National Tide 1980.

Chapter 1295 Stirring up the situation

The entire 1980s is also known as the decade of greed in the history of world finance.

  why?

The answer actually has nothing to do with Japan’s economic bubble.

This is mainly because corporate mergers and acquisitions in Europe and the United States are becoming more and more an excellent business.

And there are more and more ways to play.

As we all know, in modern times, under the backdrop of the Industrial Revolution and under the capitalist system of European and American countries, large-scale, unprecedented private enterprises have emerged in Europe and the United States.

These private companies have not only subverted the old way of life one by one, but also taken the lead in all walks of life and almost constituted the most important part of the world economy.

This situation remained roughly the same until the 1980s.

However, by the 1980s, a large number of business founders in Europe and the United States were getting old and were facing the issue of business succession.

These elderly people have no choice but to allow professional managers to take their place on the stage and start showing off their skills.

Against the backdrop of slowing economic growth, many companies have begun to merge and reduce competition in order to survive.

Therefore, increasing revenue and profit scale through mergers and acquisitions has become the only choice and basic operation for professional managers in this era.

LVMH is a typical example.

LV's Henri Lacamier hopes to expand the company's product categories in order to stabilize the company's operations and increase profits to a higher level.

What MH's Alain Chevalier fears most is the large number of shareholders and insufficient voting rights of the management. He hopes to cling to a big tree to avoid being acquired by outsiders.

It was precisely because of their different interests that the two of them initially willingly completed the marriage between the brand and the company.

In addition to this reason, in this era, there are many loopholes that can be exploited in corporate mergers and acquisitions, and you can really pick up gold.

Although there are laws and regulations in place, the laws still need to be improved.

Commercial companies also have problems with information disclosure such as untimely, non-transparent, and slow dissemination.

In addition, there are always only a few geniuses in this world. Even if they are appointed by the founder, the management of most listed companies are extremely corrupt and incompetent.

What they are often best at is building relationships rather than managing the business effectively. What most CEOs often do is destroy value rather than create value.

This has led to many companies being severely undervalued, with the quality of the companies being seriously deviated from the value of their issued shares.

As an aside, it is precisely because it is difficult to find a suitable successor.

Both Henri Lacamier and Pierre Caton himself, even though they knew that their health and energy had declined greatly, they still had to take charge of the company personally and struggled to support it from the top position.

None of them can rest assured to hand over their brands and companies to outsiders to run.

Therefore, in such an ecological environment, mergers and acquisitions cases occurred frequently in European and American countries during this period, and a large number of financial giants emerged to make a living from this.

From 1982 to 1988, the total transaction amount in the United States alone increased from US$ billion to US$ billion. It can be said that every family had wine to drink and everyone had meat to eat.

Well, there is no doubt that, given that the world's financial center has shifted from Britain to Wall Street in the United States.

Of course, those currently engaged in this industry also take American companies and Americans as industry benchmarks.

In this era, the most famous private equity fund in the United States is KKR.

This private company has three founders and a history of less than ten years. Although it has been established for a short time, it has achieved amazing success in corporate mergers and acquisitions.

Not only is he famous, he has long since solidified his position as the top acquirer on Wall Street, and his management scale has also left his followers far behind.

They are even the root of the term "barbarians at the gate".

You know, a year later, in 1988, in the business war to acquire Reynolds Nabisco, KKR relied on its abundant money to confront the management head-on without reaching a consensus with the management, and completed the acquisition by completely brutal and tough means.

As a result, it acquired this classic name from its competitors, and it became the name of books and movies that recorded this acquisition in the future, and it also became a keyword in the Chinese capital market from 2015 to 17.

As for the companies in the world today that can match their M&A capabilities and achievements, there is only one maverick - Carl Icahn, known as the "corporate predator" in the United States.

In 1985, Carl Icahn became famous in his hostile takeover of TWA and has since become the "Wolf of Wall Street" feared throughout the United States.

The Icahn Capital under his name has a higher annualized compound return than Buffett, Madoff, and Huntington, but the way of playing is completely different.

Carl Icahn was able to keenly observe the differences in interests between senior managers of listed companies and shareholders, and used various financial means to profit from them.

Of course, this is also KKR’s secret to wealth.

The commonality of playing this kind of capital game is that in addition to having a unique vision and being able to keenly discover good companies and their weaknesses, one must be good at utilizing a variety of financing methods to maximize one's leverage.

That is why it is important to look at everything Bernard Arnault has done for LVMH from a professional perspective.

In fact, it is difficult to give any excellent evaluation of this French wolf cub that has just developed its bloodthirsty nature and is far from grown up.

In fact, Bernard Arnault, apart from being very much like a Jew with a greedy heart and a vicious and selfish nature, also has obvious gaps and too many shortcomings in both M&A experience and methods compared with real M&A experts.

You should know that in corporate mergers and acquisitions transactions, the most stable business processes and most successful models should usually be carried out in accordance with the following steps.

1. Choose a company worth attacking and find its weaknesses.

Second, negotiate with management to reach a consensus on intentions - for example, although it is a comprehensive acquisition, management will be given equity and management incentives).

3. Design a plan to complete fund raising - which inevitably involves considering factors such as interest rates, cycles and equity capital ratios.

4. Acquire shares to complete privatization.

5. Improve short-term operating efficiency - after taking over a company, they often try to increase cash flow and profits for three to five years by cutting costs, splitting businesses, etc., to bring public confidence and stimulate stock price increases.

6. Sell shares - be acquired or relisted, and then sell at a higher price to exit.

In short, the essential elements are timing, money and allies, which are the right time, right place and right people in Chinese culture.

Therefore, in order to achieve the desired result and reduce uncertainties, even industry leaders KKR and Carl Icahn have to reach a consensus of interests with some people in the company and make appropriate concessions before acquiring the company.

Then comes the process of raising funds to complete the merger and acquisition, and finally pushing up the stock price or splitting it up and selling it, creating a result that benefits all shareholders.

So much so that even though they are portrayed in the media as ruthless corporate predators, the management of US listed companies all stay away from them.

But Fortune magazine gave a positive affirmation from the perspective of shareholders, expressing the voice of another group of people: "Believe it or not, they make more money for shareholders than any other speculators on the planet."

But Bernard Arnault is not like that.

Firstly, the timing of his acquisition of LVMH was just luck. It was a man like Henry who was ignorant of the ways of the world who got crazy and offered himself to him. Otherwise, he would not have had any chance at all.

Secondly, Bernard Arnault relies on deception and fraud to do things. He is too selfish and stingy, and his ultimate goal is to keep all the benefits for himself.

Not only have we lost our moral principles, but it is also difficult to find real helpers.

In addition, his funds are only supplied by Lazard Investment Bank.

He lacked professional financial capabilities. He neither knew how to issue junk bonds nor how to establish private equity funds. His methods were limited and his funds were limited, resulting in high financing costs.

In fact, no matter how you look at it, it is difficult for him to succeed.

Even now, when he is at the peak of his career and has taken advantage of the internal strife within LVMH, he has gained absolute advantage.

But a closer analysis shows that his abilities are limited.

There are undoubtedly major hidden dangers in all aspects, and we are secretly stepping on the landmine of "losing support due to losing the right path".

It can only be said that in Ning Weimin’s previous life, this commercial war, which was considered the number one in Europe, was actually not at a high level.

The reason why this French wolf was able to succeed was largely due to luck and was a matter of accident.

The main reason is that the French financial market is too small, develops too slowly, and the merger and acquisition qualifications are relatively closed, which gave him, an outlier who didn't want to be a gentleman at all, an opportunity to take advantage of and grow.

Otherwise, if the Americans also set their sights on the fat piece of meat of LVMH, and if there were no restrictions on the shareholding ratio of foreigners, there would probably be no chance for Bernard Arnault.

So even though Ning Weimin has no experience in corporate mergers and acquisitions, and entered the market late, it seems that his chances of success have already been lost.

Although he did not have much capital, he could only rely on the hundreds of millions of dollars raised by himself and Pierre Cardon to fish in troubled waters and gain a small advantage in the second half.

Even though he is a Chinese, it is impossible for him to control the entire LVMH Group.

But in reality, it’s not that simple.

In fact, Ning Weimin’s disruption is not only the biggest variable in this business war.

It is bound to bring an unexpected twist to the final outcome of this business war.

Even for Bernard Arnault, the appearance of Ning Weimin means that he already has his natural enemy.

First of all, Ning Weimin, a man with the Chinese business spirit and a good way of dealing with people, represents the good in business.

He believes in harmony, sharing, balance and honesty, which is the opposite of the selfish and immoral French wolf.

This ensures that his alliance is unbreakable and that he has the advantage of having many supporters.

Although he has not yet gained the recognition and attention of the fourth generation of LV, as long as Henry finds that it is impossible to achieve peace through appeasement, he will know what to choose sooner or later.

Secondly, funding is not Ning Weimin’s disadvantage, but rather his biggest advantage.

On the surface, because of the influence exerted by Lazard Investment Bank, no bank in France was willing to lend money to those who wanted to help the fourth generation of LV.

But the source of Ning Weimin's funds came from Japan, which was at the height of the economic bubble. Japanese banks had already begun to cry and shout, and even knelt down to beg for loans.

If he wanted, he had too many properties and companies under his name that could be used as collateral to obtain huge loans.

Moreover, the loan interest rate is much lower than that of banks in Europe and the United States.

  How can it be compared with a French wolf backed by Lazard Investment Bank?

In fact, his "ammunition" is only scarce on the surface, but in reality it is quite sufficient.

What's more, he does not seek control of LVMH.

As long as they can get LVMH shares at a low price, they can just sit back and wait for dividends, and enjoy the offerings from vain people all over the world.

Whatever the final result, it will be a victory for him personally and he will be satisfied.

As for the last point, Ning Weimin also has a unique advantage in timing, and no one can imitate it.

Even if Bernard Arnault entered the game first and already controlled 37.5 percent of the group's shares, his advantage would not be as great as his.

After all, he is a time traveler who can "predict the future" and use a time cheat.

Looking at the calendar and counting the time, he knew that the famous "Black Monday" in history was not far away.

Although the time of this stock market crash that made the entire capitalist world tremble may not remain unchanged due to the butterfly effect, the general trend will not change.

What is absolutely certain is that stock speculators around the world will eventually encounter this disaster.

For Ning Weimin, this is the best arbitrage opportunity with guaranteed wins.

If God helps him and he is well prepared and has done the right things, then it won't be a question of how much profit he can make personally.

There is a great probability that he can help Henri Lacamier to turn the tables, avenge his previous humiliation, and completely drive away the powerful enemy who has usurped his position.

By the way, we can also push the master onto the board of directors of Louis Vuitton and reward him as a mentor and friend with generous benefits.

So, Ning Weimin did what seemed to be the stupidest thing.

He and the master commissioned stock brokers through Credit Agricole CIB's sister company, CLSA, to start hedging their bets on the LVMH Group, which was already clearly at a high position.

He planned to spend $300 million to acquire shares first, and then start short selling after buying them.

They will then open another account in the name of Matsumoto Keiko and sell the same number of shares on margin.

But he was indeed calm and not at all nervous, and he was not at all worried about the stock price being pushed up further.

This left the stockbrokers and analysts at Lyon Securities collectively confused and bewildered.

No matter how hard they tried, they could not figure out the real intentions of these two big customers.

Because the hedging game of short selling seems to be meaningless. If there is no extreme market situation of sharp rise or fall, you can only contribute to the brokerage firm's handling fees and commissions in vain.

They never dreamed that someone would be able to predict the occurrence of extreme market conditions in advance. They did this in order to wait for the best arbitrage opportunity and make appropriate arrangements in advance.

But then again, even if Ning Weimin had taken the initiative and had thought of everything he could think of, he couldn't control everything.

As a result, an unexpected situation soon created new financial needs for him.

Because Catherine Deneuve found him a few days later when he had just started to make moves. Also because she recognized his character, she asked him to invest in Yves Saint Laurent.

Ning Weimin had never expected that sometimes the luck brought by his good character could also be a burden.

This can be said to be a sweet trouble.