2003: Starting with Foreign Trade

Chapter 955 Privatization, Initiated!

"Happy birthday, Mr. Tan."

"Happy birthday, boss! Any special plans for today?"

"What are your plans? I'd like to leave work early and go home to celebrate my birthday. It's not that important since it's a birthday celebration."

From the receptionist to the senior management, everyone offered their blessings to Tan Jincheng, and small gifts such as flowers were also received in the office. This is probably a tradition that Weilai Auto has every year for Qixi Festival.

"Hehe, boss, you really got a good deal. Your birthday is so easy to remember, it's hard to forget it."

Zeng Jixiang and Zhao Xinyi were sorting through the small gifts with several subordinates. When they found something they liked, the two of them didn't hesitate to keep it for themselves, ostensibly to help their boss.

Of course, these are just gifts for internal colleagues. Gifts sent by fans and delivered by the front desk are not touched. In fact, a corner has been specially set aside in Tan Jincheng's top-floor office to display these gifts.

"The same old rule applies: gifts worth more than 500 yuan for ordinary employees are either returned to the recipient or converted into cash red envelopes and returned to them. The same applies to fans."

"The rules are good, but now some people have discovered this pattern and started doing business with it."

Working with a boss who has tens of millions of followers across the internet is quite a headache for Zhao Xinyi, the personal assistant. In recent years, fan culture has become increasingly serious. Although the boss's fan base doesn't engage in the kind of support activities that celebrities do, some of them are indeed quite fanatical.

Another example is that every year on the boss's birthday, after discovering that Tan Jincheng does not accept expensive gifts, some clever fans even started this business, including some employees of the company.

It's not difficult to handle, but it increases the workload for their team.

Tan Jincheng was somewhat helpless about this: "Forget it, let's follow the rules. Anyway, it only happens once a year. You guys just have to work a little harder to handle it."

There are still many smart people, but as long as it is within reasonable rules and does not involve public order and morality, then it is perfectly acceptable to make a little money. In fact, he also knows that some "smart people" will send wedding invitations to large corporations under the guise of weddings, birthdays, etc., and if they are lucky, they may even receive a gift.

Weilai Auto had also received similar wedding invitations, and Tan Jincheng was quite shocked when he saw them; to be honest, this unconventional format was quite interesting.

"understood."

Seeing that the boss had started working, Zhao Xinyi didn't say anything more. At the end of last month, the launch of Weilai's sub-brand and new architecture caused quite a stir in the past week. The industry's evaluation of Weilai's launch was relatively high.

The launch of a new sub-brand marks the official entry into the pure electric vehicle market priced under 20 yuan. This move is seen as a step out of the comfort zone, the start of a new strategy, and a move towards becoming a true leader in the new energy vehicle industry.

The release of the new 400V architecture amazed all the peers present. The rapid progress of Weilai's technology has also put pressure on its peers. The strong performance of Aion S in the ride-hailing market and its high cost performance have been a hot topic since last year's Guangzhou Auto Show.

In terms of reputation, the newly redesigned Aion S has performed exceptionally well. According to market forecasts, the Aion S alone, given the anticipated boom in new energy vehicles, is expected to achieve annual sales of around 10 units.

In July, due to the official reduction of subsidies for new energy vehicles, the overall sales of new energy vehicles declined sharply. However, the Aion S maintained its growth momentum thanks to its high cost performance and the growing demand in the ride-hailing market.

Leading automakers in the market, such as BYD, Geely, and BAIC, which have invested heavily in the new energy vehicle sector, have also developed models for ride-hailing operations, but in terms of competitiveness, none can compare to the Aion S.

The Aion S still firmly holds the title of king of ride-hailing services. Competitors have tried various means to attack this model, especially since the title of king of ride-hailing services is not a good one for Weilai, which is determined to take the high-end route.

Using the title of "King of Ride-Hailing" to attack Wei Lai has become the most advantageous point of contention for major car companies. The key is that this thing is safe, which is a fact. Wei Lai has no way to sue them for spreading rumors.

Unfortunately, Wei Lai didn't take the bait at all. Tan Jincheng has stated in public on more than one occasion that Wei Lai was happy with the title of "King of Ride-Hailing" and that this title did not conflict with the brand strategy in any way.

The widespread use of ride-hailing services at least means that safety is more guaranteed, and Weilai, which touts safety as its biggest luxury, basically ignores the attacks from its competitors.

Although some consumers are still unconvinced by public opinion, sales figures cannot be faked. Every car company boasts about how well their cars sell and how great their sales are, but a look at the compulsory traffic accident insurance data at the terminal level makes it clear.

The Aion S remains incredibly popular.

The new 400V architecture and the latest battery cell products represent a show of strength for WILTECH in the technology field. According to WILTECH's financial report, as of the end of July 2019, WILTECH had nearly 2000 supercharging piles and more than 200 supercharging stations nationwide, covering more than 140 cities.

Meanwhile, WILAY's supercharging pile factory in Liyang has officially started construction and is expected to be put into production in early 2021, which to some extent accelerates WILAY's advantage in the energy replenishment field.

With the charging network becoming increasingly advanced, coupled with their supercharging technology and advantages in the battery field, Weilai is doing a better and better job in replenishing energy and solving range anxiety.

"Wow, Maodou 3's insurance registration volume has entered the top ten in the country."

1182 vehicles – that's the number of Tesla Model 3 vehicles delivered in China in July. It's also the first time a Tesla model has entered the top ten of the domestic new energy vehicle delivery rankings. In July, when overall sales were declining, this performance is truly impressive.

Every company or entrepreneur loves to tell a little white lie, but stock market trends never lie. Those who play the financial game are the most pragmatic. Tesla's stock price hit its lowest point since January 2016 in May.

However, with the popularity of the Model 3 in China and its performance in July, Tesla's stock price has rebounded for two consecutive months, with a rebound of more than 30%. Yesterday, it closed at $233.84, and its market value is approaching $400 billion.

"I wonder how much Lao Cheng bought at the bottom and made a profit again."

In May, Cheng Linfeng wanted to buy Tesla at the bottom. According to him, Tesla had already fallen to a low point. At that time, Musk had not yet announced the price of the domestically produced Model 3, so buying at the bottom seemed to be very risky.

As expected, the price of the Tesla Model 3 fell short of market expectations, and Tesla experienced another round of sharp declines. However, judging from the current stock price trend, Tesla has basically emerged from its predicament, and its performance in China has lived up to Cheng Linfeng's prediction.

This year, ByteDance's budget for investment has increased significantly. In order to make up for the shortcomings of WILTE in automotive-grade chips, it needs to increase investment in the semiconductor field, which is also a major test for ByteDance's cash flow.

Tan Jincheng is known as the "Cash King of Zhejiang Province," but overall, every penny in the company is useful. It's impossible for a hundred or two hundred billion yuan to lie there unused. To acquire national technology, at least 10 billion yuan needs to be prepared in advance.

This funding is still a major test for ByteDance's advertising platform.

National Technology, with a market value of 40 billion yuan as of the end of July, had total assets of 20.14 billion yuan, total liabilities of 9.26 million yuan, and negative operating cash flow of 7000 million yuan. In terms of financial condition, it can be said to be a company that is as bad as it gets.

To put it simply, Tan Jincheng would need to spend at least 40 billion yuan in cash to acquire a listed company whose total assets, after deducting all liabilities, are just over 10 billion yuan. From a financial investment perspective, this is simply a case of being a sucker.

However, we can't look at it that way. Judging from the information collected by Cheng Linfeng's secret acquisition team during the due diligence process, Guomin Technology does have something to offer, especially in terms of patented technologies that are highly valued in the semiconductor and chip industries.

As of 2019, National Technology has more than 1400 patented technologies and more than 700 authorized patents, covering fields such as chip design, information security, and low power control.

Among them, the trusted computing chip technology is considered a pioneer in the field of trusted computing in China. It has been certified by the State Cryptography Administration, and its related patented technologies cover encryption algorithms, secure storage and hardware-level protection technologies. It has won the Patent Gold Award and many national patent excellence awards.

The company has won one gold patent award and nine excellence patent awards, and has participated in the formulation of 19 national and industry standards. It has established certain technological barriers in fields such as information security, MCU chips, and mobile payment.

This is different from those who modify the appearance of small home appliances or re-register expired patents. In terms of patent quality, these are relatively high.

Furthermore, judging from these patented technologies, this company had ideals in the past, but unfortunately it has become like this now. Perhaps the original controlling shareholder's funds and strength were insufficient to support the company's development.

After conducting due diligence and obtaining authorization from the boss, Tan Jincheng, the acquisition team has essentially launched the plan to privatize and acquire National Technology. The first step, of course, is to raise funds.

Regardless of how bad their financial situation is, their market value of 40 billion yuan is undeniable. If the acquisition needs to be completed as soon as possible, a certain premium must be paid. The only difference is how much premium.

"Based on a premium of 10% to 20%, the funds to be prepared for the acquisition stage would be around 50 billion yuan. How is this preparation going?"

Upon seeing that the Maodou 3 had entered the top ten in new energy vehicle sales, and thinking of Cheng Linfeng, Tan Jincheng immediately called Cheng Linfeng over. Based on the data at hand, they began to inquire about the privatization plan of National Technology.

Further investments will be discussed later, but 50 billion yuan in cash is essential for the acquisition phase. Tan Jincheng's idea is to use cash whenever possible; he is not inclined to accept a share swap proposal. Problems that can be solved with money should be solved with money.

"The 50 billion yuan in start-up capital is not a problem for us; we have almost raised it."

On July 22, the listing of the Science and Technology Innovation Board (STAR ​​Market) saw many funds, including ByteDance (a major investment platform), actively participate in offline IPO subscriptions and make substantial profits. As Tan Jincheng expected, the first trading day of the STAR Market was so frenzied that a few days later, the regulatory authorities issued penalties to more than 130 institutions, prohibiting them from participating in offline IPO subscriptions for a period of time.

Raising 50 billion yuan of its own funds through cash flow and equity pledging would not put much pressure on ByteDance's engine. However, Tan Jincheng would naturally not do something so foolish. Why not use bank loans and other financing channels available?

In addition, Ningbo and Beicang have attached great importance to the semiconductor field in recent years. BYD's semiconductor company has invested heavily in Ningbo, and there are also chip town projects planned in Beicang.

In the past two years, semiconductor companies of all sizes have been established or introduced, the most well-known being German company Prama and SMIC. Mr. Tan's involvement in the chip industry at this time is indeed driven by strategic needs, and secondly, it also aligns with local investment requirements.

Like automobiles, semiconductor chips also require a complete industrial chain. The semiconductor industrial chain in Beicang District has already reached a certain scale. By developing automotive-grade chips at this time, Weilai can save a lot of industrial chain costs.

The overall situation aligns with the district's strategy, and Beicang is a company with plenty of money. Now that their own son is coming to ask for money, it couldn't be easier.

"The funding issue is easy to resolve, but what we need to address now is the legacy issue of national technology. We have already sent people to make contact about this."

National Technology, which has suffered huge losses for two consecutive years, will have to make this year's financial report crucial. If it suffers losses for three consecutive years, it will be delisted. The biggest historical issue behind the acquisition that caused National Technology's huge losses is the 5 million yuan investment dispute with Qianhai Qilong in 2017.

This year remains the period of performance compensation disputes for this investment, which has exacerbated the financial pressure on National Technology. If it wants to go private, the first step must be to resolve these historical issues and enhance investor confidence.

The choice of the acquisition team was also very simple: to find Qianhai Qilong to buy this debt. Ironically, the investment dispute with Guomin Technology was due to the lack of registration with the Asset Management Association of China and the lack of fund custody, which led to the embezzlement of 5 million yuan of investment funds.

The fact that relevant personnel have gone missing and have been arrested on suspicion of embezzlement truly proves the saying that the world is a giant makeshift operation.

Tan Jincheng nodded, agreeing with this point: "Okay, you should buy this debt as soon as possible and try to get Guomin Technology suspended from trading this month, the sooner the better."

Privatization is one thing, but if a company is forced to delist due to financial problems, then the two are different. In addition, forced delisting also requires a process. LeEco, which has been defunct for several years, is still not delisted.

If this drags on, it'll be too late.

I checked the calendar, and today is Wednesday, August 7th. There are still three trading days left this week, including today.

"Let them suspend trading as early as the 12th, and no later than the 16th."

From July 1st to 6th, Guomin Technology fell by 12.34% in 27 trading days. Compared with the overall market and the industry, the stock price performance was very poor, but this is a good thing for the acquisition.

The more severe the fall, the lower the premium paid. Passing the board resolution as quickly as possible and immediately suspending trading, while simultaneously announcing the privatization framework, can minimize market fluctuations during the financial reporting period and also provide a window of time for subsequent negotiations and regulatory approvals.

If it's delayed until the second half of the month, listed companies will have to release their semi-annual reports, which will make things much more difficult.

"We've already started secret negotiations with them, and this weekend is the best window of opportunity."

The team behind ByteDance's advertising platform has done countless investments and mergers and acquisitions. The first major project they undertook was the backdoor listing of FlashDrive Technology. The entire team is extremely skilled in this kind of privatization acquisition process.

"You're quite efficient, but you still need to be careful about confidentiality. I trust our own team in this regard, but I don't quite trust National Technology. You'll need to coordinate with their leaders."

The current chairman of National Technology is Sun Yingtong, who joined National in 2003 and was promoted to chairman in May 2018. He is also the general manager and legal representative. He is 47 years old this year and is currently the largest shareholder of National Technology, holding 3% of the shares.

Since National Technology became uncontrolled in 2013, Sun Yingtong has gradually taken over the company. To achieve a privatization acquisition, the first step is to gain his approval.

Since becoming general manager in 2005, National Technology's achievements in integrated circuit design and new energy materials are closely related to him. For National Technology, Sun Yingtong can be considered to have made great contributions.

National Technology's technological background actually originated from ZTE Corporation, which was one of the leading chip design companies back then. Sun Yingtong was once known as the "IC King".

The company's name itself suggests that the founders may have harbored a deep-seated desire to serve the country through industry. However, reality proved harsh. The loss of 500 million yuan in investment funds and the huge losses incurred by the lithium battery material company acquired for 13 billion yuan dealt a heavy blow to Guomin Technology.

The company's past glory has turned into a predicament. As the legal representative of the company, others can simply walk away, but he cannot. Sun Yingtong has been under considerable pressure for the past three years, especially in 2017 and 2018.

As one of the earliest companies listed on the ChiNext board, Guomin Technology will definitely not be profitable this year. However, if it wants to avoid the risk of being delisted, it must find a way to stage a financial escape.

In reality, this tactic isn't that amazing. There are countless companies that have suffered huge losses for two years and then manipulated their finances to achieve profitability in the third year in order to avoid being delisted. When it comes to the scallops involved in this stunt, this company is the one that has the most ingenious tricks up its sleeve.

National Technology has no choice but to learn from Scallop Company this year. Being designated as a special treatment (ST) stock on the ChiNext board almost means it's doomed. On the main board, you can sell the shell company, but on the ChiNext board, you can't even sell the shell.

What Sun Yingtong didn't expect was that he would receive a call from Tan Jincheng at such a difficult time for National Technology. He had no connection with this popular entrepreneur and didn't know him at all before.

Tan Jincheng was contacted by an acquaintance of ZTE Corporation. During the most difficult months of June and July last year, ByteDance's advertising platform invested heavily to buy up ZTE's stock price.

In addition, Tan Jincheng had spoken well of ZTE in public on several occasions when the company was being criticized. Due to the different choices the two companies made when facing difficulties, their reputations were polarized.

Tan Jincheng answered several questions from netizens about this issue at the time. Tan Jincheng said that the two companies have different positioning and play different roles. Moreover, under such a sudden situation, some decisions may not have been understood by everyone at the time, but he hoped that everyone could give ZTE some time.

Everything will become clear in a few years. At the time, Tan Jincheng's attitude drew criticism. Given the circumstances, speaking up for ZTE was practically suicidal. However, Tan Jincheng still made his stance clear, and some senior executives at ZTE appreciated the gesture.

Unlike chrysanthemum companies, ZTE, as the first company to be targeted, made a choice that, from any perspective, was not ideal, but it was out of necessity. The strategic significance of the two companies was fundamentally different.

On the other hand, ZTE's performance at the time accelerated the timeline for domestic substitution to some extent, because only by having our own technology can we avoid being threatened by others.

"Mr. Tan, do you mean you want to privatize and acquire National Technology? May I ask what the reasons are?"

Sun Yingtong, who came from the China Development Bank, had seen a lot of big events, but she was still stunned for a while when she received Tan Jincheng's call. How could this popular entrepreneur, who had been making waves in the A-share market just a few months ago, have taken a liking to Guomin Technology, whose financial situation was terrible?
"The reason is simple: your company has the technology we need in automotive-grade chips, which is relatively weak in this area, and we want to fill this gap."

"In addition, we also acknowledge that your company currently has no actual controller. After comprehensive evaluation, we have decided to launch an acquisition of your company."

The most important thing is that it's cheap. The acquisition cost of 50 billion yuan is not low, but buying a mature semiconductor company with more than 1000 patents for 50 billion yuan is very cost-effective for him at present.

It's important to understand that the semiconductor and technology markets currently have very high premiums. Just for investing in Cao Xudong's Momenta, ByteDance paid $4.6 million and only acquired a 4600% stake.

It cost over 300 million yuan for such a small stake, and further investment is needed. In Tan Jincheng's view, acquiring an automotive-grade chip company for no more than 5 billion yuan is still very worthwhile.

Even though he has many troubles, as long as he has money, none of them are troubles.

2019年8月12日凌晨，创业板上市公司国民技术发布公告，巨量引擎投资有限公司正式对公司发起私有化要约收购，公司将于2019年8月12日开市起停牌。

Regardless of whether you agree or not, once a takeover offer has been made, the company has to respond.

"Damn, how come there's been no news at all? Why is Boss Tan's move so sudden? Even the internal organizations don't know about it?"

Whether the institutions knew about it or not is hard to say, but as of the close of trading on the 9th, National Technology closed at 6.34 yuan, down more than 3% that day, with a market value of only 35.38 billion yuan.

"Wow, will the stocks of these companies open high or even hit the daily limit tomorrow?"

(End of this chapter)