MTL - Reborn Capital Empire-v2 Chapter 692 LBO

Chapter 692 Leveraged Buyout

…

"Have you contacted Howard Stringer?" Guo Shouyun asked after pondering for a moment.

"Contacted. But he said the Sony U.S. board was very interested in the MGM brand."

"Interested?" Guo Shouyun smiled lightly, took out his mobile phone to find the other party's number and dialed it. After a short time, the phone was connected.

"Bruce, I haven't heard from you in a long time. How are you doing?"

"Thank you for your concern, I have a good time. However, Howard, the cooperation between Matrix and Sony, from "The Da Vinci Code" to "Van Helsing", the two sides agreed to cooperate very happily. But I don't know why, you have to halfway Intervene and pry away the M&A business that Matrix has been talking about for almost a year? This is not something a friend can do." Guo Shouyun went straight to the topic.

"Bruce, I'm sorry about MGM. But this is a direct order from Sony headquarters in Japan. I'm just a part-time worker, and I can't resist Mr. Deibuka's decision."

"Is it impossible to change?"

"Yes!" Howard Stringer tried his best to sound resolute.

"That's it! But I'm curious, where are you in your negotiations with MGM?"

Howard was instantly alert, "Bruce, this is the company's secret, I can't reveal it to the outside world, I hope you can forgive me."

"Forgive, of course forgive, who made us friends!"

Guo Shouyun's tone was full of relaxation and a hint of a smile. But the more so, the more worried Howard Stringer felt. After meeting for so long, he knew exactly what kind of person the guy sitting opposite was. Coupled with the huge amount of funds in the hands of the other party, he will never eat this boring loss in vain.

"Bruce, the Matrix is ​​already very strong. From 2002 to the present, you have been the highest-grossing film company in Hollywood, with smooth progress in TV, variety shows, music, etc. The number of Universal Studios has also reached 7 in the world. It's in good condition. There's really no need to keep an eye on MGM, a declining film and television company..."

"Howard!" Guo Shouyun interrupted him, "Although Matrix is ​​developing well, our foundation is still very weak, so I am very interested in MGM's film library. If you are willing to give MGM's film library to If you give it to Matrix, how about its production department will be acquired by you Sony?"

"I'm sorry, Bruce! I'm afraid that won't work."

The most alluring thing MGM has right now is its library. If there is no revenue from the film library to support, as early as 2002, after the investment of "Wind Whisperer" failed, it should have closed down.

Therefore, like Guo Shouyun, Sony also values ​​MGM's film library and the copyright it represents, especially the classic "007" series.

"Don't have to talk?"

"Bruce, maybe I can get it from the head office!"

"Okay, I'll wait for your news! Goodbye!"

There was no time to answer Howard, he hung up the phone directly.

"Boss, do you really have to wait for Sony's reply?"

Guo Shouyun's phone turned on the speakerphone, and Buddy Morris, who was next to him, naturally heard the conversation between the two.

"Wait? Hmph, Howard Stringer just doesn't want to turn against us directly because of this matter, and just find an excuse to delay the time. If we really believe him, what we will be waiting for in a few days is not Sony's reply, but them. The successful press conference of the acquisition of MGM!" Guo Shouyun said coldly.

Buddy Morris nodded and said angrily: "This matter is my responsibility. If I didn't care about the purchase price and signed the contract earlier, there might not be these troubles."

Guo Shouyun knew this subordinate who had been with him for five years. When it comes to management skills, Buddy Morris is just the middle of the pack. But he is more loyal, able to carry out his orders meticulously; and he is diligent in his work, and he never makes an opinion on things he does not understand. This is Guo Shouyun's fancy.

In addition, it may be the habit of running a small film and television company from scratch in the early years. When it comes to finances, he's good at crunching the numbers, and the same goes for mergers and acquisitions. This can't be said to be a disadvantage, but sometimes things change because the negotiation takes too long, such as this acquisition of MGM.

"It's not your problem. Since I agreed with your M&A strategy, now that something happens, the biggest responsibility lies with me." Guo Shouyun waved his hand, "Howard and Sony want to get MGM out of our hands. It's not that easy to steal."

"A direct invitation to buy?" Buddy Morris quickly guessed what the big boss was thinking.

Guo Shouyun nodded.

"Send an offer to MGM's board and say we're going to buy MGM for $15 a share."

Under U.S. securities laws, a company's board of directors must respond to a takeover offer within ten days of receiving it.

Buddy Morris just wanted to say whether the price would be too high, but he thought that it was because of his own scrutiny and hesitation that the acquisition of MGM had changed, so he took back what he said. .

"What if Howard and Sony raise the purchase price?"

"If they can raise the price above $18, let MGM go to them." Guo Shouyun thought about it and said.

MGM's real value is now around $3.5 billion. If the price per share is raised to $18, according to MGM's total share capital of 400 million, the price of the wholly-owned acquisition will reach an astonishing $7.2 billion. The premium has nearly doubled.

Everything has value, although MGM's film library is highly valued by Guo Shouyun. But doubling the premium is already too high. Although in the future era of entertainment to death, the value of copyright will be higher and higher. But doubling the premium for MGM's library is simply too high.

More importantly, Sony's revenue only improved slightly after 1999 under the leadership of Howard Stringer. They were robbed by Guo Shouyun in the middle of the "Spider-Man" that made them earn money, and now Sony is just tepid.

Such Sony, why let Providence Equity Partners, Texas Pacific Capital Fund, Comscat, DLJ Commodity Bank Partnership, and Sifang Group believe that they can lead MGM back to life? Not only to recover the cost, but also to repay the high interest of the leveraged buyout.

Unlike ordinary buyouts, leveraged buyouts are all about excess returns. Without a return of more than 20%, how can capital support you?

If Sony buys MGM for $7.2 billion, with the way they operate, it's unclear if they can deliver a 20% annual return on investment. Looking at the performance of Sony Pictures over the years, this hope is too slim.

…

Howard Stringer, who received the news, hurried into the MGM conference room. At the same time he came in, representatives of Providence Equity Partners, Texas Pacific Capital Fund, Comscat, DLJ Commodity Banking Partners, Foursquare Group, five PE partners were already sitting here. Coupled with the MGM executives represented by Gary Barber. A total of 17 people are eligible to attend the meeting.

However, compared to before they sat together and dreamed of making a fortune through the acquisition of MGM, the atmosphere here is now extremely depressed.

If it is said that among the people, who is in the worst mood. In addition to Howard Stringer, I am afraid it is Gary Barber.

According to the acquisition agreement he reached with Howard, after Sony bought MGM, he would receive $25 million in cash and 50 million in MGM stock. However, these shares have a six-month lock-up period. Gary Barber can cash out after half a year.

But even so, that's a huge fortune that adds up to $75 million! That's nearly ten times more than his salary and bonus for eight years at MGM.

In the face of rich interests, the father-son relationship is bullshit, not to mention the M&A contract that has not been fully signed with Matrix? !

"I think everyone already knows. The Matrix has made an offer to MGM's board of directors for $15 per share. Unless our offer is higher than $15, all our previous deals are void!" Gary Bar Bo said with a serious expression.

The vast majority of U.S. listed companies are publicly held, with management and institutional investors rarely holding more than 20 percent of the shares. Therefore, the board of directors elected by them represents the interests of these investors. If they rejected Matrix's $15 per share offer, they agreed to Sony's $13 offer. That would mean the board members broke the law in this deal. Afterwards, it is inevitable that the investee will go to court. At that time, even the completed acquisition will be declared invalid by the court.

"Has this acquisition offer been handed over to MGM board members?"

A middle-aged man with gold-rimmed glasses, thin cheeks and pursed lips, who looked a bit mean, asked.

Gary Barber knew what he meant.

"The Matrix's executive vice president and chief financial officer, Tyler Adams, came to MGM in person to hand over the offer to MGM Chairman Carl Bass. He also sent a gift to every MGM board member got one."

Hearing this, everyone immediately understood. It is impossible to use the time difference to sign the contract if you want to hold on to the acquisition invitation of the matrix company.

"If I had known, I should have signed the acquisition contract earlier."

A burly middle-aged white man with a beard reminded him annoyed.

His name is Jim Chanos, MGM's chief operating officer, and one of the MGM executives involved in the merger. In addition to him and J. Barber, MGM participated in the LBO and benefited from it, as well as Chief Financial Officer Donato Essie and Chief Legal Officer Garth Gary. In this leveraged buyout, all four received a lot of cash and equity. So they are more hopeful that the acquisition will succeed than the investment team led by Howard Stringer. That way they can get a big payout that will allow them to retire early.

"If you guys weren't so greedy, now we're drinking champagne to celebrate this perfect acquisition!" a bald black man said coldly.

His name is Dan Bailey, the representative of Providence Equity Partners in the LBO.

"We are greedy, why aren't you stingy? If you could agree to our conditions earlier, the negotiations would have ended long ago." Donato Essie said not to be outdone.

"As the producer of 'The Wind Whisperer,' who directly made MGM the laughing stock of Hollywood, I think he's worth the $5 million and 800,000 severance package."

"What did you say…!"

"Okay!" Howard Stringer roared~www.novelbuddy.com~ interrupted the complaints and dissatisfaction of the two, "Everyone, now we are people in one camp, our interests are related, we share weal and woe, don't we still To hate each other because of a fact that cannot be changed?"

Although he is also dissatisfied with the greed of MGM's management, the negotiation time has been prolonged, which has caused the current variables. But what makes him stronger than Donato Essie and others is his ability to accept reality and find a solution to the problem in the first place, rather than wasting precious time on pointless complaints and regrets.

Dan Bailey and Donato Essie also realized everyone's dissatisfaction, so they quickly closed their mouths.

"Now that things have happened, the quarrel is pointless, the key is to come up with a solution to the problem." Howard Stringer continued.

"Actually, everyone knows that after Matrix intervenes in this acquisition, we have only two options left. First, to buy MGM at an offer that exceeds Matrix. Second, persuade Matrix to give up the acquisition, or let Matrix quit the acquisition. They also joined in."

Sharon Watkins is the representative of the "Texas Pacific Capital Fund", with a typical Texan accent, which makes people sound a little different. But no one cares about that now.