Autodesk acquires AI-powered VFX startup Wonder Dynamics

Autodesk — the 3D tools behemoth — has acquired Wonder Dynamics, a startup that lets creators quickly and easily make complex characters and visual effects using AI-powered image analysis. The two companies have worked closely together for years but are making it official today. Wonder Dynamics, founded by VFX artist Nikola Todorovic and actor Tye […]

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Reflecting on a roller coaster year for robotics

Big thanks to Joyce Sidopoulos, Peter Barrett and Ken Goldberg for filling in the last few weeks. I’m excited by the boost this newsletter has been getting in recent months and wanted to keep the light on while I was out. Three weeks is the longest break I’ve taken for work in…ever, really.

Went to a bunch of museums (do yourself a favor and check out Edward Hopper at the Whitney and Morris Hirshfield at the American Folk Art Museum — can’t recommend them enough) and spent a few days in Aruba, of all places. Still not sure why flights were so cheap, but if you’re ever looking for a nice place to stay on the island for $150 a night, let me know. There’s also a great animal rescue. Go make friends with a miniature donkey.

The minute you get off the plane at JFK, however . . . Let’s just say the inner peace from meditating on a white sand beach every morning wears off even faster than the tan. Suddenly you’re tossed back into New York during travel season in 30-degree weather. If anyone in the Leeward Antilles is looking for someone to write a robot newsletter, hit me up.

The truth of it is, I’m back on the clock this week because we’re less than a week out from CES. I spent yesterday combing through 1,600 unread emails in an inbox that was zeroed out the day I left. Without giving the game away, I will say that there’s going to be a lot of fodder for Actuator at the show. Likely next week’s newsletter will be written from CES, about CES.

We’ve seen a slow creep of robotics in recent years, but this feels different. There’s the simple fact that I (and many other regulars) haven’t attended the show in a few years (January 2020 was very auspicious timing for an event that brought 171,000 people from all over the world into the same space). Robotics has had the beginnings of a renaissance during that time, so it follows that it will have a bigger presence at the biggest consumer electronics show.

To all of my fellow journalists covering the space, a word of warning: bad robots are nothing new. They tend to be more prevalent in the consumer space than anywhere else. People looking to spend a couple hundred bucks on a home robot likely don’t do the same level of due diligence that goes into choosing a $100,000 robotics system for your factory.

Claims get overblown, things don’t work out as promised, stuff breaks and there’s no one from the company ready to fly in to fix it. Be careful out there, folks. A lot of bad robots are going to be mixed in with the good ones. I’ve received multiple emails from companies claiming to be bringing the world’s first consumer robot to the show, and we all know how meaningless and wrong that claim is.

Automatic mass production line with robots and automated machines running by itself. which there is no human to control. Business and automation technology and industry concept. 3D illustration rendering

Image Credits: Thamrongpat Theerathammakorn / Getty Images

The other important element of this is the degree to which CES has become an automotive show over the past decades. The obvious import of this is that many automakers are getting aggressive about robots — either through investments or through their own divisions. Hyundai’s Boston Dynamics acquisition was very much in the limelight at last year’s show. There’s also the slightly more tenuous — but equally important — impact that innovations in autonomous driving systems have had on the industry. Vision systems, drones, Lidar and the like are all here, and the robots will follow.

I just received an email from the CTA titled “Start Your Year Off at CES 2023,” which I plan to do slightly begrudgingly. Even in normal years, CES can be soul-destroying chaos, but after several years away, it’s going to be a lot. The timing is always annoying from the standpoint of attempting to enjoy the holidays but makes sense as far as trying to be the tip of the spear for tech news. CES planted its flag as the first tech show of the year, and it’s not budging, even if means, somewhat ironically, being on a plane full of hungover people traveling to the show.

Hyundai CES 2022 plug n drive

Image Credits: Hyundai

Due to the nature of the show, it’s almost inevitable that next week’s Actuator is going to be looking ahead at the year to come. Thankfully, a trio of much more qualified people gave their 2022 debriefs and 2023 predictions right here, but the week between Christmas and New Year’s is supposed to be about quiet reflection, so let’s do some of that now, and if a little bit of prediction seeps in, well so be it.

It’s overly dramatic to suggest that 2022 is the year that robotics came crashing back down to Earth, but there was undeniably a lot of market correction. That’s something that will certainly drag on into the new year. There was a nice little window in there for several months when robotics and automation seemed unfazed by macroeconomic forces, cruising on the forward momentum afforded them by the pandemic.

But it didn’t take a genius to see this coming. Those forces come for us all eventually. Here’s what I will say on a positive note: I’ve not yet found the person who suddenly changed course on robotics in all of this. There’s certainly some disagreement on the finer details, but people from all walks of life and business categories still believe the robotics ubiquity is an inevitability. That bodes extremely well for the space.

Ultimately, however, a year that crashed out of the gate on a bullish note has ended 2022 a bit worse for wear. That’s manifested itself in a number of different ways, from startup folding (we did a big piece on those here) due to an inability to raise sufficient funds to layoffs at big firms. We’re likely going to see continued consolidation of the industry, in the forms of shuttered projects and company closures (most startups fail — I don’t need to tell you that).

Workers in warehouse

Image Credits: Marko Geber / Getty Images

Of course, it’s never good when people lose jobs — I’ve been laid off a couple of times. It really hurts emotionally and financially and I don’t wish it on anyone. But there may be a silver lining of sorts in all of this. Founders have a way of overcrowding the market. Once it’s clear a product or concept brings in money, there’s a sudden land rush. This is how bubbles form. If you’ve got the right team and some luck, however, you can turn economic gloom into something great — whether it’s a pivot, a new company or combining forces with the right folks.

Ultimately, I see the industry emerging even stronger on the other side of this.


Image Credits: Brian Heater

Acquisitions will be a big piece of this. There are, of course, various reasons a startup doesn’t see a viable path forward, and economic headwinds invariably magnify these problems. Meanwhile, the company with deep pockets understands that it’s often easier to simply acquire a company with a proven track record, rather than attempting to remanufacture that momentum. Given the time, resources and brain power involved in launching a robotics company, that’s especially applicable here.

Once more big companies have determined their robotics strategies, expect them to get even more aggressive with acquisitions. And hey, if a firm is struggling due to economic factors and generally bad timing, even more reason to swoop in. The two roadblocks here are that (1) even conglomerates are cutting spending and (2) the FTA has signaled that it plans to go after antitrust concerns more aggressively. As anticipated, the Amazon/iRobot deal announced back in August is facing exactly that.

Far and away, the biggest bit of robotics news I missed during my time off was Intrinsic’s acquisition of Open Robotics. Making a note for myself to talk to the parties involved after CES, but the deal is — at the very least — an interesting one. Alphabet/Google (by way of Intrinsic) has essentially bought the for-profit elements of the company, rather than Open Source Robotics Foundation, which is the steward of ROS.

wendy tan white / Intrinsic

Image Credits: Intrinsic

Co-founder and CEO Brian Gerkey clarifies:

Intrinsic is acquiring assets from these for-profit subsidiaries, OSRC and OSRC-SG. OSRF continues as the independent nonprofit it’s always been, with the same mission, now with some new faces and a clearer focus on governance, community engagement, and other stewardship activities. That means there is no disruption in the day-to-day activities with respect to OSRF’s core commitment to ROS, Gazebo, Open-RMF, and the entire community.

So Google won’t own the open source operating system, but it is acquiring many of the brains that helped build it.

The other big thing I was slightly disappointed in not having been around to write about (nope, definitely not every dumb Elon tweet) was San Francisco’s reversal on the deadly force robotics clause. This is one of those cases where press coverage amplified an issue that authorities likely thought/hoped would go unnoticed. The city by the bay tapped into its activist roots (they’re there if you brush away some of the overgrowth and look closely enough), causing lawmakers to (at least temporarily) reverse course.

The story is an example where the things the clause represented — and the precedent it would create — were every bit as important to the story. Would the wording have directly led to bomb-strapped robots? Maybe. Maybe not. But I do believe that concern is justified here, and in a political environment where Democratic politicians went along with this over fear that blocking deadly robots might paint them as anti-policing, it’s a lot easier to give law enforcement power than to revoke it.

A mock "killer robot" is pictured in central London

Image Credits: CARL COURT/AFP (opens in a new window) / Getty Images

I’m glad the story caused more people to watch this space. The debate is very far from over — not just in San Francisco, but everywhere.

I would add all of the Ghost Robotics autonomous rifles into this bucket, as well as the opening letter signed by industry leaders calling for an end to weaponized general-purpose robots. The future didn’t look exactly like any of us expected (futures have a way of doing that), but it’s here nonetheless.

Labor is, of course, a big centerpiece to the robotics conversation. An inability to fill blue-collar jobs led to a bump in automation investment. This dovetails with ongoing labor struggles around things like living wages and unionizing that have been bubbling up in recent years. It’s an extremely important and nuanced conversation and one I fully expect to be covering in the years to come. Viewing history and past precedent is an important step in contextualizing this, but it’s also important to note the elements that are unprecedented.

There are reasons to be hopeful and reasons to be concerned, and anyone who tells you definitively how all of this shakes out is getting high on their own supply, so to speak. As ever, the one position I’m advocating here is unchanged: it’s our role as a society to speak for those who don’t have a voice. Whether short- or long-term, lives are going to impacted. If we truly believe the role of technology is the better of society, we need to make sure people don’t get caught under the wheels of this train.

Tesla Robot in action

Tesla Robot moving and waving Image Credits: Tesla

I wouldn’t say that 2022 was a huge year for humanoid robotics, but we did see some important seeds planted. Tesla’s robot was pretty much what roboticists expected: a microcosm of every conversation you’ve ever had about why robotics is hard. The debut was important for two reasons. First, it reignited an important conversation around robotic form factors, and second, it reset a lot of expectations about what a robot is — and can be — in 2022.

A dramatic firework display shoots out from Big Ben at the stroke of midnight on New Year’s eve. Image Credits: Getty Images

A few more things to watch out for:

  • Resurgent agtech robotics
  • Prosthetic breakthroughs
  • Advances in bio-inspired and soft robots
  • Nano/microbotics, particularly in the medical field
  • Eldercare robots, which are finally having a moment

As someone said to me recently, it may feel like we’ve been doing this robotics thing forever, and certainly there were times when it felt like progress was moving at a glacial pace. But if you take the long view, it’s clear that we’re a hell of a lot closer to the beginning than the end — or even the middle — of this thing. If you’re here and reading this, congratulations, you’re in on the ground floor.

Strap in and put your helmet on, it’s going to be a fun ride.

Image Credits: Bryce Durbin/TechCrunch

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Reflecting on a roller coaster year for robotics by Brian Heater originally published on TechCrunch

3 views: How wrong were our 2022 startup predictions?

What a decade this year has been. While prediction pieces always come with a large asterisk because no one knows literally anything about what may play out in the future — such as massive shocks to large startup sectors — our perspectives about 2022 have aged … interestingly.

Last year, Natasha Mascarenhas, Alex Wilhelm, and Anna Heim spotlighted three different startup theses that may define the coming 12 months. Now, we’re fact-checking how accurate those predictions were, plus what we’d change about our perspectives. We know. Humble.

For an light holiday riff, we’re talking about what happened with the M&A space, open source, and usage-based pricing. Let’s have some fun!

Natasha: Let’s talk about acquisitions

Last year, I predicted that M&A would evolve to include a riskier type of ambition. I cited Twitter’s hunger for a Slack competitor and Nike’s infatuation with NFT collectibles. I even reminded founders that startups need to “stay disciplined even amid a cash-rich environment” instead of “spinning up lukewarm climate and web3 strategies because that’s what they think their cap table wants to hear.” (And that culture and technology are hard to integrate at the same time).

3 views: How wrong were our 2022 startup predictions? by Natasha Mascarenhas originally published on TechCrunch

The Muse buys Fairygodboss as roll-up acquisitions come to VC

Not every startup can reach its full potential — or survive — on its own.

Venture capital puts a lot of emphasis on startups reaching unicorn status or exiting through an IPO, largely because such successes are crucial to making the venture model work. But this makes it easy to overlook the fact that many companies would see more success if they were acquired or combined with other startups.

Kathryn Minshew, the co-founder and CEO of recruitment and job application marketplace The Muse, started thinking about this a year ago when her startup had been around for a decade. After a year of floating the idea of consolidation to other targeted recruitment platforms, her company, which helps users find jobs based on company culture and what they value, made its first acquisition.

The New York-based startup announced this morning it has acquired Fairygodboss, a recruitment platform aimed at women and working mothers. The purchase price was undisclosed, and parties declined to comment on it, but a source familiar with the transactions said it was a mix of cash and stock. Fairygodboss is producing about $10 million in yearly revenue, which infers the purchase price was presumably favorable.

Minshew said this will likely be the first transaction of many for The Muse because the recruitment tech space is in dire need of consolidation.

The Muse buys Fairygodboss as roll-up acquisitions come to VC by Rebecca Szkutak originally published on TechCrunch

Fandom acquires Metacritic, GameSpot, TV Guide and other entertainment brands in deal worth around $55M

Entertainment platform Fandom announced today its acquisition of seven entertainment and gaming brands from media company Red Ventures, including online publications Comic Vine, Cord Cutters News, GameFAQs, GameSpot, Giant Bomb, Metacritic, and TV Guide.

While the financials of the deal were not disclosed in the official announcement, Fandom told TechCrunch that the deal cost somewhere in the mid-fifties– so around $55 million.

Founded in 2004 by Wikipedia’s co-founder Jimmy Wales and entrepreneur Angela Beesley, Fandom today offers a wiki hosting service and fan platform providing 40 million pages of content and 250,000 wiki communities to inform and entertain fans about their favorite video games, movies, and TV series.

Today’s announcement is notable as it greatly expands Fandom’s offerings to now include reviews, ratings and news.

“We’re thrilled to add these powerful, authoritative brands into the Fandom platform, which will expand our business capabilities and provide immersive content for our partners, advertisers and fans. The trusted insights, ratings and content they provide will make us a one-stop shop for fans across their entertainment and gaming journey,” said Perkins Miller, CEO of Fandom, in a statement. Miller had become CEO in February 2019, as the company rebranded from its former name, Wikia, and began to update its core platform technology.

Acquiring the seven brands will also help to expand Fandom’s gamer audience, which is one of its largest with 115 million video game fans, 17 million pages of content, and 100,000 gaming communities, per Fandom’s 2022 State of Gaming report.

Also, the ownership of these digital assets will help Fandom increase its monthly user base to 350 million, making it the 14th ad-supported site in the U.S. The addition of monthly users keeps the company on track to reach its goal of becoming the No. 1 fan platform in the world.

With a recent slowdown in advertising, the acquisition couldn’t have come at a better time. The company noted in its announcement that the deal allows Fandom to “super-serve” its advertising partners as well as help power its data platform and gaming e-commerce business.

“In addition to creating exceptional fan experiences, these platforms will add to our FanDNA data offering, giving us sentiment and intent signals that will help improve the consumer experience as well as make our commerce and advertising businesses more impactful,” Miller added.

Fandom’s deal with Red Ventures joins various other purchases recently made by the company, such as the 2021 acquisition of Focus Multimedia Ltd., the parent company of Fanatical, an e-commerce retailer that sells video games, eBooks, and software.

In 2019, the company bought Curse Media, a network of gaming sites, from Twitch.

Online movie magazine, ScreenJunkies, was purchased by Fandom in 2018.

Fandom acquires Metacritic, GameSpot, TV Guide and other entertainment brands in deal worth around $55M by Lauren Forristal originally published on TechCrunch

Elon Musk subpoenas former Twitter CEO Jack Dorsey

Elon Musk’s legal team has subpoenaed former Twitter CEO Jack Dorsey, marking the latest development in the legal battle over Musk’s attempt to break his $44 billion acquisition agreement with the social network company. Dorsey will be asked about the impact of bots and spam accounts on Twitter’s business and operations.

Dorsey stepped down as Twitter CEO last November and handed the role over to current Twitter CEO Parag Agrawal. Dorsey has displayed his support for Musk in the past, and previously tweeted that he believes the Tesla CEO is the “singular solution” he trusts to operate the company he co-founded.

Last week, Musk’s legal team subpoenaed Kayvon Beykpour, Twitter’s former head of consumer product, and Bruce Falck, who was Twitter’s former revenue and product lead. The two were ousted in May by Agrawal amid buyout turmoil.

Twitter’s bid to get Elon Musk to follow through with his multibillion-dollar bid to acquire the social network will officially go to trial on October 17, a Delaware judge confirmed last month. Although Musk initially wanted to delay a trial until next February, a judge recently ruled that Twitter could accelerate proceedings to October of this year.

The ongoing saga has seen many twists since Twitter accepted Elon Musk’s $44 billion offer back in April and after he decided he didn’t want to buy Twitter after all, citing a lack of clarity on Twitter’s bot data. Musk claims Twitter wasn’t honest with him about how much of its customer base is made up of spam and robot accounts. Twitter, on the other hand, has been pushing to force the deal to close through legal action. As part of its second-quarter earnings report last month, Twitter revealed that it had spent $33 million during the previous quarter on the pending acquisition.

Musk countersued the social network, after which Twitter responded with a 127-page document refuting Musk’s claims. The social network noted in the filing that the counterclaims “fail to justify Musk’s plan to dishonor the merger agreement,” and argued that they are an effort on Musk’s part to escape the agreement.

Singapore-based cryptocurrency exchange enters South Korea via acquisitions 

Singapore-based cryptocurrency platform has acquired two startups in South Korea — payment service provider PnLink and virtual asset provider OK-BIT — for an undisclosed amount, said

The company also said Monday it has secured registrations under South Korea’s electronic financial transaction act and as a virtual asset service provider.

“We are committed to working with regulators to continue to bring our products and services to market, particularly in countries like South Korea where consumers have shown strong interest and adoption of digital currencies,” said co-founder and chief executive officer Kris Marszalek. 

The news marks a shift for, whose CEO Marszalek said in June that it would lay off 260 employees, equivalent to 5% of its workforce, to ensure continued and sustainable growth for the long term. 

The Singaporean company, which has more than 50 million users across the globe, says it wants to build a direct relationship with Korean users. South Korea is an important market for in terms of blockchain technology advancement and high-level crypto interests, said’s South Korea general manager Patrick Yoon. had received several approvals to offer crypto exchange products and services, including in-principle approval from the Monetary Authority of Singapore and provisional approval of its virtual asset license from the Dubai Virtual Asset Regulatory Authority in June, as well as regulatory approval from the Cyprus Securities and Exchange Commission in July. 

Salesforce’s low-code workflow tool aims to unify CRM giant’s largest acquisitions

Salesforce is a big, complex set of services, which has been augmented via acquisition with several other big complex services including Mulesoft, Tableau and Slack, three companies the CRM giant acquired in recent years.

The company has been looking for ways to make all of these tools (including Salesforce itself) work better together, and it thinks the answer is using its low code workflow tool, Salesforce Flow. Today, it announced an update that is designed to build integrated workflows between whatever tools in the Salesforce family you happen to be using.

It’s a bold attempt to pull together all of the pieces in the Salesforce arsenal in a more coherent fashion, using a popular tool that has been around since 2019 to do the job.

Salesforce co-founder and CTO Parker Harris says that when the company launched 23 years ago, it was all about humans entering data and interacting with machines, but over time, the machine has been able to take over some of the tasks, and that’s where Flow comes in.

“It was humans going into screens and entering information and reading it, and while that’s still very important, I think the world has shifted a lot where it’s now more about automation. It’s more the computer driving business, rather than humans trying to do it all on their own,” Harris explained.

While that ability to automate tasks has been around in various forms inside Salesforce for some time, the company is trying to pull it together in one centralized place by updating Flow with four new components. For starters, there is Flow in Slack, which as the name implies embeds Flow capabilities into Slack.

Slack already has powerful capabilities to incorporate other enterprise tools directly into it and use Slack’s workflow or an automation tool like Zapier to move work in an automated fashion, but the native integration with Flow lets users take advantage of Flow’s Salesforce-centric capabilities inside Slack to use it as a central work platform to access other Salesforce tools as needed.

The next item, Flow Actions, gives Tableau users the ability to create data-based workflows. So as you gather data inside a Tableau dashboard, certain levels could trigger actions like sending a message to a person in Slack when revenue drops below a certain level.

Finally, not to leave Mulesoft out of the equation, Salesforce introduced Flow Integrations, a powerful feature that lets you pull data from any system as part of a workflow, whether those systems are on on prem or in the cloud. In addition, Flow RPA lets you create automations across legacy systems.

You may be wondering about an intelligence component here, and while Einstein AI may not be built directly into these tools, workflow designers could add Einstein predictions and recommendations as part of an automated process, according to Salesforce.

Brent Leary, founder and principal analyst at CRM Essentials, says that these new tools are pulling together a lot of pieces of the Salesforce family of products in a way that has been difficult to do up to now.

“I think this is a necessary piece to the puzzle. The more clouds and components that comprise the overall platform, the more important it is to make it easier for actual business people to make them all work together,” he said.

Harris says that Salesforce decided to build these capabilities into Flow, rather than building a whole new tool because a large number of customers are already using it. “It’s very important, I think, to follow on success and follow on momentum and Flow has such adoption and momentum, and we’ll keep innovating on it,” he said.

The products are being announced today at the TrailblazerDX developer conference in San Francisco. Flow Integrations and Flow Actions are available today. Flow in Slack and Flow RPA will be available later this year.

Jack Dorsey set to pocket $978M if Elon Musk’s Twitter acquisition closes

Twitter’s co-founder and former CEO Jack Dorsey is poised to receive a significant payday if Elon Musk’s $44 billion acquisition of the social media giant closes, as his Twitter shares would be converted into cash. Dorsey, who has declined to take a salary from the company and instead chose to take a $1.40 annual paycheck, owns 2.4% of the company, with just over 18 million shares. Under Musk’s offer to buy each Twitter share for $54.20, Dorsey would receive a $978 million in cash, according to a report from The Wrap.

The company’s current CEO Parag Agrawal would also be set for a significant compensation package if the deal closes. If Musk were to bring in new management, Agrawal would receive $38.7 million due to a clause in his contract, according to the company’s latest proxy filing. Agrawal’s total compensation for 2021 was $30.4 million, largely in stock awards.

As for other Twitter executives, the company’s CFO, Ned Segal, would receive $25.4 million if the company sold and Musk brought in new management. The social media giant’s chief legal officer Vijaya Gadde would get $12.4 million, whereas Twitter’s chief customer officer Sarah Personette would receive $11.2 million.

Following the news that Twitter had accepted Elon Musk’s takeover offer, Dorsey expressed his approval of the proposed acquisition. In a tweet thread that starts out with a link to Radiohead’s “Everything In Its Right Place,” Dorsey said that “in principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company, however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”

Dorsey went on to say that Musk’s goal of creating a platform that is “maximally trusted and broadly inclusive” is the right one and that this goal aligns with Agrawal’s vision for the platform as well. He concluded by saying that “this is the right path” and that he is “happy Twitter will continue to serve the public conversation.”

Agrawal’s reaction to the news was more subdued, noting in a tweet that “Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.”

As with many things surrounding the acquisition, it’s unknown if Agrawal will remain in his position as CEO if the deal goes through. However, Musk had stated in SEC filings that he did not have confidence in Twitter’s current management, which indicates that Agrawal and other Twitter executives may not remain in their positions once Musk takes control.

Twitter says the transaction, which was unanimously approved by the board, will likely close this year following shareholder and regulatory approval and “the satisfaction of other customary closing conditions.”

How’d we get here, you may ask? Here’s a complete timeline of the Elon Musk-Twitter saga.

What hostile takeovers are (and why they’re usually doomed)

Thanks to the machinations of a certain billionaire, the phrase “hostile takeover” has been liberally bandied about the media sphere recently. But while it long ago entered the mainstream lexicon, “hostile takeover” carries with it an air of vagueness — and legalese opacity.

At a high level, a hostile takeover occurs when a company — or a person — attempts to take over another company against the wishes of the target company’s management. That’s the “hostile” aspect of a hostile takeover — merging with or acquiring a company without the consent of that company’s board of directors.

How it usually goes down is, a company — let’s call it “Company A” — submits a bid offer to purchase a second company (“Company B”) for a (reasonable) rate. Company B’s board of directors rejects the offer, determining it to not be in the best interest of shareholders. But Company A attempts to force the deal, opting for one of several strategies: A proxy vote, a tender offer or a large stock purchase.

The proxy vote route involves Company A persuading shareholders in Company B to vote out Company B’s opposing management. This might entail making changes to the board of directors, like installing members who explicitly support the takeover.

It’s not necessarily easy street. Aside from the challenge of rallying shareholder support, proxy solicitors — the specialist firms hired to help gather proxy votes — can challenge proxy votes. This extends the takeover timeline.

That’s why an acquirer might instead make a tender offer. With a tender offer, Company A offers to purchase stock shares from Company B shareholders at a price higher than the market rate (e.g., $15 a share versus $10), with the goal of acquiring enough voting shares to have a controlling interest in Company B (typically over 50% of the voting stock).

Tender offers tend to be costly and time consuming. By U.S. law, the acquiring company is required to disclose its offer terms, the source of its funds and its proposed plans if the takeover is successful. The law also sets deadlines by which shareholders must make their decisions, and it gives both companies ample time to state their cases.

Alternatively, Company A could attempt to buy the necessary voting stock in Company B in the open market (a “toehold acquisition”). Or they could make an unsolicited offer public, a mild form of pressure known as a “bear hug.”

A short history of hostile takeover attempts

Hostile takeovers constitute a significant portion of overall merger and acquisition (M&A) activity. For example, in 2017, hostile takeovers reportedly accounted for $575 billion worth of acquisition bids — about 15% of that year’s total M&A volume.

But how successful are hostile takeovers, typically? According to a 2002 CNET article, between 1997 and 2002, target companies in the U.S. across all industries fended off 30% to 40% of the roughly 200 takeover attempts while 20% to 30% agreed to be purchased by “white knight” companies. In the context of a hostile takeover, a “white knight” is a friendly investor that acquires a company with support from the target company’s board of directors when it’s facing a hostile acquisition.

Confined to the past two decades or so, the tech industry hasn’t seen an outsized number of hostile takeover attempts. That’s partly because — as the CNET piece notes — the value of tech companies is often tied to the expertise of its workers. As evidenced this month, hostile takeovers tend not to have positive social ramifications for the target’s workforce. The distraction and lingering uncertainty from a hostile action could lead to a flight of talent at both the top and middle levels.

During the same time frame referenced earlier — 1997 to 2002 — there were only nine hostile takeover attempts against tech companies. Four were successful, including AT&T’s buyout of enterprise service provider NCR and IBM’s purchase of software developer Lotus.

Hostile takeovers in the tech industry in recent years have been higher in profile — but not necessarily more fruitful.

Take Xerox and Hewlett-Packard, for example. In November 2019, Xerox — spurred on by activist investor Carl Icahn, who owned a 10.6% stake — approached Hewlett-Packard’s board with an offer to merge the two companies. Hewlett-Packard rejected it, and Xerox responded by announcing plans to replace Hewlett-Packard’s entire board of directors and launching a formal tender offer for Hewlett-Packard’s shares. Pandemic-affected market conditions proved unfavorable for the deal, and Xerox agreed to cease pursuing it in March 2020.

In 2018, tech giant Broadcom unsuccessfully made a hostile bid for semiconductor supplier Qualcomm. After attempting to nominate 11 directors to Qualcomm’s board, Broadcom raised its offer from roughly $100 billion to $121 billion and cut the number of board seats it was trying to win to six. But security concerns raised by U.S. regulators and the possibility of interference from Broadcom’s competition, including Intel, led Broadcom to eventually withdraw.

That isn’t to suggest hostile tech takeovers are a forgone failure. In 2003, Oracle announced a takeover attempt of HR software vendor PeopleSoft in an all-cash deal valued at $5.3 billion. Oracle succeeded at a higher bid price, overcoming 18 months of back-and-forth and a court battle over PeopleSoft’s shareholder provisions.

The downsides of hostile takeovers

The high failure rate isn’t the only factor dissuading hostile takeovers. Other potential pitfalls include tainting the deal-making track record of the hostile bidder and major expenses for the acquirer in the form of adviser and regulatory compliance fees.

Companies have also wisened up to hostile takeovers and employ a range of defenses to protect their management’s decision-making power. For example, they can repurchase stock from shareholders or implement a “poison pill,” which considerably dilutes an acquirer’s voting shares in the target company. Or, they can establish a “staggered board,” in which only a certain number of directors is reelected annually.

A note about poison pills, for those curious. As this Biryuk Law blog post helpfully explains, there are three main kinds: a flip-in, a “dead hand,” and a “no hand.” With a flip-in poison pill, shareholders can force a pill redemption by a vote if the hostile offer is all cash for all of the target’s shares. A dead hand pill creates a continuing board of directors, while a no hand pill prohibits the redemption of the pill within a certain period.

Other anti-takeover measures include changing contractual terms to make the target’s agreements with third parties burdensome; saddling the acquirer with debt; and requiring a supermajority shareholder vote for M&A activity. The drawback of these — some of which require shareholder approval — is that they might deter friendly acquisitions. (That’s partially why poison pills, once common in the 1980s and 1990s, fell out of favor in the 2000s.) But many companies consider the risk worthwhile. In March 2020 alone, 57 public companies adopted poison pills in response to an activist threat or as a preventive measure; Yahoo and Netflix are among those who’ve in recent years used poison pills. (Full disclosure: Yahoo is the parent company of TechCrunch.)

Tech giants commonly employ protectionist share structures as an added defense. Facebook is a prime example — the company has a “dual class” structure designed to maximize the voting power of CEO Mark Zuckerberg and just a small group of insiders. Twitter is an anomaly in that it only has only one class of shares, but its board retains the right to issue preferred stock, which could come with special voting rights and other privileges. (The Wall Street Journal reported this week that Twitter is weighing adopting a poison pill.)

Some corporate raiders won’t be deterred, though, whether because of strategic considerations or because — as in the case of Elon Musk’s and Twitter — they believe that the target company’s management isn’t delivering on their promises. They might attempt to recruit other shareholders for their cause to improve their chances of success, or apply public pressure to a company’s board until they reconsider a bid. They could also invoke the Revlon rule, the legal principle stating that a company’s board shall make a reasonable effort to obtain the highest value for a company when a hostile takeover is imminent.

But as history has shown, hostile takeovers — even when successful — are rarely predictable.