Chapter five hundred and fiftieth chapters first ceremony before soldiers
Of course Xie An knew what "cooperation" Zhang Yida meant. He said calmly, "Of course cooperation is no problem. I wonder what kind of conditions Mr. Zhang is willing to give?"
Zhang Yida gestured with four fingers and said, "4 billion Hong Kong dollars! I am willing to privatize Digital Kingdom at a 20% premium based on today's closing price."
Logically speaking, this price is not too low, and there is a 20% premium.
But when Xie An thought about Digital Domain's market value of more than 20 billion Hong Kong dollars, he felt that maybe he should persist.
"5G is coming soon, and the virtual reality industry will definitely usher in a big explosion."
Xie An smiled and said, “After all, Digital Domain has invested more than US$200 million in the VR industry.
Everyone believes that the virtual reality industry is currently in a cold winter, and we are betting heavily on this, betting that it will eventually explode."
Although Xie An did not explicitly express his rejection, Zhang Yida had already heard the rejection.
“2016 was the first year that the virtual reality industry exploded. After that, the popularity plummeted. Apart from VR experience centers in large shopping malls, there were almost no other practical applications.
Compared with mobile phones, head-mounted display devices are only popular among technology enthusiasts."
Zhang Yida chuckled, "Maybe you are right, this industry will eventually explode, but don't think about it within one or two years.
Maybe five or ten years, maybe twenty years.
This is an area that requires continuous investment of money. Mr. Xie, have you communicated with shareholders such as SoftBank and Poly?
Let’s see if they are willing to work hard for another ten or eight years and wait for the final harvest.”
Zhang Yida's words made Xie An look heavy. The special effects business was already suffering a steady stream of losses, plus there was a big money-burning VR company.
Based on an annual loss of 500 million for ten years, Digital Domain's market value will be lost.
Digital Domain's market value last year was still HK$7 billion, but this year it was halved.
In the past two years, when VR concept stocks were popular, the market value was more than 20 billion Hong Kong dollars and the price-earnings ratio was more than 490 times.
But compared with the storm of large A-shares, it is still slightly less impressive.
Baofeng has hit the daily limit 37 times in the 40 days since its listing, and its market value has soared 28 times, reaching a maximum market value of 40 billion yuan.
As for Baofeng's revenue that year, it was only 650 million yuan, which was only more than 100 million yuan more than Digital Kingdom back then, but its market value was almost twice as high.
However, these good days are gone forever. Xie An recovered his mind and said to Zhang Yida: "Can privatization be turned into investment?
Digital Domain can issue 20% additional shares to Ruixiang based on the average stock price in the past 30 days.
Digital Domain's shareholding is relatively dispersed, with 20% of the shares firmly being the largest shareholder."
Zhang Yida raised the corner of his mouth, what does this mean? Do you regard me as a strategic investor?
"Ruixiang is not content with being a major shareholder, or the kind of person who doesn't care about things."
Xie An shook his head, "Mr. Zhang, you misunderstood, that's not what I meant.
I know that Ruixiang has four major business sectors, and content is one of them.
We can cooperate with Ruixiang in film and television production, VR games, original IP, VR entertainment, live broadcast, etc.
Sometimes, the goals that can be achieved through strategic investment do not necessarily have to be achieved through mergers and acquisitions, right?"
There is nothing wrong with what Xie An said, but Ruixiang is not short of funds. And Zhang Yida believes that Digital Domain needs to be merged into Ruixiang's system to play its greatest role.
So Zhang Yida said: "If you are worried about selling too early, you will not enjoy the dividends of the VR explosion.
Ruixiang can use equity to acquire shares held by your management."
"Ruixiang's current public valuation is US$205 billion, right?"
Xie An frowned and said, this is worse than a cash purchase!
It’s already 205 billion U.S. dollars, and it hasn’t even gone public yet. If it goes public, it will double to 410 billion U.S. dollars?
Wouldn't that mean he was on equal footing with Ahri and Penguin? He believed that Rui Xiang was not qualified yet and would not be able to catch up with Ahri and Penguin in at least two or three years.
"What about 29.9% shares?"
Xie An proposed a new plan. He looked at Zhang Yida and reminded: "Any more, and the tender offer line will be triggered.
If the VR industry sees great development in the future, Ruixiang will just have to cross 30% of the offer line.
Moreover, investors’ money can also be used to develop the VR industry.
If it cannot develop, the losses will be smaller.
Of course, if Ruixiang develops, the privatization price it pays will be higher.
It’s all relative!”
Seeing that Zhang Yida seemed unmoved, Xie An continued to use his sharp tongue to persuade, "Just like what you just said, Mr. Zhang, the losses may continue for many years.
If Digital Domain is installed into Ruixiang's system, it will have an impact on the market value of Ruixiang's future listing and lower profits.
When Digital Domain develops well, it will be directly consolidated..."
Focusing on capital operation methods, Xie An told Zhang Yida various advantages.
The core point is to hope that Zhang Yida will only invest strategically, let Ruixiang become the major shareholder, and retain the equity of himself and others.
Zhang Yida knew what the other party was planning, so he used Ruixiang's money to develop the business so that he could share the dividends after it developed.
"If Ruixiang becomes the majority shareholder, what do you want?"
Zhang Yida asked with a smile.
He had seen the shareholding structure of Digital Domain, although no shareholder held more than 20% of the shares.
However, there is such a thing as "people acting in concert", and Ruixiang, the major shareholder, cannot necessarily be said to be in control of the overall situation.
If you think about it carefully, maybe when the VR industry breaks out, Ruixiang will be kicked away.
"Give me five years of management rights. If I still can't bring Digital Kingdom up in five years, I will abdicate and make way for others."
Zhang Yida nodded, "Okay, I also know your appeal. I need to think about it."
On the way back.
Bao Fan had not interrupted just now, but was listening from the sidelines. At this time, he asked in the car: "Why didn't you agree to him?"
Zhang Yida did not answer this question, but asked Bao Fan's relevant views.
"Thank you for this guy, I think being loyal is like being traitorous."
Bao Fanxun glanced at Zhang Yida and said, "Don't think I'm being alarmist. I've always judged people very accurately."
Zhang Yida nodded and asked: "Then you know that this person is unreliable, and you still ask me why I don't agree to him?"
Bao Fan asked with a smile: "Then you really gave up?"
Seeing Zhang Yida's silence, Bao Fan said in surprise, "Isn't it right? Are you really giving up on the acquisition?"
With 29.9% of the shares in hand, even if there is a dispute between major shareholders, it will not be easy to resolve it with your financial resources."
Zhang Yida shook his head, "Didn't you see? Zhou Yongming didn't show up today. Together, they have a shareholding of more than 50%."
Bao Fan shook his head, "They don't necessarily all wear the same pair of pants, especially when there is a conflict of interest."
He thought for a while and then said: "However, you are right. This is also an unsafe factor.
If they collude one day, it is not impossible to kick you out."
"You say, how about we become barbarians for once?"
Bao Fan was stunned for a moment, "Isn't it right? For such a small company, you can't do it, right? Then the stock price hasn't skyrocketed?"
Zhang Yida chuckled, "It's just a joke. If you don't sell it, you will lose it. Buying VR assets now is almost like picking up rags."
There are a lot of companies that have gone bankrupt in Silicon Valley, so just go and take them over. I just want to say that development may be a little slower, and you need to reinvent the wheel, rather than just take it and use it."
From the bottom of his heart, Zhang Yida still hopes to privatize Digital Kingdom.
After all, the current state of the company is not suitable for listing. It requires continuous investment and the stock price cannot rise.
However, he plans to "be polite before fighting". It depends on the choice of Xie An and the people behind him.