[xyzzy21]

The legality of a poison pill is defined by case law of of Unocal vs. Mesa Petroleum.

https://en.wikipedia.org/wiki/Unocal_Corp._v._Mesa_Petroleum....

Basically a company can ONLY create a poison pill IF and ONLY IF:

* the tactics of the party doing the hostile takeover are "coercive"

* the hostile takeover will likely result in dissolution of the company

Neither applies to Twitter in any serious sense. Musk's methods are anything but coercive under the law per point #1. A change in direction or operations is NOT legally the same as point #2.

Additionaly, board members are required under law to maximize shareholder value under the rubrik of profit maximization (eBay vs. Newmark) and public company board members can be PERSONALLY legally liable for lost profits and punitive damages.

https://www.lexisnexis.com/community/casebrief/p/casebrief-e...

It's VERY LIKELY that the Twitter board was informed of these cases (again, hopefully - these are legal fundamentals of being on a corporate board you'd be stupid not to know ahead of time).

As a result the Twitter board appears to have "straightened up and are flying right" in terms of law and potential legal liability now.

Again: I'm utterly mystified that boards (especially in "Tech") do not seem to know basic stuff like this and let companies run riot in ways that puts both the board and executives at tremendous personal legal and financial risk.

[colinmhayes]

I'm gonna go ahead and say this comment is misleading. The board is obligated to make decisions that they believe in good faith will maximize shareholder value. If they can come up with a reasonable explanation for why twitter is worth more than 54.20 (like it being worth 70 last year) they can go ahead and decline the offer.

[tptacek]

Notably, from one of that post's own links:

A board can use the protection of a rights plan to respond to an underpriced bid, counter the tender offeror's timing and informational advantages, and force the hostile acquirer to negotiate with the board.

[tempnow987]

Why are you getting down voted? I'm serious, it's weird. A lot of views here that board can do anything it wants, can destroy shareholder value through poison pills for political reasons etc. No.

There were actually threats by pension funds in right wing states to come after twitter if they didn't do the deal and imploded it for political reasons.

The downside to the stock from a) loss of offer, b) sale of musk shares and c) launch of a competing service by musk might have been pretty significant.

The board was in a tough spot. Doesn't look like they were able to negotiate a larger price.

[mrtesthah]

You keep posting this same statement over and over again -- it's starting to look like you're pushing an agenda.

The truth is, that no, corporations do not have overriding fiduciary obligations to their shareholders in the simplistic way that you seem to be inferring. This cannot be legally enforced so expeditiously. You seem to be taking your position from youtube and political opinion pieces (e.g., reframing the vindictive and opportunistic threats of right-wing AGs) rather than corporate law.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1352595

[tempnow987]

The argument that board members can do what they want or do not have a fiduciary duty are so false its honestly not worth discussing further at this point.

The question of expeditious enforcement is a separate factor. Twitter is a Delaware corp so it's not as horrible as it would be elsewhere, but no question the enforcement side is less than ideal.

[mrtesthah]

Enforcement controls whether and to what extent they can do what they want. That’s the point.

Also, not sure what you mean by “ideal”. You seem to be assuming an unstated ethical frame there.

[tempnow987]

I agree on enforcement.

What made this unique is that very early on there was relatively high profile interest from folks (DeSantis) who I'm guessing might try to make a point (they seem to be working towards a national profile vs just FL local). There is a naivete here that AG's offices are impartial in enforcement, they are often highly highly selective in enforcement efforts.

Securities litigation (broadly) has been going pretty strongly.

The parent comment I was engaging with had a substantive comment citing case law in this issue that at the time I commented was voted down.

Your article is also interesting.

My point was that this was trending towards a litmus test type political issue.

Elon was offering to let shareholders vote on the plan. Board was doing a) a poison pill, b) had a staggered board term setup, c) had the founder criticizing them, d) had some bumpy history and e) were faced with wading into an ugly political fight with poor optics given his offer.

So my own personal view is that Elon came with a surprising amount of leverage. What folks don't realize is that doing $43B deal at this speed is unusual.