If a person were wealthy enough, could they go and buy up all 4.11 billion shares of Wal-Mart and make the company private…or is there something in place so that doesn’t happen?
Sure, it’s usually done by means of a “leveraged buyout”
But there’s nothing stopping you from paying 100% cash.
In simple terms, all they’d have to do is buy 2.06 billion shares, making themselves the majority shareholder.
Complexity #1: The company may have a “poison pill” provision, that will weaken the effectiveness of an unsolicited takeover.
Complexity #2: The company may have multiple classes of stock, giving one class (in this case, potentially held by the Walton family) more power than another class.
And not borrowing against the target.
4.11Billion shares is A LOT of divisions of Wal-Mart.
How do they regulate how many shares a company can issue? They wouldn’t let a company with a marklet cap of $10Mil issue a trillion shares would they?
If somebody is willing to buy a trillion shares, why not?
I just thought they might have regulations of how many shares can be issued by a company.
I don’t think there are any limits on the total number, aside from the fact that if you want to trade your shares on a public market (NYSE, NASDAQ, etc) they must be worth more than a few cents each. Stocks whose value remains below a certain threshold for too long tend to get de-listed. This is up to the exchanges, though; I don’t know of any laws or regulations that directly apply.
In the case that shares get significantly devalued for a long time, the board can reverse-split them – reducing the number of outstanding shares and increasing their value. This can help them prevent a de-listing, though in the case of a small company, it may significantly reduce share liquidity.
In the case of a privately held company, I see no reason why you couldn’t issue ten bazillion shares, as long as you’re willing to do the accounting to several decimal places. 
There probably are some rules but the real counter measure is the existing stockholders and the “street”.
If I can rephrase your question, you are probably wondering why a company with a $10 stock issue wouldn’t just issue a million more shares and create $10,000,000 for the company.
The main reason is that the existing stockholders and the street (potential buyers or sellers) cause the value of that stock to move according to their willingness to buy or sell.
And those players react to a perceived total value of the company called the market cap.
Example - For a company with a $10 million market cap and 100,000 shares the share price would be around $10.
If that same company printed 900,000 more shares and put them on the market , the price of the existing shares and the new shares would drop to $1. The people who held the original 100,000 shares legally control the decision to issue more shares so they would probably resist issuing more shares in cases that could harm their investment.
That’s one reason investors like to know how much of the company is held by insiders. Investors like the fact that insiders hold a good percentage of the company. That way the insiders investment is affected by the stock price and as such they would not issue shares and devalue their own holdings unless they believed that doing so would maintain or improve their investment.
Why? Shares are just tiny slivers of a percentage of ownership. It doesn’t matter if the company is split into 1 million or 4 billion pieces as long as the numbers reflect that. Shares are simply worth very little each if there are tons of shares. Existing shares may be split or reverse split. Buyers that already own the shares may find that they now own 1/3 or even 3x the shares that they once did but the overally value doesn’t change in theory execpt indirectly to kick up buying and selling activity in the short term.
The biggest problem with buying up all of Wal-Marts stock is that the price isn’t fixed and your demand will drive the price up very high if you try to buy the shares quickly and your plan will have an effect even over the long-term since you have indicated that you are willing to spend whatever it takes to get enough shares. Why would anyone sell right away if they can wait and get more?
Repaired my bad math in BOLD
There are public filing and disclosure requirements in place for anyone buying more than 5% of a public company’s stock. I believe this is what they finally got Michael Milliken on–buying/selling stock through sham nominees and failing to report those transactions in the public filings required if he himself had done the deals.
Also, once a public company’s “float” (number of shares trading) falls below a certain number, it can get delisted by the exchange it trades on; the SEC allows a company with fewer than 300 (IIRC) shareholders to deregister.
Michael Milken was convicted mostly on insider trading charges.
42% of Wal-Mart is held by insiders and others with >5% holdings, so it is possible that someone could buy 51% of the company (2.06 billion shares). However, once they hit 205 million shares, they would have to file and notify the market of all subsequent purchases, so if the insiders don’t want to sell, they can put further obstacles into the buyer’s path.
As others have noted, while possible, this is highly improbable without the full cooperation of company insiders.
It just goes to show how complex the securities laws are that we (the general public) don’t know/remember the causes of the downfalls of legendary offenders like Milken and Martha, neither of whom was actually convicted on insider trading counts. “Insider trading” of course is a non-specific, popular catchall which can get used to cover something like obscuring who is making a particular trade, and wikipedia does use it (and so did the NYTimes in headlines, so it’s not an isolated thing) in discussing Milkne, but compare http://www.bartleby.com/65/mi/Milken-M.html (from the Columbia Encyclopedia).
Martha was tripped up by lying during her investigation–IMHO the SEC would have had a problem proving that Martha should have known that a tip from a broker who was not an insider was based on inside info. Marth had an inside channel with others, but the facts seem to show that’s not where she got her info–if word about something is out on the street to the extent that your broker is tipping you, you may have the expectation that it is no longer confidential.
Anyway, “illegal stock transactions” (which a number of sources use) is more correct than “insider trading” in this case.
In theory, maybe. But note that if one party started buying up that much stock on the open market, the price would spike up, so this is sort of a self-limiting process. I do not know what the actual scenarios for a hostile takeover have been, though.
Definitely only in theory. That kind of buying would spike the price long before they hit the 5% mark (205 million shares) and had to file a notice of intent. That’s why takeovers, hostile or peaceful, are announced and always occur at a premium of the current price.
You are, of course, correct - I did use ‘insider trading’ as shorthand. Milken was charged under the RICO Act and plea bargained down to securities and reporting felonies.
English football clubs have been bought up by wealthy investors.
Once owned, they can become private companies or public ones.
‘Scores of Manchester United fans launched a vocal protest against owner Malcolm Glazer at a recent reserve team clash with Wigan. Although police were called by stewards, the protest continued peacefully, with supporters unfurling banners declaring their opposition to Glazer, who completed a controversial 790million pound buy-out of the Old Trafford outfit last summer.’
http://www.football.co.uk/football_features/story_238.shtml
I understand the Glazer family had to borrow a lot to buy the club.
'Chelsea will “not be affected” by the news that Roman Abramovich and his wife have divorced, said a statement from the club’s billionaire Russian owner. ’
Abramovich has put a lot of money into the club.