There is this story how Microsoft wanted/wants to buy Nintendo but was laughed out of the room. Is nintendo not a stock company? Couldnt Microsoft just buy 51% of all the shares? From what Ive seen the biggest shareholder is a japanese bank with 17%. Its not like somebody already owns the half.
In: 1530
Is Nintendo in financial trouble? Why are they in the target of acquisition?
> it’s not like somebody already owns the half
What? All the shares are owned by someone or something.
There is a supply curve for stocks. Some people might be willing to sell for $1 while others wouldn’t sell for anything under $100.
While the market price of a stock might be $50 it doesn’t mean that everyone (or even 50% of shareholders) is happy selling at that price.
The problem is there isn’t an inf8nite amount of shares available, they technically need a controlling amount of shares for voting.
But there is volume on stock exchanges and I doubt that volume is enough to hold a controlling stake. Plus as they started buying all the shares the price would squeeze astronomically because there just isn’t enough for the current price point.
You’re getting a lot of good ELI5, but important extra bit here. Stock transactions for the average person looking at Robinhood or a similar app seem like it’s just going into the store, putting the item in your cart, and checking out and taking it home.
When you want to buy a single share of a stock that has hundreds of thousands or millions of shares out there, that’s easy to do, like buying a loaf of bread at the store.
But when you decide you want to buy 51% of all the bread that grocery chain has on its shelves across the country right now, you’re now in an entirely different world. You’re not spending dollars, you’re spending millions to billions of dollars, not to mention the logistics of putting together all that bread from all the different locations of that store.
1) The FTC and the Justice Department might block the acquisition due to them acquiring a monopoly on the video game industry
2) many shareholders don’t want a competitor to buy them out unless they are paying significantly over what the share value currently is
3) many corporations have “poison pills” in place that require somebody who purchases more than x amount of shares to pay substantially more per share afterwards than a normal buyer, so it becomes more expensive to outright buy the company than compete against it
You don’t nesessarily need 51%, you just need a significant stake (let’s say 10-20%) and then make an offer above market. At that point, you’re implicitely threatening them that you’ll sell off tanking the price. The conpagny’s board has to make a decision in the benefit of stakeholders so they are forced to accept unless the stock price surges and the increase looks sustainable.
Just because no singular entity owns 51%, doesn’t mean that a group of them doesn’t, and they might collaboratively not be interested.
There’s over a billion shares of Nintendo that exist, and only around 1 million for sale at any given time. So basically no. If Microsoft is buying all the available shares, the demand to buy shares will greatly outstrip the amount of shares available for sale, causing the price of shares to skyrocket, and making future purchase of more shares much more expensive.
After purchasing more than 10% of shares, they need to discuss with the Japanese government their intentions.
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