Chapter 692 Leveraged Buyout

……

"Have you contacted Howard Stringer?" asked Guo Shouyun after a moment of silence.

"Contacted. However, he said that Sony's U.S. board was very interested in MGM's brand. ”

"Interested?" Guo Shouyun smiled faintly, took out his mobile phone and dialed the other party's number. It didn't take long for the phone to go through.

"Bruce, it's been a long time since I've heard a call from you. How are you doing?"

"Thank you for your concern, I'm having a good time. However, the cooperation between Howard, Matrix and Sony, from "The Da Vinci Code" to the current "Van Helsing", the two sides have worked together very happily. But I don't know why, you want to step in and pry away the M&A business that the matrix has been talking about for almost a year? Guo Shouyun went straight to the point.

"Bruce, I'm sorry about the MGM thing. However, this is an order issued directly from the headquarters of Sony in Japan. I'm just a part-time worker, and I can't resist Mr. Fukayuki Idei's decision. ”

"Can't you change it anymore?"

"Yes!" Howard Stringer tried to make his tone as resolute as he could.

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

Howard instantly became alert, "Bruce, this is a company secret, I can't reveal it casually, I hope you can forgive me." ”

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

Guo Shouyun's tone was full of lightness and a hint of a smile. But the more this happened, the more worried Howard Stringer became. After having intersected for so long, he knew very well what kind of person the guy sitting across from him was. Coupled with the huge amount of money in the other party's hands, he will definitely not eat this loss in vain.

"Bruce, the matrix is already strong. From '02 to the present, you have been Hollywood's highest-grossing studio, and you've been doing well in TV, variety shows, music, and more. The number of Universal Studios has also reached 7 worldwide, and the revenue situation is good. There's really no need to stare at MGM, a declining film and television company.... ”

"Howard!" Guo Shouyun interrupted him, "Although the matrix is developing well, our foundation is still very weak, so I am very interested in MGM's film library. If you're willing to give up MGM's library to Matrix, how about its production department being bought by you Sony?"

"I'm sorry, Bruce! ”

The most alluring thing in MGM's hands right now is its film library. If it weren't for the revenue of the film library, it would have gone out of business as early as 02 after the investment in "Wind Whisperer" failed.

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

"Don't talk about it?"

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

"Okay, I'll wait for your news!

Without giving Howard time to call back, he hung up.

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

Guo Shouyun's mobile phone was turned on hands-free, and Buddy Morris next to him naturally heard the conversation between the two.

"Hmph, Howard Stringer just doesn't want to turn his face with us because of this and find an excuse to delay time. If we really believe him, what we will be waiting for in a few days will not be a reply from Sony, but a press conference on their successful acquisition of MGM!" Guo Shouyun said coldly.

Buddy Morris nodded, annoyed: "This matter is my responsibility, if I don't care about the purchase price and sign the contract sooner, I probably won't have these troubles." ”

Guo Shouyun understands this subordinate who has been with him for five years. When it comes to management ability, Buddy Morris is just a middle-class man. But he was loyal, able to carry out his orders scrupulously, and diligent in his work, never advocacy on things he did not understand. This is where Guo Shouyun takes a fancy to him.

In addition, it may be a habit developed in the early years of running a small film and television company from scratch. On the financial side, he is good at budgeting, and the same is true for mergers and acquisitions. It's not a disadvantage, but there are times when things can be changed because of long negotiations, such as the MGM acquisition.

"It's not your problem. Since I agreed to your M&A strategy, now that something has happened, the biggest responsibility lies with me. Guo Shouyun waved his hand, "However, it won't be so easy for Howard and Sony to snatch MGM away from us." ”

"Is it a direct offer?" Buddy Morris quickly guessed what the big boss was thinking.

Guo Shouyun nodded.

"We sent MGM's board of directors an offer to buy MGM and said we were going to buy MGM for $15 per share. ”

Under U.S. securities law, the board of directors of a company must respond within 10 days of receiving a takeover offer.

Buddy Morris just wanted to say whether the price would be too high, but he thought that it was precisely because of his own price and hesitation that the acquisition of MGM was uncertain, so he took back the words that came to his lips.

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

"If they can get the price above $18, they'll give it to them. Guo Shouyun thought about it for a while and said.

MGM's actual value is now around $3.5 billion. If the offer is raised to $18 per share, the price of a wholly owned acquisition would be a staggering $7.2 billion based on MGM's total share capital of $400 million. 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 era of entertainment to death, the value of copyright will become higher and higher. But doubling the premium for MGM's film library is too high.

What's more, Sony's revenue only improved slightly after '99 under the leadership of Howard Stringer. was robbed by Guo Shouyun halfway through "Spider-Man", which originally made them profitable, and now Sony is just tepid.

Why did Sony believe that Providence Equity Partnerships, Texas Pacific Capital Fund, Kongscart, DLJ Commodity Bank Partners, and the Sifang Group could lead MGM back to life?

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

If Sony buys MGM for $7.2 billion, it is unclear whether they will be able to deliver a 20 percent annual return on investment in the way they operate. Looking at Sony Pictures' performance over the years, this hope is too slim.

……

Howard Stringer hurriedly walked into MGM's conference room. At the same time as he entered, representatives of Providence Equity Partners, Texas Pacific Capital Fund, Kongscart, DLJ Commodity Bank Partners, Sifang Group, and five PE partners were already sitting here. Plus Gary Barber as the representative of MGM executives. A total of 17 people were eligible to attend the meeting.

However, compared to the euphoria of sitting together and dreaming of making a fortune from the MGM acquisition, the atmosphere here is extremely oppressive.

If you say that among all people, who is in the worst mood. In addition to Howard Stringer, I'm afraid it's Gary Barber.

Under his agreement with Howard, he will receive $25 million in cash and $50 million worth of MGM stock after Sony acquires MGM. However, these stocks have a six-month lock-up period. It had to be half a year before Gary Barber could cash out.

But even then, it's a huge asset of $75 million, nearly ten times more than his salary and bonuses for eight years at MGM.

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

"I think everybody already knows. The Matrix has made a takeover offer to MGM's board of directors at $15 per share. Unless we offer more than $15, all of our previous trades will be voided!" Gary Barber said with a serious expression.

The vast majority of publicly traded companies in the U.S. are publicly owned, with management and institutional investors rarely holding more than 20% of the shares. Therefore, the board of directors elected by them represents the interests of these investors. If they rejected Matrix's offer of $15 per share, they agreed to Sony's offer of $13. Then it means that the board members violated the law in this transaction. After the fact, it is inevitable that the investee will go to court. At that time, even the acquisition that has already been completed will be declared invalid by the court.

"Has this offer been placed in the hands of MGM's board of directors?"

A middle-aged man with gold-rimmed glasses, thin cheeks, pursed lips, and a somewhat mean look asked.

Gary Barber understood what he meant.

Tyler Adams, executive vice president and chief financial officer of The Matrix, personally arrived at MGM and handed over the offer to MGM Chairman Carl Bass. And one was given to every member of the MGM Board of Directors. ”

Hearing this, everyone instantly understood. If you want to withhold the acquisition offer of Matrix, it is impossible to take advantage of the time difference to sign the contract.

"If you knew that you should have signed the purchase contract earlier. ”

A bearded man reminded the stout middle-aged white man to chagrin.

His name is Jim Chanos, MGM's chief operating officer, and one of MGM's executives involved in the acquisition. In addition to him and Guy Barber, MGM was involved in the leveraged buyout and benefited from the buyout by Chief Financial Officer Donato Essy and Chief Legal Officer Garth Gary. In this leveraged buyout, all four received a lot of cash and equity. So they want the acquisition to be successful more than the investment team led by Howard Stringer. In this way, they can get a good return that will allow them to live their retirement early.

"If you weren't so greedy, we'd be drinking champagne again to celebrate this perfect acquisition!" said a bald black man.

His name is Dan Bailey, and Providence Equity Partners is the representative of Providence Equity Partners in the leveraged buyout.

"We are greedy, why are you not stingy, if you had agreed to our conditions earlier, the negotiations would have ended long ago. Not to be outdone, Donato Essi said.

"As the producer of 'The Windtalker,' the man who directly led to MGM becoming the laughing stock of Hollywood, I think he deserves $5 million and 800,000 severance shares. ”

"What did you say...!"

"Alright!" Howard Stringer roared, interrupting their complaints and dissatisfactions, "Guys, now that we're in one camp, we're all about to share weal and woe, and we're still hating each other because of a little fact that can't be changed?"

Although he is also dissatisfied with the greed of MGM's management, which has led to the extension of the negotiation time, which has caused the current variables. But what he is better than Donato Essi and others is that he is able to accept reality and find a solution to the problem in the first place, rather than wasting precious time on meaningless complaints and regrets.

Dan Bailey and Donato Essy were also aware of the displeasure and quickly shut their mouths.

"Now that it's happened, there's no point in arguing, the key is to come up with a solution to the problem. Howard Stringer continued.

"In fact, everyone knows that after the matrix company intervened in this acquisition, we only had two ways left. First, the acquisition of MGM at an offer that exceeds the matrix. Second, say that the Matrix Company will abandon the acquisition, or let them join in. ”

Sheron Watkins is the representative of the 'Texas Pacific Capital Fund', with a typical Texan~State accent, which makes people sound a little awkward. But no one cares about that right now.