How easy is it for a rich person to buy out most of a company's stock?

[Melbourne]

Conversely, when you’ve bought most of the company, you’re required to make the same offer to minority share holders. This % is typically smaller than the % where you can force compulsory acquisition.

And also, a stock market where a stock is listed will have listing requirements. Typically this includes a minimum number of shareholders: one you’re down to the last 1000 (or whatever), you’ll be delisted.

[msmith537]

@Velocity

Suppose Bill Gates one day suddenly takes a liking to XYZ Company, and decides he must have a big say in XYZ’s affairs, and decides he wants to buy up most of XYZ’s stock. That stock is currently selling for $27 a share. It is no difficulty at all for Gates, given his immense wealth, to just offer up a buying price of $50 per share (let’s say the company has a million shares, all of which are already owned by others.) Most shareholders would be happy to sell to Gates at once.

Now, what legal obstacles might arise in Gates’ path to becoming majority shareholder?

For Bill Gates? I’d say several obstacles, including the US DoJ…

@Velocity

I had read that there are safeguards built in to prevent a mere 51% from being able to ride roughshod over the 49%, but don’t know what those safeguards are.

Public companies typically have a board of directors who makes decisions such as hiring and firing the CEO. While they are voted in by shareholders, I don’t believe it is necessarily as simple as whoever holds 51% of the stock can just reorganize the board.
Fact of the matter, it isn’t uncommon for wealthy individuals to buy enough shares to own or at least obtain a board seat at a public company. Nelson Peltz’s involvement with Procter & Gamble is a good example.

[Kimera757]

@Velocity

Suppose Bill Gates one day suddenly takes a liking to XYZ Company, and decides he must have a big say in XYZ’s affairs, and decides he wants to buy up most of XYZ’s stock. That stock is currently selling for $27 a share. It is no difficulty at all for Gates, given his immense wealth, to just offer up a buying price of $50 per share (let’s say the company has a million shares, all of which are already owned by others.) Most shareholders would be happy to sell to Gates at once.

Is this company publicly traded? I assume so. How publicly traded? It’s possible the owner of the company owns 51% of the stock and simply refuses to sell.

[dalej42]

Keep in mind that if there’s a merger approved by both companies, it’s really hard to be a rebel and hold out. Your brokerage firm will automatically sell your stock on the merger date. Yes, it’s in the fine print.

It’s almost impossible to get the physical stock certificates so forget that route.

The acquired company’s stock will cease trading on the merger date.

So, holding out is basically pointless.

[Schnitte]

@dalej42

Keep in mind that if there’s a merger approved by both companies, it’s really hard to be a rebel and hold out. Your brokerage firm will automatically sell your stock on the merger date. Yes, it’s in the fine print.

It’s almost impossible to get the physical stock certificates so forget that route.

The acquired company’s stock will cease trading on the merger date.

So, holding out is basically pointless.

That is logical, no? After the merger, the original company in which you owned stock previously doesn’t exist anymore; all that is left to own stock in is the new, merged entity. Which is why, usually, in such a case your broker won’t sell your shares; they will be exchanged for shares in the new entity.

[dalej42]

@Schnitte

That is logical, no? After the merger, the original company in which you owned stock previously doesn’t exist anymore; all that is left to own stock in is the new, merged entity. Which is why, usually, in such a case your broker won’t sell your shares; they will be exchanged for shares in the new entity.

That depends if it’s a stock merger, a cash merger or a hybrid of cash and stock merger.

There’s always a few oddballs out there that think they’re waging some sort of Holy War by not wanting to participate. I’ve spent hours on the phone listening to their Gordon Gecko fantasises when they’re holding 47 shares of XYZ that’s being acquired by some evil company.