Chapter 519 The knowledge of ingenious mergers and acquisitions
"Brother Cheng, you didn't tell me all the merger and acquisition trends of the consortium. I didn't know until today that Shanghai Hotel Group is in contact with Hilton Hotel Group. This is a large-scale merger involving US$26 billion. Our funds are not enough to support it.
With such large-scale successive mergers and acquisitions, as well as negotiations between HSBC and Standard Bank of South Africa, and the next large-scale investment in European industries, where will we get so much money?"
Shi Xueyi sighed worriedly and continued;
"The successive listings of companies such as Carrefour Supermarket and Gree Group have indeed reduced our capital expenditures. However, this money has been resold and spent for large-scale mergers and expansions. The Royal Fund's current cash pool is less than US$45 billion.
, and we have to invest more than 10 billion US dollars in the British O2 Telecommunications Company. So many projects require money, and the stalls are too big, and the remaining money is not enough. I am so worried that I can't sleep at night."
"You are unfounded." Wang Yaocheng hit him unceremoniously; "Study more, who said that mergers and acquisitions have to cost one's own money?"
"To date, the market value of Hong Kong and Shanghai Hotels Co., Ltd. is only HK$96.6 billion, or about US$13 billion, and our shareholding ratio is about 62%. I can't figure out how we can swallow up the Hilton Hotel Group without investing a lot of money.
Who will be the boss of this stock then?" Shi Xueyi still insisted on his own point of view.
"Of course it's capital operation, using other people's money to make money."
"This is a gap of tens of billions of dollars! Who would be stupid enough to give you the money? I don't think it's reliable."
Wang Yaocheng was really defeated by him. After all, Shi Xueyi was a mediocre talent, not a genius manager with full spirituality. His biggest characteristic was that he was loyal and reliable, and he liked to watch the consortium's capital pool increase steadily.
Once you spend too much money, you become anxious, and you are the type of person who can get in but not get out.
Speaking of which
The image of a watchdog and a miser comes to mind. Yes, this is his biggest feature, besides being reliable, he is reliable.
After all, he is his brother, Wang Yaocheng still has to explain to him slowly;
"Take the Hong Kong and Shanghai Hotels Co., Ltd. as an example. I will tell you how to get it with a small amount of money. First of all, tell me, why did Barron Hilton want to sell the Hilton Hotel Group?"
"Does this have anything to do with the funding issues we're discussing?"
"It's very important. Only by understanding why Barron Hilton wants to sell the Hilton Hotel Group, which is still operating well, can we accurately design merger and acquisition leverage according to the situation. If he wants cash, give him cash, and if he wants equity, give him equity. If he wants, he can give him equity."
If you want a premium, give it a premium. Well... this is the correct operating posture."
Shi Xueyi nodded thoughtfully. He didn't know if this guy understood it, but it sounded like that.
He thought carefully and said;
"Although the Hilton Hotel Group seems to be operating well at present, Barron Hilton is already 75 years old, his energy is far from exhausted, and his control over the entire group has plummeted.
In recent years, many financial scandals and management corruption cases have broken out, putting the management of the entire hotel group in danger.
Barron Hilton saw this and was deeply concerned.
It is a pity that his eight children and fifteen grandchildren (including the famous sisters Paris Hilton and Nicky Hilton) are all masters of life and debauchery, and none of them can take over the Hilton hotel business. This has become a joke in the upper class.
This year, Barron Hilton was hit hard by the death of his wife Marilyn. At this time, he decided to contact our consortium for the purpose of disposing of his estate.
If it is left to these unscrupulous descendants, I am afraid that it will be completely destroyed in a few years. I heard that he plans to donate all his assets to the Conrad Hilton Charitable Foundation named after his father.
In this way, his descendants can still receive millions of dollars from the charitable foundation every year, enough to maintain a luxurious life."
Wang Yaocheng clapped his hands and said, "Now that I know Barron Hilton's thoughts, the next action is simple. It is nothing more than estimating a reasonable price for Hilton Hotel Group.
We know that Hilton Hotels Group has nearly ten hotel brands, 2,800 hotels around the world, and 480,000 beds.
A reasonable price should be between 24 billion and 27 billion U.S. dollars. Mr. Mo Yuxuan is leading the team to contact the other party. The other party quoted a price of 27.4 billion U.S. dollars. Our bottom line price is no more than 24 billion U.S. dollars. This will require arduous negotiations to obtain.
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After the final transaction price is determined, we can talk about payment methods.
My plan is for The Hong Kong and Shanghai Hotels Co., Ltd. to raise US$3 billion through the issuance of new shares, and the consortium will simultaneously inject US$3 billion one-on-one to avoid diluting the share capital.
So, we have 6 billion US dollars on hand, and we still hold 62% of the shares of the Hong Kong and Shanghai Hotel. We use this money to acquire the Hilton Hotel Group, which is equivalent to indirectly holding the equity of the Hilton Hotel Group through the shares of the Hong Kong and Shanghai Hotel.
The remaining approximately US$20 billion is paid in corporate bonds, which are worth the same as stocks, and the principal and interest will be repaid in installments within five years.
We can promise;
As long as the stock price is lower than 60% of the face value of the bond, triggering the buyback line, the corporate bond will be repurchased at 120% of the face value.
In this way, there is no risk to convenience and you can also earn interest income.
In addition, we can also promise that this part of the bonds will be endorsed by the Royal Fund, and the repurchase option can be exchanged for Cisco shares or Microsoft shares of equal value, which will greatly increase the temptation.
If you do this, do you think Barron Hilton will be tempted?
Barron Hilton is not stupid. Anyway, the risks are backed by royal funds. If the Hilton Hotel Group's stock price falls, it is possible to get 20% more income by choosing bonds. US$20 billion is an extra US$4 billion.
Once you repurchase it, you can even exchange it for Cisco shares of the same value, which is like a dream.
We are putting a delicious fruit in front of him. He can see it but cannot eat it, but the temptation is always there.
And we did not suffer any loss. We spent 6 billion US dollars to acquire the entire equity of Hilton Hotel Group and let it make money for us to pay off our debts.
Once the value of the Hilton Hotel Group rises, we can also sell part of the stock to repay the principal and interest, which is equivalent to using shareholders' money to buy the Hilton Hotel Group for us, which is of course a cost-effective thing."
Wang Yaocheng explained in a simple and profound way. Shi Xueyi thought carefully and nodded in approval, but then raised new questions;
"I admit that you have a bright mind, but have you ever thought about it. If the Hilton Hotel Group has very big problems and the operating mechanism of the high-end hotel chain around the world is completely rotten and needs to be rebuilt, this will be a disaster for the stock price.
A disaster may actually trigger the repurchase line, and then you will have stolen the chicken but lost the rice, and may have lost your controlling stake in Cisco."
There is no way, this kind of axis must be explained clearly, otherwise Shi Xueyi will toss and turn and be unable to sleep after returning home, and maybe it will bother him at one or two o'clock at night.
"Guantianxia Economic Research Center has done an in-depth analysis on the operation and management of Hilton Hotel Group. I won't tell you the details. Anyway, it's just eight words;
Top-level system with poor implementation.
Under such circumstances, the Hilton Hotel Group still achieved a net profit of US$1.26 billion in 2002, which shows its strong profitability.
After the merger, there will be a two-pronged approach;
First, 1,500 elite personnel were transferred from various positions in the consortium to join the Hilton Hotel Group to participate in management, fully implement the original good system of the Hilton Hotel Group, and have a positive relationship with the senior managers of the Peninsula Hotel, Miramar Hotel, and Shilla Hotel
communication, conduct strict financial verification and layoff employees, and take complete control of this multinational hotel group.
Preliminary consideration is to lay off at least 10,000 employees worldwide, about 1/3 of which are middle and senior managers.
Second, implement a high-end hotel brand franchise system and use other people's money to develop the Hilton Hotel Group.
In other words, as long as the financial strength is strong enough, Hilton Hotels' brands are allowed to be used to develop chain hotels after paying a certain amount of funds. The prerequisite is to fully introduce a high-end hotel management system and implement unified standards.
By implementing the brand franchising system, we make no losses and do not bear any business risks. We can also collect considerable management fees and brand franchise fees every year.
It is planned to increase the number of rooms under the Hilton Hotel Group to 1 million in five years, doubling the current number.
Do you think under such circumstances, how come the stock price doesn’t rise?”
Shi Xueyi admitted that what he said was reasonable and asked again worriedly;
"According to the Hilton Group's operating performance last year, the profit was only 1.26 billion U.S. dollars, but the value of bonds is nearly 20 billion U.S. dollars, which may be between 18 billion and 19 billion U.S. dollars. If the principal and interest are repaid over five years, at least
With an expenditure of more than 4.6 billion US dollars, what should we do with such a huge gap?"
"Did you forget something?"
"No! What did you say you forgot?"
Seeing Shi Xueyi's baffled look, Wang Yaocheng wished he could open a gourd on his head to let him breathe;
"Since the Hong Kong and Shanghai Hotels Co., Ltd. has merged and acquired, of course it has to bear the responsibility of repaying principal and interest. Based on the revenue in 2002, the annual profit was HK$10.3 billion, about US$1.5 billion.
In 2003, Shanghai Hotels Co., Ltd.'s profit increased by 18.5% in the first three fiscal quarters compared with the previous year. Based on this calculation, it can reach a net profit of US$1.8 billion for the whole year.
Adding the two together means that after the merger and acquisition, the Shanghai Hotel shares can guarantee at least US$3 billion in annual principal and interest payments, which is still the level before comprehensive rectification.
I don’t believe that there are 2,800 high-end hotels with 480,000 beds all over the world, and they only have a profit of 1.2 billion US dollars every year, and each one makes less than 400,000 US dollars. This is simply ridiculous.
Let’s not mention this for now
As long as we take measures to restore the confidence of investors, drastically reduce expenses, enhance administrative efficiency, and eliminate some hotels that are losing money or even making small profits, it is a high probability that Hilton Hotels Group's profitability will increase and its stock price will rise.
At this time, we can sell some stocks to repay the principal and interest on the previous bonds.
If things go well, we can even pay off the huge M&A costs in advance. This means using investors' money to pay for our M&A plan.
think about it
If the Hilton Hotel Group's profitability increases sharply and its franchise scale expands rapidly, its own value will rise rapidly.
If the stock price rises by more than 60% or more, we can sell more than 40% of the Hilton Hotel Group shares, which is equivalent to getting the world's top hotel group for free without spending any money, and still firmly controlling the controlling stake.
This is the true meaning of borrowing money to lay eggs. Don't be intimidated by the huge price of mergers and acquisitions. The four words "Royal Family Fund" are enough to give investors full confidence to pay for it, and the consortium itself does not have to pay any extra price.
Don’t forget, this method can also be applied to the British O2 Communications Company to achieve the same wonderful transformation.
The British O2 Communications Company currently has more than 13 million users. After the completion of the two-year expansion plan, it will have more than 80 million users and become one of the top five communication providers in Europe. What kind of concept is that?
How much will the stock price rise?
How many times will it double?
At that time, as long as you casually sell 20% of the stocks, you can get back all the investment and still make a profit. This is capital operation.
Learn from it, brother dung beetle."
Shi Xueyi was completely convinced by the explanation in simple terms. He raised his head and poured the remaining whiskey in the glass into his mouth, and said with a trace of wine stain on his mouth;
"Tsk tsk tsk, no wonder Auntie said that all the Wang family's eyes are on you. You are indeed as smart as a monkey. You have thought of almost everything you can think of. Then I have nothing to worry about. You can go back and have a good sleep.
"
"Get out of here."
"Eh... eh... don't do anything. I'm not in a good state today, so I'll spare your life."
Wang Yaocheng's long legs kicked him out. Shi Xueyi had been on guard against this move for a long time. He slid along the sofa and ran out, closing the door behind him.
Watching his good brother leave, Wang Yaocheng felt warm in his heart;
The road ahead is getting more and more dangerous, and there are only a few companions around him. Shi Xueyi must be considered a good brother who will never leave.
This question raised by Shi Xueyi has long been considered by Wang Yaochen.
For all listed companies under the consortium, large-scale mergers and acquisitions will be fully borne by the consortium itself. The shortfall can be solved through the market or leverage, and the Royal Family Fund itself will no longer inject capital.
This has two benefits;
One is that it does not occupy the consortium’s precious funds, which can be used for the development and expansion of unlisted companies, and the money is used wisely.
Second, appropriately reduce excessive shareholding ratios and expand the effective utilization of capital. The company's reasonable liabilities are both pressure and motivation, which can promote corporate executives to exert their subjective initiative, more actively cut unnecessary expenditures, and enhance corporate efficiency.
2003 is coming to an end, and there are fewer and fewer golden fingers in the past and present. 2004 is the election year for the United States President. If nothing unexpected happens, George will be re-elected. It will only be four years, and the historical window of opportunity for the development of the consortium is gradually closing.
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Royal Fund’s aggressive entry into the European market is also a cunning move.
According to a secret report from the Guan Fengyun Economic Research Center in Hong Kong;
Once it is hit at the U.S. government level, the core electronics and semiconductor industry's entire industry chain closed-loop production capacity will be crucial, so that it can independently produce products without relying on the U.S. market and technology.
This acquisition of KUKA and the next acquisition of German company Lycra are preparations for this closed-loop industrial chain.
In addition, Royal Fund has successively changed the registration places of Red Hat Systems, Athlon Microprocessor Company, AMD, Silicon Valley Wireless Communications Center Laboratory, Atlantic Business Machines Company and other companies from the United States to the Cayman Islands, the Bahamas, and the Bermuda Islands.
Virgin Islands, etc., this work has been done quietly.
Others looked at it as if it was for tax avoidance, but Wang Yaocheng knew in his heart that it was much more than that.