i have the $60 2024 calls— they lost almost all their value in the past couple days. If this takeover fails those options should spike— good risk to reward. Doubled-down yesterday
Boards are often described as CEO rubber stamps but it’s more complicated than that. In accepting the offer the board has said the long term value of the company is not 54.2. The stock will plummet to further depths of Elon walks away (the billion dollars isn’t that meaningful of a breakup fee). Calling someone’s bluff means that you don’t expect them to go through. You think the board doesn’t expect elon to close the deal?
"When one company chooses to buy out another in a stock-based acquisition, the acquirer generally seeks to gain 100% ownership of the target corporation. Corporate law typically allows the acquirer to gain full ownership of the target even if shareholders who in total own a minority interest in the target company oppose the acquisition. The required vote favoring the merger can vary depending on what's stated in the company's articles of incorporation. Some companies require a simple majority, while others require supermajorities of anywhere from two-thirds to 90% of outstanding shares. When this occurs, the acquiring company pays objecting minority shareholders the same amount of cash, shares of the acquiring company, or a combination of both that those who favor the acquisition receive. As long as that compensation is deemed to be fair value for the stock, the recourse for the objecting minority shareholders is limited." And no there is not a 0.0000000001% chance the price could go above offer price. What ridiculousness.
interesting price action right now. $60 calls up almost 20% , share price down 3%. Me thinks this deal may not be done.
I'm not usually one to say "I told you so," but I was told in response to the above post that corporate "boards don't call bluffs." Yes they do. And TWTR's board called Musk's bluff, played him for the fool he is, and now they have him by a $Billion worth of the short hairs. One would have thought that after the SEC slap down over the bogus "I have the cash to take TSLA private" tweet (he didn't), Musk might have toned down his bravado. But narcissists like Musk find it hard not to play the big swinging d***. Once he pays for this little stunt, he might have no choice but to keep his trap shut.
I have been reading about a different scenario. If the board chooses to sue Musk and it ends up in court, there is apparently some rule about gathering information in the discovery phase of a trial. This would force the board to divulge all the info on algos and associated metrics. Its maybe similar to why the accused in a court case doesn't go up on the stand to give his side of the story as it opens him up to cross examination. So maybe its not as simple as the board suing Musk and getting their money without anyone digging deeper.
The time-premium on long-dated options should come back. Leaps should get re-priced but I haven’t seen it happen yet