Detroit, Michigan, USA, luxury suites at the Marriott International Hotel

"My dear Mike Doug, what kind of wind blew your old friend, General Motors' performance on the stock market today is too disappointing, the stock price fell by 8% in a single day, and the market value fell by nearly 20 billion at once, you guys have to re-evaluate all the bids overnight, and they have to be overturned and restarted, this is a big trouble!" Lyndon Bock, executive vice president of strategic investments at Goldman Sachs, and the visiting vice president of General Motors poured bitterness when they met.

Five years ago, Mike Doug was Goldman Sachs Strategic Investment Department and worked with Lyndon Bock for a period of time, both of them were general managers of subordinate departments, but Mike Doug resigned because his department lost a contract for an acquisition of as much as 2 billion yuan, and went to Morgan Stanley, but Mike Doug did not develop well in Morgan Stanley, and after only a year and a half, Rick Wagner was poached from Morgan Stanley's investment department to General Motors' strategic investment department as executive vice president. When Smith went from CFO to president and CEO, and Rick Wagner was promoted from president of strategic investments to CFO, Mike Doug naturally rose to the position of president of investments.

"Old friend, I'm not here to catch up with you, you tell you the truth, why did Goldman Sachs follow the shorting of GM stock this afternoon? According to the information we gathered, Goldman Sachs' floor traders shorted 10 million shares of GM stock, and Morgan Stanley also followed suit and shorted 8 million shares. ”

Mike Doug is well versed in the way of negotiation, first of all, it is not to say that he is playing haha to reminisce, but to put pressure on the other party with a single knife, of course, the hole cards can not be lightly exposed, the more you want to pull the other party to cooperate against Merrill Lynch Securities, this has to be said in the opposite way, but Lyndon Bock and Mike Doug were very competitive at the beginning, and the two of them knew each other, so they were not bluffed by the old colleagues who represented the position of General Motors, this guy invited Mike Doug to sit down, While going to the wine cabinet and pouring two glasses of whiskey with ice, he came back with a wine glass before he said with a smile,

"Mike, your temper has not changed at all over the years, I dare to say that the culprit of shorting General Motors this afternoon is Merrill Lynch, we are short 10 million shares, but that is entirely for the benefit of Goldman Sachs investors, if it is not above 60 to join the ranks of short selling, inside and outside one day Goldman Sachs customers held General Motors shares have to depreciate by 8%, how can we afford this loss, you have to thank us for just selling the stocks held at a high level, and not short selling, otherwise the closing price is not 57 US dollars, I'm afraid I'll have to run for $50! ”

Lyndon Bock's words are actually half-true, it is true that there are not many GM cars in the Goldman Sachs securities account that can be borrowed and borrowed, even so, only 8 million shares of 10 million shares are stocks held in the customer's account, and the remaining 2 million shares are stocks that are short-sold, of course, Lyndon-Bock knows that the other party is just that, who cares whether you are short selling 10 million shares or 8 million shares plus 2 million shares, in short, in the case of GM's stock price being blocked by shorts, Goldman Sachs and Morgan Stanley have both become accomplices in short selling, and this is true.

"Okay, Linden, I'm not going around in circles with you, what the hell does Goldman Sachs think?" Mike Doug gets the question back to the point.

"What do you think? The lower the share price of General Motors, the lower the bid price of our underwriting Saturn Motors IPO, and the higher the commission income ratio, is this not clear, do you expect us to raise the stock price for you and then sign your Saturn listing underwriting contract at a high price? At least at this stage, it's good for us to be bearish on GM's share price, and I don't need to remind you of that, right?" Lyndon-Bock spread his hands and looked innocent, feeling that what he said was the truth and nonsense, and the stock price of General Motors did not fall, but he found that for the underwriters who had not yet got the contract, Nima was really a godsend for bargaining, wasn't it?

"The problem is that the board of directors of General Motors doesn't think so, not to mention the amount of financing for Saturn's IPO listing, which needs the support of GM's strong stock price, which you will not turn a blind eye to as a broker!" Mike Doug just wants to scold his mother in his heart, Nima wants to sell at a low price when the other party buys it, and wants to sell it at a high price, the problem is that if the stock price of General Motors plummets so much, shareholders and investors will not agree, maybe an extraordinary shareholders' meeting will have to be held to re-elect the board of directors, and then won't it be a complete pattern?

"Mike, you are also a veteran of investment banks and brokerages for so many years, you said that from the position of our brokerage, you can't raise the price and block yourself, right? Of course, GM's stock price needs to be strong, but that will happen after we get the lead underwriter for Saturn's IPO, and until then, you won't be able to help you. "Lyndon-Bock is enjoying this moment in front of him, and the other party wants to bluff me with his body? Wouldn't it be unreasonable to be bluffed by you!

"Lyndon, in that case, we can only go to Morgan Stanley to talk, I believe that for the big order of Saturn Automobile's IPO, the other party is determined to win, and you don't regret the throne of the chief underwriter...... you don't regret it" Mike Doug put on a look of getting up and wanting to leave without saying a word, but he didn't expect Lyndon Bock to be fooled at all, he sat on the sofa with a smile and didn't even move his buttocks, and said, "Morgan Stanley's appetite is much bigger than our Goldman Sachs, don't lose your wife and break your soldiers when the time comes, It's not easy to explain in front of your boss......"

"So what do you want? Let me tell you, just now I could have gone to Morgan Stanley to talk about cooperation, I came to you first and I was sincere enough, what, humiliating me and General Motors is very enjoyable for you?! Mike Doug finally roared! His fists clenched tightly stared at Lyndon Bock's neck, as if he wanted to pounce on him and tear each other apart, in fact, Mike Doug had the nickname of the angry lion in the industry when he was younger.

"It's very simple, Goldman Sachs is not interested in the qualification of the lead underwriter, we want exclusive underwriting, in exchange, we can take the plan of underwriting at the floor price, according to the financial statements of Saturn Motors provided by you, according to the current average price-earnings ratio and price-to-book ratio of the auto sector, if Saturn Motors takes 25% of the shares out of the IPO, according to the net assets per share of 1 US dollars, the total share capital of 1.8 billion shares, Among them, 450 million shares were taken out for IPO, priced between $12-$15 per share, and if the number of shares subscribed is insufficient, all of them will be underwritten by Goldman Sachs as an underwriter! Of course, we have a commission of 7% of the financing amount! ”

Lyndon Bock's prepared words made Mike Doug return to the living room, and began to circle with his hands behind his back, while he was thinking about whether Goldman Sachs' IPO plan was feasible, and after thinking for a while, Mike finally opened his mouth and raised his own questions,

"Linden, I don't know how your account is calculated, Saturn Automobile's net assets are 1.8 billion, last year's production and sales were 200,000 units, sales revenue was close to 4.5 billion US dollars, gross profit was 720 million US dollars, 120 million R & D expenses and 400 million salaries were removed, and the net profit was 200 million US dollars, if the total share capital was 1.8 billion shares, the net assets per share were 1 US dollars, and the net income per share was only 0.11 US dollars, and you said that the offer price was 12 US dollars per share, wouldn't that be 109 times the price-earnings ratio? In the case that the average P/E ratio of the industry does not exceed 25 times, do you think the P/E ratio of 109 times can be accepted by investors? ”

"The stock market has come out of the shadow of the stock market crash of '87, and now the enthusiasm of investors is very high, since last year's loss of $7 per share of General Motors' stock price of 60 dollars have been bought, so I can't see why no one buys the Saturn car with an earnings of $0.11 per share? And according to our calculations, with the release of production capacity after the launch of Saturn Motors, the market share will be further increased, the growth rate per share this year will be at least more than 30%, and the growth rate next year can reach 50%, then the earnings per share will not be 0.11 but 0.22, even if only 50% growth is maintained in the third year, earnings per share can reach 0.45 US dollars, I think there must be someone willing to bet on Saturn Motors! ”

Of course, Mike Doug, who is a member of General Motors, hopes that the Saturn car can be sold for a high price of $12 per share, but if this plan can be realized, the market value of a Saturn car will reach $21.6 billion after it goes public, is this possible? You must know that after General Motors fell by 8% today, the total market value has shrunk to $211, and $12 can really be sold?!?

"Well, while I don't think that's possible, Goldman Sachs really intends to underwrite 450 million shares of Saturn Motors at a floor price of $12 per share?!!" Mike Doug was not fooled by Lyndon Bock, Wall Street certainly has no shortage of examples of straw selling gold prices, but the transparency of the automobile manufacturing industry is very high, Saturn Motors' net worth is only one-tenth of General Motors, and it can be sold at a high price-earnings ratio of 109 times.

"Well, 450 million shares of IPO, each share underwriting floor price of $12, this is just a preliminary plan, of course, in view of the great risk, Goldman Sachs can not take all the risks themselves, we need the cooperation of General Motors, is to package the assets of Saab Motors into the Saturn Motors listed assets, Saturn's net assets are 1.8 billion US dollars, Saab Motors' net assets are 2.8 billion US dollars, in this way, it is almost ......"

As soon as Lyndon Bock's words came out, Mike Doug almost fainted, "I said, it turns out that you even have a crush on Saab Motors, this is not good, Saab Motors' listing plan is ranked after the Saturn Plan, and the board of directors will not agree to the bundling of the two companies at all, there is no feasibility at all...... You pull it down, you can! ”

"If Saab Motors is not included in this asset, Saturn Cars alone can not be sold for $12 per share, according to the average price-earnings ratio of 25 times in the auto sector, the subscription price of Saturn Motors can only be set in the range of 2.50-2.75 per share, I believe that Morgan Stanley's offer will not be more favorable than ours! Of course, at this price, Goldman Sachs still promises to underwrite at the reserve price! Lyndon-Bock said seriously.