Since Masimo is a publicly traded company, can’t Apple just buy enough shares to have a controlling interest in the company and just force them to back out?
Masimo's market cap is $6 billion.
Only a proportion of that is net income
> market cap is $6 billion.
Even if > 50% enough stocks are on the market how much do you think Apple would end up paying $12 billion? $16? $20? $25?
How many years would it take them to earn that back?
You can’t really buy companies directly on the stock market, the price will just start going up exponentially.
Also they’d be rewarding patent trolls which creates incentives for other companies to behave the same way so that Apple would acquire them
Will that still happen if you put in a single order to buy 51% of all the shares at a price a little above the current market value ?
That trade will be complete before the market "sees" you are trying to buy a ton.
> Bid [500 x $64.39], [$64.42 x 100] Ask <
It means that someone currently offers to buy 500 shares at the price of $64.39.
It means that someone currently offers to sell 100 shares at the price of $64.42.
In practice, it means that you can buy 100 shares at the price of $64.42, then, after, it will move to the next price level.
=> You can see the "depth" of offers, it's called Level 2 book:
Ask offers:
$64.42 x 100
$64.43 x 200
$64.46 x 100
$65.00 x 600
$97.00 x 100
$999.99 x 100
=> If you try to buy 400 shares, it will cost you:
100 shares x $64.42 = $6 442
200 shares x $64.43 = $12 886
100 shares x $64.46 = $6,446
Divided by 400 shares.
It means ~$64.435 per share, though you saw $64.42 as price.
If you send very large volumes, you quickly eat these price levels.
In our example, if you try to buy 2000 shares, you will get only 1200 shares.
You will have paid an average price of $145.39 per share.
So, yes it may not go through because, it is possible that there are not enough people interested to sell their share (that there is not enough depth, or not at an acceptable price).
And also, the SEC has certain rules (uptick rules, etc) that makes the stock to be frozen in case the price varies too much.
When we are talking about a massive % of the total share count there simply isn't that many "sell" requests out there for you to take advantage of.
Also companies have an obligation to report once they have accumulated a certain percentage of a company.
They'll charge a handsome fee, but they could probably get it done.
That's not how the market works. There are not enough open sell orders at any price (let alone a little above most recent price) for someone to sweep in and buy 51% (or even just a few percent) at once.
As soon as more than a trivial (in the noise) amount of your buys goes through all the open sell orders will start to move up in price (since it's nearly all automated), so you'll be chasing that ever-increasing price a long way up.
There is no set price to buy shares. If you just want to buy 100 shares at the current ask, it'll probably go through (but even that is no guarantee), but the next 100 shares might well not be available at that price anymore.
For small-time consumers who are buying a few shares here and there - it will appear like there is always some available, but when you are talking about a majority share of the company there isn't that availability sitting there waiting to be just taken.
Source: https://warren.law/blog/protecting-minority-shareholder-righ...
Apple could borrow a large amount of shares of Masimo and short the company.
They have enough cash for that, and the borrow fee might be less than the settlement costs, plus they could profit from the operation.
https://www.investor.gov/introduction-investing/investing-ba...
https://en.wikipedia.org/wiki/Hindenburg_Research would be out of business if that business model was illegal. You can short all you like; you can't be deceptive/fraudulent about it.
Hindenburg compiles and releases information they believe to be truthful about a company, which they shorted beforehand in order to profit from the information.
What I am talking about is sending orders only to cause a certain reaction (e.g. by convincing momentum traders that there is momentum in a certain direction).
So if the ownership of the company (Apple Computer, in this case) takes a deliberate act that fails to honor the shareholder compact (taking a huge haircut on a patent license), then you sue them because they should have gotten you more.
It does if they willingly sell their shares to Apple
> Then they buy the 50.1% of company for $500M and write off the debt to their subsidiary
Well that would not be legal. They’d use their position as the majority shareholder to buy out everyone else and delist the company (of course they could still not sell, they’d just end up having shares in a private company)
Why would they do that? That's literally just giving away money. I still think you're failing to understand the principle at work here. You can "control" a public company with a 50.1% share, that doesn't allow you to steal from the remaining shareholders. That's what shareholder lawsuits are about: the shareholders collectively feel that the company is not acting in the interests of its owners and sue.
Now, sure, often this is abused. Often the suits are baseless and mostly just attempts by law firms to squeeze some dollars out of the process. But the actions described in this subthread are exactly why they are allowed in the first place. You can't do that.