Chapter 196 I Want It All
Rockefeller Center, New York.
On the floor where Paladin Investments was located, Milo moved to the monitor to look at the data.
The display screen shows the stock trend of Phillips Petroleum over the past six months.
He is not an expert in capital operations, nor does he have the relevant academic qualifications and experience in this industry, but this does not prevent him from getting involved in the capital field.
He can cheat.
But when it comes to real capital operations, such as acquiring and merging certain companies.
His hook is not that useful.
Fortunately, he can hire experts in this field and doesn't need to do it himself.
His role is to steer the ship, and he can see a future that other capitalists cannot see. This huge advantage is enough to offset his inexperience.
"Boss, after the market opened today, Kansas Indian Bank sold 0.15% of Phillips Petroleum shares, which is about three million shares, at $15.64 per share. The stock price rose slightly after we bought it, but the number of orders on the market is increasing, but the trading is not active, and the stock price has fallen back." Nelson reported an important news.
In the United States, the smallest unit of stock trading is one share, not a "lot."
Therefore, sometimes, the transaction costs that may be incurred when purchasing a share of stock in the United States (such as brokerage commissions and platform fees, etc.) may be relatively high, and sometimes even exceed the price of a share of stock.
"How much do we own now?" Milo asked Nelson.
"32.1%!" Nelson's tone was slightly excited.
Unlike in the past when he transformed himself into a plunderer and butcher, this time he was acquiring Phillips Petroleum.
This is a real capital operation, and Nelson feels it is time to show his real skills.
Because this is what the boss is not good at. The boss is better at strategic and financial plunder.
If you want to acquire an energy giant, the investment will definitely be astronomical.
At this moment, Nelson was like a cat that smelled blood, so excited that he lost himself. He was eager to enter the capital market, just like a football star stepping onto the green field. He had the talent and passion for capital operation, as well as the ambition to successfully capture prey.
“You are very efficient and do a great job!”
Milo nodded approvingly. With Herbert's help, he successfully acquired about 27% of the shares.
After getting it, on the surface he just wanted to become one of the shareholders of Phillips Petroleum and share the glory of the energy industry.
So for a long time, he got these shares but they didn't increase their value.
This is mainly to give some people a sigh of relief.
In fact, Milo certainly wanted to take over the entire Phillips Oil.
So after things in Asia are over.
Milo then began to let Nelson and others operate silently in secret.
He continued to buy shares of Phillips Petroleum, so that he now holds more than 32% of the company's shares.
"Phillips Petroleum's top management is not doing a good job. The financial report for the first quarter of this year was released earlier this month, and all of its businesses are losing money. Small shareholders are unwilling to hold on for the long term."
William, deputy manager of Paladin Investments, explained with a smile:
"The sell orders in the market are surging, but the trading volume is pitifully small. Even if we buy in large quantities, the stock price has not changed dramatically. At this rate, we will be able to launch a full takeover offer next month at the latest."
In fact, they are very cautious in their operations. They will only take action when the stock price falls, and they generally remain on the sidelines when the stock price rises.
The buying rhythm is very well controlled, and the daily trading volume is all controlled within a certain range to prevent excessive buying from pushing up the stock price.
"Once the tender offer begins, the stock price will surely skyrocket, and then we will have to compete with financial strength." Milo said this for a reason.
The United States has enacted the Williams Act, the purpose of which is to regulate tender offers, clarify the acquisition procedures and information disclosure requirements, and allow shareholders sufficient time to understand the acquirer's background, acquisition intentions and the impact on the target company, so as to make correct decisions.
A tender offer is mandatory. The company must disclose its M&A plan in accordance with the law, issue a M&A announcement to all shareholders, truthfully disclose its company information in the announcement, and elaborate on the development strategy after the acquisition is completed. This is to protect the rights and interests of small and medium shareholders.
At this time, generally speaking, the original board of directors of the listed company will defend its control at all costs and launch an anti-takeover war against Milo.
Without exception, they all invested heavily to push up the stock price. If Milo ran out of ammunition, the acquisition would fail.
But it doesn’t matter if you fail.
Once the sniper launches a comprehensive takeover bid, it is almost impossible to counter. If the takeover is successful, they will completely control the target company. If the takeover fails, they will sell out and leave. The stock price has already been driven up by them, so there will be no loss if they sell out!
Therefore, before Milo holds 35% of the shares, it is in the stage of secret acquisition. As long as the operation is careful, the stock price of Phillips Energy will not rise sharply.
And when a full takeover offer is launched, it can be said that funds are ammunition.
This war can only be won if we have enough ammunition.
“How much liquidity do we have left?”
Milo asked.
In the past six months, we have achieved great results in Asia.
The total profit exceeded 12 billion US dollars, but his investment activities never stopped during this period.
Buy MCA and the remaining shares of TBS. Even if part of it is a share exchange, some of it needs to be paid in cash.
The key point is that Milo spent nearly $26 billion on the shares of Phillips Energy and Little Bang.
Of course he doesn't have so much cash, but fortunately he now owns many valuable businesses.
Yahoo alone can bring him a lot of loans.
What's more, he has always had good relations with First National Bank of Boston, Wells Fargo, Chase Bank of Manhattan, and even JPMorgan Chase & Co.
Getting a loan is easy.
Moreover, M&A loans themselves are an important business for American banks.
The amount of funds involved in this loan exceeds 15 billion US dollars.
Milo's own funds are less than 3 billion, and he will not use them easily until the last stage.
So in the end, we still have to seek support from M&A loans, and the banks will definitely be happy to do so.
Because no matter how much losses Phillips Petroleum suffers, it is still one of the industry giants.
Its market value is $35 billion, but its total assets exceed $30 billion.
Milo has the ability to repay.
Besides, in the US market, for each acquisition, the acquirer’s own funds often only account for 10% of the total acquisition amount.
The remaining 90% is solved through financing. There are two financing channels: bank loans and the issuance of M&A bonds.
Milo is also planning to do the same this time. After the acquisition is successful, he will slowly repay his debts.
If the acquisition fails, he will transfer the equity to the bank in order to transfer the risk.
But plans are never as good as changes.
Milo plans to wait another month before launching a full takeover bid for Phillips Petroleum.
But on May 10, 1997.
A major event that occurred in the U.S. energy industry forced him to enter the market early.
Because of this day, another American energy giant.
Connor Petroleum suddenly announced that it would launch a comprehensive takeover offer for Phillips Petroleum.
They offered $16.80 per share in cash, or 0.7 shares of Connor for each share of Phillips Petroleum.
Connor Oil Company is the seventh largest energy company in the United States.
On the stock market, the market value exceeds 45 billion US dollars.
One share of Connor stock was worth about twenty-five dollars.
0.7 shares of Connor Petroleum are equivalent to $17.5.
It is much more valuable than Phillips Petroleum, whose stock price normally fluctuates around $15-16.
Moreover, Connor Petroleum is very profitable, with profits exceeding US$1 billion for five consecutive years, and has a large amount of cash reserves.
As soon as the acquisition news came out, the stocks of both companies rose.
In one day, Connor Petroleum's stock price rose 8%.
Phillips was even more outrageous, with its stock price rising 12% in one day.
Of course, Connor Petroleum also adjusted the acquisition price accordingly.
The cash acquisition premium is 5%, and the stock exchange ratio remains unchanged.
The incident happened suddenly, and the young Paladin Investment was somewhat embarrassed.
William and Nelson were so confident a few days ago that they told Milo that they could launch a full takeover offer next month.
On the 11th, when Milo convened an emergency meeting, he was a little afraid to look at his boss' face.
"How many shares does Connor Petroleum hold?"
In the conference room, I heard the boss' voice.
Nelson looked at the information and said, "As of today's midday break, Connor Petroleum has announced that it already holds 38.56% of Phillips' shares."
"What about us?"
"32.5%."
"Looks like we're going to lose?"
There was silence in the conference room.
Milo actually knew that even if Connor Oil's acquisition was successful, he would not be considered a loser.
He holds 32.5% of Phillips Petroleum shares, which are real stocks.
If Connor Oil's acquisition is successful, his shares will be converted into shares of the new company in corresponding proportions.
And because Connor Oil is more valuable, the market value of the new company will increase after the two companies merge.
It will definitely be more valuable than the two companies combined.
Originally, Connor Oil was worth about 45 billion and Phillips was worth about 36 billion.
The combined market value is $81 billion, but the combined market value may exceed $100 billion.
Milo's stock, originally worth about $12 billion, may even increase in value to more than $20 billion this year.
From this perspective, he made a lot of money.
With so many shares, he can occupy at least two board seats in the new company.
But his original idea of controlling an energy company on his own is likely to fail.
Milo actually knew all of this, and of course everyone present knew it too.
But they could all see that Milo was a little unhappy.
So no one dared to say that Milo did not lose money, but instead made a huge profit.
"Nelson, if we come out as the White Knight to compete with Connor Oil, how much money will we need to pay to repel Connor Oil?"
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Milo suddenly looked at Nelson.
It's like hunting in the forest.
Milo had already set his sights on a fat fawn and was planning to hunt it down right away.
Before he could even fire his gun, another hunter nearby shot and hit the deer's leg.
Milo now had two choices. One was to come out and say that he also had a share of the deer and that he must share some of it if he killed it.
Because he has a gun, the other party will most likely agree.
There is another option, which is to come out and grab the deer to see who is faster.
Or simply -
"If, I mean if, Nelson, if we take action against Connor Oil and Phillips at the same time, how much money will it cost?"
Or just kill the deer and the hunter who stole it.
Then it's all his.
Nelson and William were obviously very surprised at their boss's bold idea.
Attack Phillips and Connor Oil at the same time?
Even though the boss already holds 32.5% of Phillips' shares.
If we want to achieve a controlling stake of 50.1%, we need to take into account the premium and competition between the two parties.
Nelson quickly gave a few numbers: "30 billion dollars, to around 35 billion dollars."
He said: "If Connor Oil is determined to fight us to the end, the funds needed may be more than 40 billion US dollars."
This is the amount of money needed to invest in both companies at the same time.
Forty billion dollars is conservative.
"That's it, then."
Milo stood up and made up his mind, "Announce to the public that we have also launched a comprehensive takeover offer for Phillips Petroleum. At the same time, we will take the same measures against Connor Petroleum."
"As for the funds, I will seek half from the bank for a merger loan. For the remaining half, I will use my shares in Yahoo and Paladin Media as collateral for a mortgage loan!"
Nelson and everyone present gasped in shock.
Because the boss's decision meant that he had to take a risk and enter the market.
This was a shocking takeover attempt initiated by the boss who wanted to use most of his wealth.
It is mid-May.
A stock market sniper war that was unexpected, tragic, and swift, attracting the attention of the entire United States and affecting more than a dozen companies in the Dow Jones Industrial Average, suddenly broke out.
Even the two parties in the game, Milo and the board of directors of Connor Oil, did not anticipate how horrific the earthquake caused by their business behavior would be.
The beginning of this battle actually started on May 10th.
That day, Connor Petroleum made an offer for Phillips, offering a partial acquisition at an offer price 5% higher than the suspension price.
The condition for the completion of this offer is to close above the 50% controlling line, and the offer period lasts for one month.
Phillips' original shareholding in Connor Petroleum was 34.5%, and the offer ratio was 15.5%, requiring the use of US$5.5 billion in funds or corresponding stocks.
Generally speaking, after the acquirer issues an offer, the stock price of the target company will continue to rise, especially in a hostile takeover, when speculators will frantically hype and drive up the stock price in an attempt to make arbitrage.
But after a 12% gain the day before, Phillips' major shareholders took no defensive action in the days that followed.
Not even a word was said about Phillips in the media, which caused the market to give Phillips a bearish move.
In the first week of the offer, Phillips' stock price fluctuated up and down with little fluctuation.
Financial experts from media outlets across the United States have predicted that Phillips is already in the pocket of Connor Oil.
By the end of the offer period, it should not be difficult to acquire 50% of the controlling stake.
Initially, this acquisition did not trigger market turmoil, but only attracted people's curiosity and gossip.
“Will the size of the new company after the merger be among the top five?”
"Isn't Milo Blackburn a major shareholder in the acquired company? Why didn't he say a word?"
and debate among Phillips employees.
"Connor Oil is more profitable, so will our salary increase after we are acquired?"
"Shit! Connor Oil's salaries are notoriously bad. If we get acquired, we will be even worse off as the acquired company!"
“…”
It was lively for several days, but no one responded.
Therefore, the impact is limited to stock investors and practitioners in the energy industry.
But, on the night of May 18th.
Things began to change.
All Americans, all American media.
Even the attention of the entertainment paparazzi was shifted to this matter.
“My name means warrior and warrior, so I’m happy to help Phillips Petroleum as a white knight.”
This morning, he frequently appeared in the media.
But Milo, who rarely gives interviews, suddenly appeared on CNN.
Appearing with him was James Mulvey, CEO of Phillips Petroleum.
The purpose is to create momentum!
James Mulvey spoke emotionally on TV: "Phillips Petroleum is an energy company with a century-old history. It has a rich page in the history of American energy. I joined this company when I was 20 years old, and I have deep feelings for it. But now, outsiders have set their greedy eyes on Phillips, for which I have fought all my life. I will resolutely defend the management rights of Phillips and prevent it from being coerced by the greed of capital."
"I have more than 30 years of experience in energy industry management, which is very suitable for Phillips' development needs. Compared with the acquirer, Connor Petroleum, I have reason to believe that their acquisition is for the purpose of capital speculation, which will seriously disrupt the public's energy needs."
"At the same time, I would like to remind all Phillips shareholders that Connor Oil's offer price of $17.5 per share is far below Phillips' true value. I hereby call on all shareholders not to accept Connor Oil's acquisition proposal!"
The call means driving up the stock price, but if James Mulvey just makes the call without taking any substantial action, even if Phillips' stock price rises, it will fall back in a few days.
“As CEO of Phillips, on behalf of Phillips management and employees at large, I invite Mr. Milo Blackburn, Phillips’ largest individual shareholder, to join the fight to defend Phillips Petroleum.”
James Mulvey revealed his true colors on TV and pushed out Milo, the mastermind behind everything.
After the introduction, Milo smiled and said, "I hold 33.8% of Phillips Petroleum. I will officially announce the reverse takeover offer for Phillips today. I will acquire 17.2% of Phillips shares at $18.5 per share, which is 13% above yesterday's suspension price. The offer period will last for one month!"
This was Milo's first combination of attacks against Connor Oil's acquisition.
To acquire 17.3% at a price of US$18.5 would require approximately US$6.5 billion.
Milo can fully afford this investment, but it is a powerful blow to Connor Oil.
First, Connor Oil must increase its chips!
Once Milo announced its counter-takeover offer, Phillips' stock price would soar like a rocket.
If Connor Oil does not refill, then Connor Oil will not be able to fulfill the offer.
Milo paused and continued on TV: "In addition, I have decided to invest in Connor Oil and jointly announce a takeover offer for Connor Oil to the market today. At the offer price of $29 per share, we will acquire 50% of the shares of Connor Oil in proportion. The offer period will last for one month."
There were two to three hundred reporters at the press conference.
Everyone was very excited, but as soon as he finished speaking, the whole audience fell silent.
Then there was a loud noise that could be heard from the TV.
There was an endless stream of questioners.
"Mr. Blackburn, is your acquisition of Connor Oil an act of revenge?"
"More investment behavior!" Milo replied on TV:
"Just like my investment in Phillips, my acquisition of Connor Oil is also an investment. The profits of energy companies have always been very stable, and I am optimistic about the development prospects of this industry!"
After the news of the press conference spread, it spread at an astonishing speed.
It became known to the whole of America in just half a day.
In the past, when a company was acquired, most Americans would wait to see the fun.
Some don't even look at it because they don't understand it.
But this time, Milo is involved.
The amount of money involved was so huge that the whole of America was watching it like crazy.
(End of this chapter)