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Matt Levine

Elon Closes In

Also Sam Bankman-Fried on yield farming.

Sure this feels weird, but it’s actually pretty normal, except for all the tweeting. A bidder offers to buy a public company for cash at a premium to its market price, say for $54.20 per share. The reaction of the company’s board is, as it usually is: No, we’re worth much more than that. It quickly puts in place defensive measures so it can take its time to consider the bid and its next steps.

The next steps are pretty standard. One thing the board does is ask the bidder to pay a bit more: “Look, these defensive measures can stop you, but if you can pay $69 per share we’ve got a deal.” Another thing is to look for another buyer who might pay a higher price: The company is in play, so if there’s anyone else who might buy it now is the time. Sometimes, though, there is only one natural buyer for a company, so there will not be much competition. Other times, I guess, there will be zero natural buyers for a company and one unnatural vanity buyer, and then there definitely won’t be much competition.