Investor That Can See The Future

Chapter 101

The first reason Eunsung Cha learned the name of OTK Company was the sale of Carlos.

Eunseong Motors sold its subsidiary, which was nothing more than an ugly duckling, to OTK Company for $88 million. It wasn’t until half a year after the sale that I realized that the company was a swan.

If OTK Company did not take over at that time, Karos would still remain a subsidiary, and Eunsung Motors would have been able to secure core technology for autonomous driving.

Gerard Clark, MC of Top Motor, a famous automobile program, scoffed, saying, “Eunsung Motor’s sale of Karos to OTK Company is as stupid as Russia selling Alaska to the United States.”

Since then, OTK Company has emerged as a competitor by directly entering the automobile industry using Karos. Moreover, he poured out all sorts of support to win the election of Ronald Stamper as President of the United States.

Last year, Eunsung Motors sold 1.65 million units in the US market. This is 20 percent of the total sales of 8.3 million units last year.

This year’s sales and share were also similar. However, it was difficult to foresee the situation next year.

The election of Ronald, who advocated America first and protectionism, was the worst-case scenario for Eunsung Cha.

Ronald made clear the principle of imposing tariffs on imported cars and incentivizing cars made in the country. This applies to all industries, not just automobiles.

If you want to sell to America, build a factory in America and hire American workers.

For Eunsung, it means that the light has gone out. Currently, there is only one U.S. plant in Georgia.

In Mexico, on the other hand, there are three factories and an additional one is under construction. Most of the products produced here were exported to the United States.

The same thing happened to Toyota in Japan when the instep went out on fire. Even before taking office, the Japanese Prime Minister personally went to the United States to meet with Ronald, and Prime Minister Okazaki announced Toyota’s construction of an American factory on the spot.

Eunseong-cha was busy preparing countermeasures.

The issue of stopping construction of the Mexican plant and building a plant in the US was also discussed, but more than 70 percent of the process had already been completed, and in order to build a new plant in the US, several processes were required, including securing a site, recruiting manpower, and consulting with the union.

All of this would not have happened without OTK Company.

At first, I didn’t really care about Kang Jin-hoo because I thought Oh Taek-gyu was the CEO.

Later, when he found out that Jin-hoo Kang was the CEO, he thoroughly investigated it, and in the process he learned a shocking fact.

There was a subcontractor named DHK Engineering, and the company went bankrupt after losing the patent to Eunsung Motors. In the process, the president died of a brain hemorrhage.

I looked at how important the patent was, and it was nothing. It may have been difficult for SMEs to develop it, but from the standpoint of large corporations, having these patents is not enough.

But once you start tolerating these things one by one, there is no end.

People mistakenly think that if they have a lot of money, they can spend it easily, but whether they are rich or large companies, they never spend money recklessly.

Of course, we don’t spare money where we need it. They are willing to pour tens or hundreds of billions of dollars into factory construction, R&D, and marketing.

However, we thoroughly save money that is wasted unnecessarily. It is a common practice to cut subcontractors’ products in units of won to reduce costs.

Subcontractors pay only 1 or 2 won, but if you take care of all these things, the cost ratio will increase and operating profit will decrease.

In addition, small and medium-sized enterprises (SMEs) with original technology and patents are sometimes the bosses of large enterprises. So to prevent that from happening, the weeds had to be trampled down before they sprouted.

The role of the subcontractor is to produce the parts needed by the subcontractor, and if technology has been developed in the process, it is natural for the subcontractor to own it.

It’s not just Eunsung’s car, it’s the same with other large companies.

The problem is that the deceased president of DHK Engineering is Kang Jin-hoo’s father. When this fact became known, the inside of the Eunseong car was turned upside down.

‘Did you do anything to get revenge?’

Looking at the progress of OTK Company so far, it was not unreasonable to be so suspicious. The suspicion was confirmed when OTK Company jumped in before the acquisition of Xcop.

Eunsung Motor is entrusting all security and security work to DS, a subsidiary of Seosung Group. However, recently, the relationship between the two groups has been creaking.

As Ronald’s election made the prospects of the overseas market uncertain, the importance of the domestic market grew.

Eunsung Tea Group is a huge manufacturing kingdom with not only affiliates, but also 1st, 2nd, and 3rd partner companies.

A security company was needed to effectively maintain and control this kingdom. Therefore, it was planned to take this opportunity to acquire Xcop and incorporate it as an affiliate.

The preliminary bid was as expected.

Companies like the chaff were eliminated, leaving only five influential companies.

Eunsung Car Group, Kanline Group, KRR, RCK Bros., and OTK Company & Golden Gate Consortium.

And now it was 12 hours before the main bid.

* * *

The current topic of discussion among automakers is the future car. All companies have devoted themselves to the development of autonomous driving and electric vehicle technologies.

Related start-ups also appeared one after another. More than 90 percent of them go bankrupt and disappear, but there are some that actually make the right technology.

Eunsung Cha initially treated them in the same way they did to subcontractors. In other words, technology and patents were stolen, and key personnel were taken out.

However, although this method may secure the technology and patents immediately, it has no effect beyond that.

Leading IT companies like Gubble and NPL spend tens of millions of dollars to acquire startups with a few employees, not because they are rich and kind.

Technology can be copied, but it is difficult to copy the culture and philosophy of a company. Therefore, it is judged that it is more efficient to purchase the entire organization and support it even if it costs more money.

Eun Seong-cha, who realized this belatedly, created an M&A team under the group, and Han Chan-young took the initiative to bring in Seo Sang-won, who was the Korean president of Redstone Group, an American private equity fund, and his teammates.

At the headquarters of Eunseong Motors, an all-night meeting was held to determine the bid price.

In the conference room, five team members, including Seo Sang-won, reviewed the materials until the end to determine the bid. Together, they are the best talents with a strong backbone in M&A.

must buy

But you should buy it as cheaply as possible.

It is their role to solve such a dilemma.

Chan-Young Han also did not leave work and remained in the conference room.

Most likely, not only Eunsung Motor Group, but also other companies will set their bids just before bidding.

“Who is your strongest competitor out of the four?”

Team leader Seo Sang-won answered Han Chan-young’s question.

“This is RCK Bros.”

“What about other companies?”

“KRR is insensitive to the Korean situation. It is difficult to spend large sums because the market itself lacks understanding. The Korean representative of Kanline Group was recently replaced by Lee Jong-ho. As this bid is before our debut, we will not bet an excessive amount.”

“What about OTK Company and Golden Gate Consortium?”

“Golden Gate is an IB. There is a private equity fund under its umbrella, but mergers and acquisitions are not its main business. OTK Company also has experience in venture capital, but I have never encountered such a large-scale sale.”

OTK Company CEO Kang Jin-hoo is still in his 20s, and Golden Gate Korea branch manager Oh Hyun-joo is also in his 30s.

Being in such a position at such a young age is great, but on the other hand, it meant that neither of them had practical experience.

Listening to the story, Chan-Young Han thought that the world was very interesting.

‘If DHK Engineering had not gone bankrupt and the president was still alive, wouldn’t Jinhoo Kang be attending school?’

If it were, Carlos would still be in the arms of the silver car, and Ronald would never have been elected.

After all, everything is just a home. The important thing is to solve the problem that is right in front of you.

“On the other hand, RCK Bros has a very high understanding of the Korean market as it is a Korean private equity fund. There will be nothing more to say about Chairman Ryu Cheol-gyun and Vice Chairman Shin Byung-doo.”

“Didn’t RCK Bros use the lowest price among the companies listed in the main bid? Could it be that we don’t have enough money?”

Although the preliminary bid price was not disclosed directly, the companies were aware of each other to some extent.

Usually, half of the acquisition funds of private equity funds are raised from LPs, and the other half is obtained from senior loans from banks.

Recently, RCK Bros is known to have exhausted a lot of funds through several mergers and acquisitions of Chinese companies. You will feel a lot of pressure because of it.

However, team leader Seo Sang-won had a different idea. As I worked at Redstone Group for the past 20 years, I knew better than anyone about the physiology of private equity.

“You must not be vigilant. It’s likely a low-ball strategy where you spend a low amount on the preliminary bid to distract your competitors and then flip it over in the main bid.”

In particular, Vice Chairman Shin Byung-doo is in charge of this work. In many circumstances, the will to take over seemed clear. It was his judgment that he had no intention of leaving at least raising the amount.

RCK Bros has shown the appearance of a winner several times during that time. If there was a need, he boldly wrote the amount, and no one had an unexpected victory.

“How much do you think you will spend?”

Before the bidding began, $2.7 billion was considered the upper limit. However, looking at the results of the preliminary bid, the $2.7 billion was nothing more than a lower limit.

Whoever takes it will have to spend more than that.

Team leader Seo Sang-won said after a long time of deliberation.

“I think at least $2.8 billion, at most $2.85 billion.”

3.8 trillion to 3.135 trillion?

In terms of amount, it is the largest M&A in the history of Eunsung Motors.

Even the second-largest chaebol group in the business world is burdened with trillions of investments. The amount initially thought to be in the second half of the 2 trillion won was now over 3 trillion.

It did not even end here, but continued to increase by tens of billions.

There is no big difference between 3,000 won and 31,000 won. Wouldn’t it be great to spend an extra 1,000 won if necessary?

But if you change this to 3 trillion or 3.1 trillion won, the story is completely different.

Although the ratio is only 3%, 100 billion won is enough money to buy an entire company listed on the KOSDAQ.

Since the amount is large, you have to be careful.

“How much do you have to spend to win?”

“It’s $2.88 billion.”

Chan-young Han looked at him with sharp eyes.

“Are you sure?”

Team leader Seo Sang-won nodded confidently.

“Yes.”

He thought that this amount would be enough.

By the way… … .

For some reason, I kept thinking about OTK Company.

‘What is Jinhoo Kang thinking?’

Is the purpose of the acquisition really the purpose, or is the purpose just to increase the price?

As the bid price is disclosed in the main bidding, if the price difference with the second-placed company is large, even if the takeover is successful, you will be criticized.

It may be useless worrying, but there is nothing wrong with being certain.

“I’d rather spend another 50 million dollars.”

Team leader Seo Sang-won shook his head.

“It’s too much. No need to do that… … .”

Chanyoung Han said firmly.

“I am responsible. We must win the bid for X-Cop.”

* * *

There are several ways to sell a business.

The most commonly used method for large-scale listings is a progressive deal. The two or three companies that passed the main bid by offering more than a certain amount of money will compete again.

The selling technique using the prisoner’s dilemma has the advantage of increasing the price as much as possible.

The higher the amount, the more disadvantaged each other. However, since you don’t know how much your opponent has spent, you should spend an amount that you think will be higher than that.

If there was enough time, Morgan Stanley, the manager of the sale, would have taken this approach as well. However, Typo Group urgently needs cash before the end of the year.

Therefore, we chose the sealed auction method of selling to the party who offered the highest amount in the main bid. In this case, the one who submits by spending even one penny more wins the bid.

Hyun-joo’s older sister entrusted me with the issue of determining the actual bid. I played games with Taek-gyu all night at the company, leaving documents with empty money fields.

To others, it would appear that the CEO and COO spend all night struggling to set a bid.

I put down the gamepad and lay on the sofa muttering.

“How much should I spend?”

Taek-gyu said it was natural.

“Can’t we just spend an extra dollar?”(Read more @ wuxiax.com)

“The minimum bid is $100,000.”

“Then I can only spend another ten thousand dollars. $2.93 billion.”

“By the way, is it the highest amount that Eunsung Cha spends? What if KRR, Kanline Group, or RCK Bros. use a higher price?”

“Then go out.”

“… … .”

That’s right. Up to that point, it’s not something I can do anything about.

How will Eunsung Cha react if the difference is 100,000 dollars?

Tirling!

The intercom on the table rang. The source is the lobby.

Taek-gyu pressed the speakerphone.

[Delivered from Golden Pavilion.]

The original delivery or courier service is received and delivered at the lobby for security. But Taek-gyu said it was okay, so he ordered it to be uploaded.

As long as you don’t scan your card in the middle anyway, the elevator doesn’t stop on the other floor.

After waiting for a while, a delivery man from a Chinese restaurant with an iron bag came up to the 38th floor.

Perhaps he did not think that the CEO’s office would have ordered Jjajangmyeon, and the delivery man looked around with a surprised expression.

“The ship has been delivered, but… … Did you really do it here?”

“Yes. Please leave it here.”

Jajangmyeon, jjamppong, sweet and sour pork, and dumplings were placed on the table in order.

“We didn’t make dumplings.”

“Service.”

“Five! I will also tell the staff to eat a lot here.”

At Taek-gyu’s words, the uncle was happy and bowed his head.

“Thank you, Chairman! I’ll do my best.”

Apparently, the boss came directly to the delivery.

“Please pick up the dishes in the lobby later.”

“Yes. Then enjoy it.”

After the delivery man left, we sat around a table and ripped the plastic off. Come to think of it, it’s been a long time since I’ve had jajangmyeon.

I didn’t know that the CEO’s office would be able to eat it.

“Won’t even the presidents of large corporations sometimes order jajangmyeon for a late night snack?”

“No way.”

Taek-gyu rubbed the jjajangmyeon and said.

“lets think. Whether you have money or not, Jajangmyeon is equally delicious for everyone. Do you think the presidents of large corporations would hate them?”

“… … .”

There’s a point.