2003: Starting with Foreign Trade

Chapter 556 Acquisition Price Before the Bell Rings

Tan Jincheng does not participate in direct price negotiations, and Li Jianxin is well aware of this as well; he will not participate directly either.

"Then go to Yongzhou for a few days. I'll talk to the relevant people in Yongzhou and ask them to show you around. If there are any other projects, we also welcome Flash Motors and Beicang City Investment to invest in Yongzhou and other places in Hunan Province."

Changfeng Group is focused on Shanchi Group, while Hunan Province is more concerned about Xie Junhong.

The responsibility of the city investment company is to invest everywhere. Even though Xie Junhong repeatedly stated that he came as a shareholder of Flash Group, the people in Hunan Province were still very enthusiastic.

The trip to Yongzhou was temporary, but the arrangements were made meticulously, and Xie Junhong and his group were warmly received upon arrival.

"Thank you, Mr. Li."

Both sides tacitly understood each other. The next day, Tan Jincheng and Li Yaohui set off for Yongzhou to meet Xie Junhong and others, while Huang Ming stayed in Xiangshi to oversee the work, but they maintained constant communication.

It is impossible for a listed company to sell important assets in a short period of time.

Li Jianxin didn't delay either. He had always heard that Tan Jincheng was efficient, so he convened a board meeting the day after Tan Jincheng left and maintained communication with Huang Ming.

"Our requirement is that the shareholding must reach 51%. If Changfeng Group wants to sell its 55% stake, we welcome that. If your company wants to retain some shares, please help us communicate with Xinhua Lian."

Although Xinhua Lian's headquarters have moved to the capital, they still wield considerable influence in Hunan Province, even more so than Changfeng Group. For the time being, Shanchi cannot establish any connection with Xinhua Lian.

According to the boss, Changfeng Group would prefer to retain a certain number of shares so that it could acquire a portion from Xinhua Lian and establish a connection with Xinhua Lian, since the latter is in the mining business. Cooperation would be ideal.

"Okay, I will discuss your demands in the board meeting after I understand them."

Li Jianxin was very unwilling to sell Yangzi Automobile. During the restructuring of Yangzi Automobile, many non-core assets such as refrigerators, electric fans and buses were divested. Wuhu Yangzi Automobile was also sold to Chery.

The company only focused on producing pickup trucks and SUVs to concentrate its strengths. In addition, Changfeng invested heavily in upgrading its production lines and was about to reap the rewards, but it was forced to sell at this time.

If we were to compare Ying Jianren with Li Jianxin, then Li Jianxin's understanding of capital is far too rudimentary.

If Ying Jianren were in charge of the previous restructuring of Yangzi Automobile and this restructuring, he would definitely hype it up dramatically instead of actually modifying the production line. Even if he did modify it, he wouldn't actually invest in it.

Only hype can make stock prices rise rapidly. Obviously, although Li Jianxin knows the importance of stabilizing stock prices, he still doesn't know how to do it.

This is the difference between a pragmatist and a capitalist.

Li Jianxin's idea is to retain a certain number of shares in Yangzi Automobile, so that he will have more control over future buybacks, and it also forms the basis for cooperation with Flash Motor.

That's right, Li Jianxin, this stubborn old man, is still thinking about finding another opportunity to buy back Yangzi Automobile in the future.

Flash's demand for a controlling stake of over 51% is entirely reasonable. However, if Changfeng and Flash only complete the transaction, then Changfeng will only have 4% of the shares left.

The 5% shareholding has always been a major dividing line between minority and majority shareholders. Changfeng Group either doesn't retain any shares, or if it does, it must retain at least 5%.

The board of directors of Changfeng Group quickly approved the sale of Yangzi Automobile to alleviate the group's financial difficulties and decided to retain a 9% stake.

"Shanchi's requirement is more than 51% of the shares to achieve full control. We will retain 9% of the shares, and I will coordinate with Xinhua Lian on the other 5%."

Li Jianxin enjoys a very high level of prestige at Changfeng. Although it is called a board meeting, he had already communicated with the key figures privately beforehand. In addition, Xiangcheng City Investment had no objection to Changfeng Group's sale of Yangzi Automobile.

The actual controlling shareholder of Changfeng Group is the same as that of Jianghuai Group, namely the Provincial State-owned Assets Supervision and Administration Commission. However, although Changfeng Group is highly valued compared to Jianghuai Group, the level of importance attached to it is not as high.

The automotive industry is something every province wants to develop, but Hunan Province also has many other industries. In the view of the Hunan Provincial State-owned Assets Supervision and Administration Commission, Changfeng's problem is that the workmanship of its civilian vehicles is poor, which has led to a rapid decline in its reputation.

As long as the vehicle manufacturing process is improved and the quality is raised, there will be no worry about selling them. Therefore, Changfeng Group can save itself through its own means.

Regarding the shares, Li Jianxin didn't want to give up any more. Flashpoint said 51% was the minimum, so he really only gave 51%.

Xinhua Lian and Changfeng are related parties in the acquisition of Yangzi Automobile. Based on the principle of mutual support, it is not a problem for both parties to reduce their shareholding from 30% to 25%. This amount of money is nothing to Xinhua Lian.

The equity acquisition agreement was quickly reached, but the negotiation process was not so smooth, as the two sides still had considerable differences regarding the valuation of Yangzi Automobile. In addition, Changfeng Group was also intentionally delaying the process.

Since Changfeng Group's stock price hit a low of 7.45 yuan on April 22, a deep V-shaped recovery has been observed. Rumors of a cooperation agreement with Flashpoint have been circulating in the market, and the stock price has been rising steadily with the positive news.

As of April 30, the last trading day before the May Day holiday, Changfeng Group's stock price had rebounded to 9.1 yuan, an increase of more than 22% from its lowest point. During this period, Changfeng Group also experienced a significant gap-up opening and a limit-up.

One of Changfeng Group's objectives was to stabilize the stock price by prolonging the negotiation process.

Huang Ming was happy to cooperate, and even released some information from time to time in order to lower the price during negotiations. Compared to the meager acquisition price offered by Yangzi Automobile, a one-point increase in the stock price was worthwhile for Changfeng Group.

"Flash Group's foray into the automotive industry is inevitable and in line with the economic development cycle. As an investment institution under Mr. Tan, we at ByteDance's J Engine will definitely give our full support."

"Funding? Absolutely no problem. Our ByteDance engine currently has 6 million in cash flow, so manufacturing cars will not have any financial impact on the group as a whole."

The amount of money an investment company has is a measure of its strength.

Everyone knows that ByteDance made a lot of money during last year's bull market, but nobody knows exactly how much. This is the first time ByteDance has flexed its muscles publicly.

6 million in cash, cash!
This surprised many small and medium-sized investment institutions in China. No one expected that Tan Jincheng's low-profile investment company would have so much cash on its books. If other equity investments were included, the company would have at least 10 billion yuan.

In 2008, China's capital market was not mature enough, which is why foreign capital was able to invest in China so smoothly. The government also intended to promote the prosperity of the capital market.

As a purely domestic investment institution, ByteDance's 10 billion RMB scale is definitely noteworthy.

During the May Day holiday, Tan Jincheng returned to Xiangcheng from Yongzhou. He had to explain to Huang Ming that Orange Technology was about to go public, and the negotiations here could only be left to Huang Ming to handle.

As the second largest shareholder of ByteDance's advertising platform and its current legal representative, Huang Ming is fully qualified to sign the contract on behalf of Tan Jincheng.

"51% of the shares is fine, it's not a big problem. As long as we can control the company for now, it's fine. When we take over the entire Changfeng Group, his 9% stake will still be mine."

Huang Ming nodded: "That's true, so we haven't been too concerned about the equity. The current disagreement is on the valuation."

"Our idea is to acquire their shares at a 30% premium, but Mr. Li feels that's a bit too little, because they've also invested a lot, and Yangzi Automobile's production capacity after May will not be the same as it was three years ago."

Three years ago, Yangzi Automobile was valued at 4 million yuan. With a 30% premium, the price would be 5.2 million yuan. Based on a 51% equity stake, the acquisition price this time would be 2.652 million yuan.

From a manufacturing PE perspective, the offer is not low. However, Changfeng Group still wants to complete the acquisition at a total value of 6 million, which means the premium reached 50%.

Tan Jincheng was also a bit troubled by this. A 50% premium was a bit too outrageous. It's your business if you invest. Everyone has to invest something. If you're so capable, then don't sell it.

"51% of the shares, 2.8 million yuan, that's our bottom line. If it's not acceptable, then forget it, I'll just go and acquire Huanghai Automobile."

Boss Tan was in a hurry to go back and didn't want to stay here and waste time talking nonsense. Tan Jincheng originally didn't plan to attend the Nasdaq bell ringing, but Shen Nanpeng suggested that Tan Jincheng bring Gu Qingqing with him.

What is this "American Dream" that the old man likes to talk about? At the Nasdaq bell-ringing ceremony, there was a founder who was only 23 years old and a founder who was only 21 years old. The man and woman had a net worth of over 100 million. Isn't this the perfect American Dream?
Shen Nanpeng understands the US's approach of using the other party's cultural practices to inflate Orange Technology's stock price and improve its performance on the listing day.

"The price has gone up?"

“I’m in a hurry to go to the US. You can talk to them. It’s fine if they give us more. Anyway, we’ll keep the profits for ourselves. But 3 million is definitely not enough. If it’s 3 million, we’ll have to give them more shares.”

“Okay, then I’ll talk to them. I’ll try to get the price down to below 2.8 million yuan,” Huang Ming said with a smile.

If the boss is willing to lower the price a little more, they will have more room for negotiation. However, Huang Ming doesn't want to let Changfeng Group get away with it so easily. 2000 million yuan can do a lot of things.

There are great opportunities to invest in or even acquire a startup company.

"Okay, then I'll be going now. I'll leave this to you. I've already spoken to Mr. Li. I need to go to Old Mi, and Mr. Li understands."

"Then I wish you a safe journey, boss."

I'm off to Old Mi to harvest chives!
(End of this chapter)