The Mech Touch

The negotiations between the Larkinson Clan and Isthmus Manufacturing sped up by an enormous degree now that the ultimate decision-maker had issued his verdict.

After Ves managed to gain the assent of his new imperial 'friend', all of the obstacles that stood in the way of taking over a part of the renowned Rubarthan mech manufacturer had disappeared!

No matter what the CEO or the board of directors thought, none of them had the power or the courage to oppose this reckless and extreme initiative.

Prince Casevir did not even have to supervise the process in person. He only had to issue a few instructions to his staff in order to get the ball rolling.

All of the other institutional shareholders that easily could have formed a voting majority to reject the proposal did not say a peep in the end.

None of them wanted to get on the bad side of a Rubarthan prince without sufficient cause!

It helped that the deal was not as one-sided as it appeared on the surface.

Isthmus Manufacturing not only promised to become one of the biggest corporate partners of a rising superstar in the mech industry, but could also begin to capture market share and earn high profits right away by putting the fantastic new Fey Fianna model into production.

Perhaps it was not a bad idea at all to trade short-term gains in order to secure the cooperation of a mech designer that might one day return value many times over in the long run!

It was just that the heavy dilution of stock that they had 'voluntarily' approved tasted very bitter in their mouths.

Even if their stake in the massive company only dropped by a few percentage points, that already represented a loss in value of billions of MTA credits at the very least!

First-raters may be a lot wealthier than their lesser counterparts, but even they did not dare to mess around with such vast sums!

The Larkinsons did not care about the obvious ambivalence from the other side. The lawyers, the business executives, the process engineers and so on couldn't restrain their ecstatic smiles as they worked to facilitate this humongous deal.

Their clan was on the cusp of forging its largest corporate alliance yet! This was the first time in its short history that it had managed to secure a partnership with a much more powerful first-class corporation!

Once both sides signed the final contract, the Larkinson Clan ascent to first-class had become a foreordained conclusion!

Just the massive amount of dividends that the Larkinson Clan could earn from a company that had always been profitable despite its heavy capital expenditures was enough to uplift every Larkinson to a first-rater!

Of course, Ves and numerous Larkinsons did not lose their minds after securing this insanely lucrative windfall.

The 20 percent stake in Isthmus Manufacturing did not come without a lot of strings attached.

It was all well and good to rely on friendship and mutual trust to ensure that Ves fulfilled his promises, but deals on such a massive scale should always be secured in a formal contract.

This was the reason why the negotiators on both sides had to work all night to hammer all of the subtle nuances and complicated details that their leaders never bothered to think about.

Ves did not worry too much that his negotiation team would botch the results. The leading figures had already set the trend. The staffers could only fill in the gaps.

As the contract rapidly started to reach completion, Ves received another update from his personal assistant.

"The Rubarthans agree to let the Larkinson Clan to gain a total of 20 percent of all outstanding stock in Isthmus Manufacturing." Gavin reported with a slightly more restrained smile than before. "This doesn't prevent further stock dilution or other events from reducing our ownership, but on the flipside we can also buy additional shares in the stock market to increase our weight in the company."

Ves shook his head in disapproval. "That is far too expensive. Neither the Impresario Prince nor I want to diminish our voting rights in the company. It won't happen so long as both of us are opposed to this measure."

"You're probably right. What truly matters is the conditions that the Rubarthans have tacked on to the contract. You won't be able to hold onto all of those juicy shares without meeting your obligations to the company. For one, Isthmus Manufacturing has already bought out the commissions that you have originally agreed to fulfill to the Colonial Federation of Davute."

Ves did not look too surprised. "It's a shame that I cannot fulfill my original responsibilities to Davute, but I hope that my former client managed to get a huge payday out of this buyout."

"The deal the Davutans manage to secure with the Rubarthans is completely voluntary." Gavin assured. "Our local branch over there has heard rumors that President Yenames Clive managed to leverage his position to extract a lot of useful concessions from the Impresario Principality. Davute expects to gain access to a lot of technological support, favorable trade channels, apprenticeship programs and lots and lots of cash. This will ease the deficit of his state and strengthen its foundation a lot further down the line. Besides, the Davutans also managed to retain the right to produce and field the commissioned mechs themselves, so it is not as if they are actually losing anything meaningful."

"I see. That is a remarkable result. What conditions do we have to abide by in order to uphold the deal?"

"Aside from fulfilling the original commissions, you and your mech company are expected to regularly supply Isthmus Manufacturing with mech models that can guarantee high sales. There is room for the occasional dry spells, but if you no longer bother with designing any commercial mechs one day, it becomes difficult to justify your continued stake in the company. The good news is that the contract is not solely dependent on your output. The reason why our clan is the legal entity that will hold all of the shares is to spread the benefits and obligations to our other mech designers. If Ketis or one of the other lead designers manage to design a bestseller by themselves, they can fulfill the contract obligations on our behalf."

That was rather clever. Though Ves felt it was a bit of a shame that he could not place all of those lucrative shares under his own name, it was better and more reassuring to let his clan take over this heavy responsibility.

As long as Ketis, Alexa and the other lead designers became good enough, Ves would gain the space to spend his time on other productive activities.

"What else is in the contract? What about the exclusivity terms?"

"Just as you have previously agreed, Isthmus Manufacturing gains the exclusive right to produce, distribute, sell and provide after-market services of all LMC products within the borders of the Rubarthan Pact. The Rubarthan company will be able to do all of this while paying lower rates for all of these rights. Our clan and mech company must agree to never initiate any direct mech-related business activities by ourselves or through any other business partners. The time limit of this exclusivity clause is 98 years."

"So the deal ends at 100 AOD?"

"Yup." Gavin replied.

"The rules set by the Red Association don't prevent third parties from licensing my commercial mechs and producing them in their own factories before selling them in the Rubarthan mech market." Ves remarked.

"The negotiators already thought about that, boss. The solution to that is the lowered fees that Isthmus has to pay to our mech company. Isthmus is effectively allowed to license our commercial mechs at a considerable discount. This allows them to drive out any competitors by starting aggressive price wars."

"I see."

The downside to that was that Isthmus paid a lot less fees to the Larkinson Clan, but it didn't really matter.

The latter already owned 20 percent of the former, so the Larkinsons still profited one way or another.

"Do we still get to keep the shares after the exclusivity deal has ended?" Ves asked.

"Do you even need to ask that question?" Gavin raised his eyebrow. "This entire agreement is based on the assumption that you will continue to design better and better mechs. If the Fey Fianna is just the start, then you are bound to design much more powerful and profitable products years to come. Isthmus Manufacturing will be able to earn such an enormous windfall from these expected sales that its earnings far surpasses the present market valuation of those shares! It is more than justified for us to retain our ownership in the company even if we don't supply any further commercial mech designs."

That made sense. Ves had no objections to this arrangement, and neither did the Rubarthans.

Gavin proceeded to explain other details, but none of them were significant enough to change the overall calculus of this enormous deal.

This was a clear win-win arrangement. Even if the Impresario Prince regretted his emotional decision to approve the deal a few days later, there was not enough of a reason to break the contract once it came into effect.

Ves looked forward to gaining access to the enormous production capacity of this big industrial player. Isthmus Manufacturing was not only capable of meeting the expected demand from the middle zones of the Rubarthan Pact, but it should also be able to export a lot of output to the Red Ocean Union!

The Fey Fianna and the Supremo Project would be the first two commercial mech lines to take advantage of the vastly improved access to better infrastructure!

All of the production bottlenecks that persistently plagued the LMC in the past would disappear once Isthmus got serious about retooling its production lines to churn out living mechs day and night.

In the future, Ves could also take advantage of the company's mature first-class production facilities to meet the needs of his future Rubarthan consumers.

The profitability of first-class mechs was much higher than any other second-class mech!

With all of this recent spate of good news, Ves grew concerned whether anything could threaten this lucrative arrangement.

"What are our risks?"

"Well, if the Impresario Prince turns against us for whatever reason, we won't be able to profit much longer. You need to make sure you stay on his good side."

"Understood. I will make sure that this will never be a cause for concern." Ves seriously promised.

Gavin's expression grew a lot more serious. "The contents of your private conversation with the 5733rd Prince hasn't spread, but that is no guarantee. I have been able to listen in, and I am sure that His Highness pulled in his own trusted advisers. Any of us present a possible security leak. Your words will instantly generate a huge amount of controversy and attract a lot of opposition to us if they leak to the public. Nefarious parties can also use the threat of leaking a sensitive recording to blackmail us. You have put us all in great jeopardy when you pursued a high-risk strategy."

Though Gavin was right to be concerned about the repercussions of this crazy gambit, Ves did not show any obvious concerns.

"Hehehe. Is that what is weighing on your mind? It won't be a problem even if it leaks. Blackmail can never work if the victim doesn't really mind the penalty for non-compliance. As far as I am concerned, the Rubarthans need a harsh dose of truth in order to adapt to the new age. They can be angry all they want, but that doesn't make my words any less right. Even if they want to do anything to me, they can't. I'm an honorary member of the Red Association. Isn't it normal for the mechers to bully the Rubarthans and get away with it? If that is not enough, I can always ask a favor from the Destroyer of Worlds. The word of a god pilot should be enough to squash any open discontent."