6 ms·
A lot of the comments here seem to assume that a smaller public company can’t acquire a larger one, which just isn’t true. A quick search for how leveraged acq
by manwithnoplan 5mo ago
A lot of the comments here seem to assume that a smaller public company can’t acquire a larger one, which just isn’t true.
A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.
Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?
- petesergeant 5mo ago> Is it too much to ask the Hacker News commentariat to do one quick search Are you new here?
- dgellow 5mo agoI see a single comment mentioning it is impossible. No sign of a collective declaration. I think you’re overreacting
- manwithnoplan 5mo agoI think you are under reacting.
- deleted 5mo ago[deleted]
- lijok 5mo agoThere’s one comment as of the time of your post that makes this assumption - you could have replied to them directly.
- manwithnoplan 5mo agoIt is implicitly implied in many comments.
- wwalexander 5mo ago“Implicitly implied” is redundant. Either of these phrasings would suffice: > It is implicit in many comments. > It is implied in many comments.
- manwithnoplan 5mo ago[flagged]
- darkwater 5mo agoWell, it's called "tautology" and it's a perfectly valid rhetorical device.
- deleted 5mo ago[deleted]
- lijok 5mo agoLinks?
- rplnt 5mo agoExample from quite some time ago: Avast buying AVG. The value of AVG was around twice that of Avast.
- ceejayoz 5mo agoAOL/TimeWarner, Kmart/Sears… lots of prominent examples.
- adroitboss 5mo agoAlso when Capital Cities purchased ABC. A popular phrase coined by the media was "minnow swallows whale" https://www.nytimes.com/2022/05/25/business/media/thomas-s-murphy-dead.html https://www.nytimes.com/2022/05/25/business/media/thomas-s-m...
- radlad 5mo agoInteresting how none of these are around anymore
- archon810 5mo agoAnd much more recently: Paramount Skydance / Warner Brothers.
- sschueller 5mo agoBut if it all goes sour nobody will be held accountable and two not one company are ruined. I don't see how such leveraged acquisitions should be legal.
- panick21_ 5mo agoIs there anywhere a good breakdown of these leveraged acquisitions. Like a video or something that breaks down how that exactly works and why its legal and why the acquired company goes along with it. Its seems like such a strange mechanism. And the history of it.
- airstrike 5mo agoWhy would it not be legal? You can take out any loan, so long as the creditor believes in your ability to pay it back with interest, which informs how it gets priced. This is basically Finance 201 and everyone is up in arms ITT
- panick21_ 5mo agoBut if that loan is used to basically acquire, or rather help another company acquire the company with the debt? So basically creating debt to facilitate mergers. But to be honest I don't fully understand all the financial engineering.
- idiotsecant 5mo agoThey better not ruin eBay, it's actually a useful business, I use it all the time
- Hackbraten 5mo ago> A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections. Isn’t the assumption that it’s impossible intuitively justified if you have no background in finances? A small fish usually can’t devour a bigger fish either. Also, all those terms you mentioned mean nothing to me. You can’t search for what you don’t know exists.
- i_think_so 5mo agoSpeaking as someone who used to know absolutely nothing about the world of high finance, yes, it is too much to ask. Before I started paying attention to such things I wouldn't have known a single one of those terms to even begin googling. And let's be honest here. A smaller company saddled with big debt buying out an even larger company really doesn't make logical sense. It makes financial sense, which is subject to different laws of mathematics, probably involving the waiter's check pad in an Italian bistro.
- vessenes 5mo agoAgreed that Marvin would find this (and everything about Earth) ridiculous. I propose this would make sense in the animal kingdom though; large, lumbering fatty walks along. It has big claws, but … it doesn’t look like it can be bothered to be dangerous anymore. Meanwhile a pack of hungry successful hunters walk alongside. To take this down, they will risk pretty much everything.. It’s the same story. The shareholders provide a sort of bet on if the big guy has still got it, or the risk-on hunters do. That’s why the operational results got attention in Cohen’s letter — he’s telling Shareholders: “I turned around GameStop. I can turn this ship around, too.”
- maxk42 5mo agoGameStop has zero debt and billions in cash on its books. It is not a stretch for them to be making this offer. It really does make sense here for both sides.
- Forgeties79 5mo agoI imagine the vast majority of us do not have a problem understanding smaller companies can buy larger ones. Most of us are just incredulous that anyone is taking GameStop, especially Cohen, seriously.
- venusenvy47 5mo agoI think we also all assume that it is probably not a healthy feature of capitalism.
- 59percentmore 5mo agoWhy wouldn't they? Before he showed up, Gamestop had years of negative earnings per share. They haven't had a negative EPS quarter in almost 2 years, now. That seems like a serious turnaround.
- Forgeties79 5mo agoYou’re omitting the fact that they’ve had declining revenue YoY 4 years now, with no sign this won’t be year 5. Their liquidity is primarily the result of leveraged debt and sold off shares. They have had to seriously downsize, including shuttering tons of brick and mortars. You’re picking one single metric that’s not even consistent for 2 years to assess the health of the company. It feels rather cherry-picked. The whole story is very rough for them right now, they’re in trouble.
- 59percentmore 5mo agoSeasonally-adjusted EPS has been a consistent stair-step up for 2 years. Declining revenue does not matter; they're squeezing more profit out of the revenue that's left than they were out of the gobs of revenue they had before. That's just what a good business does. >You’re picking one single metric It's THE metric. And you are, too (a single metric, but not THE metric). >The whole story is very rough for them right now, they’re in trouble. Trumpian logic and speech pattern. Which speaks to its lack of veracity.
- protocolture 5mo ago>Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible? A quick review of the comments here would have demonstrated that it is.