrees (for whatever reason or maybe the fact that he has too much money ) to close a bad business deal. That’s all my brain could process.
A great question and i have been wondering in my head too. Further questions: How is a twitter buy out “in the shareholders” interest if “everyone knows post buyout what would happen?” How is short term gain, of buyout, better than long term? Also if I’m correctly processing all the comments, and presuming just like the “housing market keeps going up and up” (bunny quotes), won’t the twitter eval be higher than $54.2 (44 bn) after a projected few years, ahead of whatever they’ve projected before the deal? Also the ceo is supposed to think long term or is Parag just a puppet by Jack Dorsey here? He lasted what 6months? 🫤
They buy 100% of the shares. Usually at a fixed price with a premium. If the board agrees it’s sold. A good example is Microsoft and Activision agreed at a buy price of $95 a share, even though the stock was trading at $78 at the time. It’s enough of a premium for shareholders and the board to accept the sale. The price of Activision now is $70 due to worry about the acquisition being blocked but if you can tolerate risk any shares bought now will be sold to Microsoft at $95. Merge arbitrage is another term for it.
Twitter agreed because it makes sense for shareholders. The stock would probably be in the 20s right now if it wasn’t sold.
So how can someone buy 100% shares, given they are distributed across the world among so many ppl. This must be a very stupid question. But let’s say if I had 10 Twitter shares, Elon Musk is obviously not reaching out to me to buy those. How does it work? And I would not have any choice?