After hearing the conditions offered by Zhang Yida, Mao Wenchao and Qu Fang admitted that they were tempted.
Xiaohongshu’s current market valuation is approximately US$1.5 billion.
However, all-cash mergers and acquisitions and discounts are also common methods in the industry.
It has been four or five years since Xiaohongshu was founded, but it has never made a profit. It has tried many direct e-commerce and e-commerce shopping guide businesses, but it just can't make any money.
If you can’t make money, you can only tell stories to deceive venture capital investors: We want to be large-scale, and we want to be China’s Ins.
But it’s hard to say how long this story can be told, whether it can really usher in the day of listing, and whether it will fall like a dog after listing.
The two looked at each other, and Qu Fang said: "Yida, please add a little more, how about 1.5 billion US dollars?"
Go to hell with your bullshit ideals!
Zhang Yida cursed secretly, if you are not satisfied with the price, you should have said it earlier!
I foolishly talked about my ideals for you for a long time, and even said that I would take Xiaohongshu out to sea and experience the scenery of the world.
1.5 billion US dollars, this price is not outrageous. Zhang Yida remembers that in his previous life, just next year, Xiaohongshu completed a US$300 million D round of financing led by Ali and participated by Penguin, with a post-money valuation of over US$3 billion.
Since then, the market has continued to hear news of valuations of US$5 billion and US$6 billion, but Xiaohongshu has never completed a new round of financing.
The biggest problem is probably that we have encountered a bottleneck, and our imagination space is already very limited.
In addition, Zhang Yida also heard that Ali has been thinking about acquiring Xiaohongshu to strengthen the e-commerce traffic entrance.
How can this be possible? Xiaohongshu must not be allowed to join Ahri’s camp.
Although Xiaohongshu is good, Zhang Yida won't find it troublesome if the price can be reduced. After all, Zhonghe Group is short of funds now, so it would be better to save a little.
After negotiating the price with Qu Fang and Mao Wenchao for a while, Zhang Yida was very resolute, saying it would only be US$1 billion and no more would be added.
Qu Fang and Mao Wenchao looked at each other, and the latter said: "We don't want all cash, half equity and half cash. Can the price be raised like this?"
In the eyes of many people, Zhonghe Group is a shaky ship.
However, Qu Fang and Mao Wenchao have witnessed the whole process of Zhang Yida's rise with their own eyes, and they are very confident that Zhang Yida will create another miracle.
Zhang Yida's expression softened. He had done this kind of stock exchange a lot, so he naturally knew the pros and cons.
The company has a lot of cash on its books and the project prospects are very good. Naturally, it is better to spend cash than to exchange shares;
But in the current situation of Zhonghe Group, stock exchange is the most rational transaction method.
Save more cash and spend it on other businesses, which can also enhance the strength of Zhonghe Group in all aspects to a greater extent.
In the end, Zhang Yida chatted with the two again and reached a compromise on the merger price of US$1.3 billion.
Zhonghe Group acquired Xiaohongshu for "US$650 million in cash and an additional US$650 million in shares."
Penguin is also a shareholder of Xiaohongshu, but its shareholding ratio is less than 10% and it does not have veto power.
Although he voted against Xiaohongshu’s board of directors, it could not prevent the sale of Xiaohongshu.
After the acquisition of Xiaohongshu, Zhonghe Group’s cash reserves fell below US$4 billion again.
In addition, Zhonghe Group issued an additional US$650 million in shares to all shareholders of Xiaohongshu at a valuation of US$63.3 billion, accounting for approximately 1.03% of the total share capital of the entire Zhonghe Group.
Qu Fang and Mao Wenchao also each obtained 0.1%-0.2% of Zhonghe Group's equity.
After the work handover is completed, the two of them will fade out of Xiaohongshu. Whether they start a business again or become investors, it is up to them.
But there is also a non-compete agreement restriction, and you cannot engage in content or e-commerce entrepreneurship within five years.
These are basic operations for mergers and acquisitions to prevent the original founder from taking away the company's various resources and starting a new business, and the acquiring party ends up buying an empty shell.
After issuing an additional US$650 million in shares, Zhang Yida's personal shareholding ratio also dropped, from 60.09% to 59.47%.
This shareholding ratio is still much higher than his shareholding ratio in Ruixiang.
After the latter completed US$6.66666 billion in financing, he only held 34.36% of the shares.
After Xiaohongshu was acquired, both Pinduoduo and Xiaohongshu were included in the e-commerce business group of Zhonghe Group.
Zhonghe Group attaches great importance to Xiaohongshu and wants to build it into an e-commerce platform different from Pinduoduo, focusing on young female users.
In fact, according to Xiaohongshu’s user portraits, nearly 90% of the platform’s users are female, and most of them are aged 18-35.
Many of these users overlap with Douyin, so Zhang Yida decided to connect the two platforms.
DouShi plus Xiaohongshu, Kuaishou plus Pinduoduo, forming two pairs of CPs.
Why build a dual e-commerce platform strategy? The main reason is to target high-end users, and Pinduoduo is currently unable to do this job.
Of course, live streaming e-commerce is not something that can be achieved overnight.
The GMV produced by Taobao Live only accounts for a small part of Ali's entire e-commerce system.
This industry is far from ushering in an explosion.
What Zhang Yida did was just slowly lay the foundation and grab traffic everywhere.
…
"Pony, SoftBank has talked to us more than a dozen times.
They are willing to take over the shares of Ruixiang at a 20% discount; they are only willing to take over the shares of Zhonghe... at a 40% discount."
Speaking of this, Liu Zhiping was also full of indignation. He took advantage of SoftBank's situation and robbed it. It was simply too much bullying.
Knowing that the relationship between Penguin and Zhonghe Group, and even Zhang Yida, had deteriorated, Penguin was eager to cash out his equity, so he kept hanging on Penguin and bargaining in various ways.
It has been almost two months, and there is still no substantive progress in the negotiations.
Bonima also covered his forehead and was distressed. It was almost 2018, and the shares of Ruixiang and Zhonghe just couldn't be sold.
By selling according to SoftBank's quotation, Penguin actually makes no loss compared to its investment.
But Bonima just couldn’t swallow this breath!
Mingrui Xiang and Zhonghe are still alive and kicking, especially Zhonghe, which controls Lagou.com and acquires Xiaohongshu. How can there be any signs of decline?
Bonima asked again: "What about other investment institutions?"
Liu Zhiping frowned and shook his head and said: "I can't afford it at all. Gaoling is only willing to take 1 billion US dollars. CDH is more willing to buy 2 billion US dollars, but they only want Ruixiang's shares and give us a 20% discount.
"
"Fuck, each of these funds is worse than the last!"
Liu Zhiping sighed, the order was wrong, the equity should be sold first, and then the conflict would be made public.
Now, even if the equity is sold, the loss will be considerable.
However, he did not dare to accuse Ponima and could only curse in his heart.
"Contact a few more funds, not just a few funds, but dozens of fund head offices, right?"
Liu Zhiping shook his head again, "It's useless. How many VCs are willing to join a company worth tens of billions of dollars?"
Even if there are no problems with Ruixiang and Zhonghe in the future, what is the rate of return?"
"Do you have any contact with PE abroad?"
"I contacted you," Liu Zhiping said, "but most of them are already Ruixiang shareholders and are unwilling to increase their holdings.
If Zhonghe is not optimistic, these PEs are not very optimistic, and the price offered is lower than SoftBank."
Bonima pondered for a while, and then said: "Continue to fight the price with SoftBank, and by the end of December, no matter what, all the equity will have to be cleared."
Liu Zhiping nodded. There is still more than a month left, and he is confident that SoftBank will raise the price by another 10%.
As for more, he has no idea.
"Is PlayerUnknown's Battlegrounds going to be launched in the country?" Poonima asked again.
"Yes, preheating has already started on multiple platforms such as Dou Vision, Kuaishou, Bilibili, and Panda Live."
Bonima was stunned for a moment when he heard the panda live broadcast, and asked with a smile: "That panda that Xiao Wang did?"
Liu Zhiping nodded.
Bonima shook his head repeatedly and sighed: "Zhang Yida really went back more and more, and got together with such a person!"
Liu Zhiping added: "Although Xiao Wang is a bit unique, he is still somewhat influential in the e-sports circle.
Not only did he post multiple Weibo posts to help promote PlayerUnknown's Battlegrounds, he also asked his e-sports club to organize a team..."
After hearing this, Bonima's face was as gloomy as water. Games are the lifeblood of penguins!
Zhang Yida is promoting PlayerUnknown's Battlegrounds overwhelmingly. Is he going to fight Penguin to the death?
The advantages and disadvantages of PlayerUnknown's Battlegrounds have been verified by the PC version. As long as the mobile game is not too bad, it should also be a hit.
He said: "Let Tianmei and Photon speed up the research and development progress, and we must launch our own battle royale game before Zhonghe."
Liu Zhiping smiled and said: "We fought with Zhonghe Group, but NetEase took advantage. I heard that Knives Out will be launched soon."
Bonima laughed and said: "Ding Sanshi looks harmless to humans and animals, but he likes to do these little tricks.
Now Zhang Yida has a headache, I want to see how much market PUBG can take away from us and NetEase."
Liu Zhiping also had a smile on his face. Anyway, PlayerUnknown's Battlegrounds and the others did not get an exclusive agent. They would be happy to see multiple NetEases attack Zhonghe Games.
In the domestic game market, Penguin and NetEase have been the leaders in the industry in recent years.
Now that there is an extra person to share the cake, everyone naturally has to point their guns at the outside.
How can you allow others to snore and sleep on the side of the couch?
Bonima asked: "I heard that Rocket Video has launched a variety show. What is it called Rocket Girls 101? Is that the name?"
"That's right, it's a girl group talent show, and the copyright was bought from South Korea."
Liu Zhiping added: "iQiyi has also launched a boy group audition called Idol Producers. Should our Penguin Video follow up? How many online variety shows will we produce ourselves?
Originally, Penguin Video was lagging behind iQiyi. At this time, we cannot take our guard down and must catch up quickly.”
Bonima nodded, "Just look at the arrangements!"
"Oh, right."
Liu Zhiping suddenly remembered something and said to Bonima: Zhonghe Chinese website and Zhonghe Animation have also developed independent apps and officially started operations.
I heard that they are poaching authors from our platform, and many platinum and top writers have been harassed by headhunters sent by Zhonghe Group.”
"Is this happening?"
Bonima is a little uneasy. Damn it, headhunters have been sent out. It seems that the Zhonghe Group has done a lot.
"We must take strict precautions and not allow them to poach people. If necessary, change the contract and make sure to retain people.
Web writing is the upstream of IP. Without web writing, where would comics, games, and web drama adaptations come from?
For big entertainment, online writing is the key and must not be messed up."
Liu Zhiping said with a smile: "Don't worry, it's a newly opened site, and it's just some newcomers trying their luck.
Who among the other famous writers is willing to give up their stable income of millions or tens of millions to try their luck at a small website with an uncertain future?
Last year, we distributed nearly 1 billion yuan in manuscript fees, and there were more than 100 writers with royalties exceeding 1 million yuan.
Now our novel website has formed an ecology, and its foundation is very stable and will not be easily shaken."
Only then did Bonima feel relieved and asked again: "Is there any news at Zhonghe Music?"
Liu Zhiping shook his head: "We only registered a trademark and haven't started operations. I don't know what the plan is.
Even if you start operating, you don't need to be afraid of them, the copyright alone will kill them.
Take NetEase Cloud Music as an example, no matter how good the user experience and community atmosphere are, so what?
I can’t hear the songs I want to listen to, aren’t you pushing users away?”
Bonima let out a long sigh and said with a smile: "It seems that all these years of hard work have not been in vain. The moat has been dug deep enough, and it will be difficult for newcomers to cross it."
Liu Zhiping nodded slightly and said with a smile: "Pony, you still have a long-term vision and made relevant arrangements early. Otherwise, how would there be such a prosperous penguin today?"
Bonima laughed loudly. We are all on our own. In fact, flattery doesn’t need to be slapped so loudly.