Seeking Input: Tender Offer

[David]

We are considering adding Tender Offer to the Banking and Finance DLC.

Step 1) We would like to seek the community's input on how the Tender Offer should be implemented.

One of the key questions is how to define the formula for calculating the reasonable tender offer price that will be accepted by the shareholders. The game can then compare the tender offer price set by the player against this reasonable tender offer price to determine the chance of success of the tender offer.

Note: the same formula can be used for determining the reasonable offer price for Privatization, which is another feature that we are considering adding to Banking and Finance DLC.

Step 2) We will set up a poll, stating the implementation details that we have collected from Step 1.

If there is more than one suggestion for the formula for calculating the reasonable tender offer price, we will add them as different poll options.

Step 3) If the poll result turns out to be positive, it will be scheduled for implementation.

FYI, there were some discussions on Tender Offer in the past. Here is one of the old posts: http://www.capitalism2.com/forum/viewto ... =52&t=5075

[standardplayer]

We are considering adding Tender Offer to the Banking and Finance DLC.

Step 1) We would like to seek the community's input on how the Tender Offer should be implemented.

One of the key questions is how to define the formula for calculating the reasonable tender offer price that will be accepted by the shareholders. The game can then compare the tender offer price set by the player against this reasonable tender offer price to determine the chance of success of the tender offer.

Note: the same formula can be used for determining the reasonable offer price for Privatization, which is another feature that we are considering adding to Banking and Finance DLC.

Step 2) We will set up a poll, stating the implementation details that we have collected from Step 1.

If there is more than one suggestion for the formula for calculating the reasonable tender offer price, we will add them as different poll options.

Step 3) If the poll result turns out to be positive, it will be scheduled for implementation.

FYI, there were some discussions on Tender Offer in the past. Here is one of the old posts: http://www.capitalism2.com/forum/viewto ... =52&t=5075

Example from "Wall Street Raider" Tender Offers:

Purchase of Publicly Traded Shares = Simple Premium based on Ownership Purchase Size
• Buy 5% Ownership = No Premium (Current Publicly Traded Price)
• Buy 10% or More Ownership = 10% Premium over Current Publicly Traded Price
• Buy 20% or More Ownership = 15% Premium over Current Publicly Traded Price
• Buy 100% Ownership = 20% Premium over Current Publicly Traded Price

For Shares Owned by AI Private Individuals and AI Controlled Companies:
• Mandatory Minimum Offer of say ~10% but you would usually have to offer a larger premium for them to actually decide to sell that would be based on some sort of a formula that may include if they work for the company as an executive, personality, etc.
• Premium Range: ~10%-50%, Average Premium of ~20%-30%

[fritz]

"Wall Street Raider" is a pure financial game. In Capitalism Lab, acquiring competitors is the ultimate way to nullify the competition. The tender offer feature will have a profound impact on the gameplay balance in a bad way if tender offer can be pulled off so easily with just 20-30% premium over the current stock price.

[lagrelax]

I don't have a clear answer yet. But I found AI is very smart when trying to buy tech from them so maybe we can utilize that.

Say when AI is reluctant to sell one tech because you're one of theirs competitors, the tender offer price should multiply by a very high multiplier. When the AI is not in need of cash, the multiplier could be relatively higher. Otherwise it should be of a base multiplier. That base multiplier could be modified by the setting in the beginning.

[derekg52]

Did this idea ever go anywhere? Been waiting for years for some kind of tender offer.

[saffgee]

I think the problem is not so much the mechanics of the tender offer itself, but government approval of the merger/acquisition once both companies approve it, as I fear it would make the game much easier.

It would be nice to couple this mechanic with a simple anti-trust check against monopolies (which would also need to be scriptable as on/off), then I think it can be a more than decent addition to the game. Simply look across the dominance of the two companies combined in the product classes and if this goes over a certain percentage for 2 or more, then the merger has a chance of not being approved and the buyer must sell the shares of the company again to bring himself back down to a particular ownership threshold. Something like that. I'm sure this regulation could be easily adapted as an in game mechanic - and whilst I appreciate it would frustrate the players that want to own everything and make everything, however it is simply intended to be a mechanic that makes for a more realistic game and can be switched on or off, thus catering to everyone's taste.

[derekg52]

So I was thinking about this more and the first thought I had was that whatever setting is implemented can be on a slider. Tender offers could be a setting something like Disabled, No regulation, realistic regulation. At a quick glance, you could just have the feature off and let players use it if they wish. The "no regulation" would be what it implies, have it be some measure of a premium versus the stock price or whatever calculation seems reasonable. It's such a pain to slowly try to acquire someone 5% at a time and it takes years without paying enormous premiums based on how much the share price rises.

I definitely agree that simulating regulations has a few factors to it, two top competitors in a space where the market is also enormous. The top players for example in a tiny market shouldn't necessarily be stopped either. Additionally growing out across product classes shouldn't necessarily be stopped either (think the Berkshire Hathaway model). It also has a possibility of being a powerful feature for competitors. There are real world examples too where the #2 and #3 in a space may merge and become larger than the existing #1. That could be an interesting wrinkle where the player has a strong hold over a particular field.

If you go to make the tender offer it should show the window of how to pay for it including potentially issuing bonds and then lastly it should show the screen where you can either merge firms or keep as a subsidiary.

[derekg52]

Any update on the topic?

[jondonnis]

Maybe you could include it with the option to disable it, if that's possible? So then everyone will be happy.

[Kniz]

I personally support having a tender offer, as again, it's realistic, but give people the option if the AI should use it, and if its enabled at all.