Chapter 621
Buying at the Bottom
In June, the clock in the conference room of the Zif Davis Group headquarters in Midtown Manhattan, New York, struck three in the afternoon; the negotiations had entered their eighth and most intense hour.
Chen Wenying tapped his fingertips lightly on the table, while the three Zif brothers across from him hesitated. Just ten minutes earlier, Forstmann Little's final offer had been locked at $14 billion in cash, and Chen Wenying's latest bid had plunged the entire conference room into silence.
“US$14.6 billion, paid in full in cash.” Chen Wenying’s steady and powerful voice broke the deadlock.
"We paid $11 billion on the day of signing and the remaining $3.6 million was paid within 24 hours of the completion of due diligence, which is three times faster than any of our competitors' payment cycles."
He pushed a bank statement in front of the three brothers, the clear figures on it proving that Chiba Investment had sufficient cash strength and did not need any financing or installments.
Deco picked up the proof of funds, his fingertips trembling slightly.
The $14.6 billion is $6000 million higher than Forstmann Little's. More importantly, Chen Wenying's promise of "final payment within 24 hours" will allow them to resolve their urgent family trust and estate tax issues in the shortest possible time.
"Mr. Chen, why are you willing to pay an extra 6000 million?" Daniel couldn't help but ask, his tone filled with doubt.
"Because what I value is not short-term assets, but Ziff Davis's technological publishing background and ZDNET's future potential."
Chen Wenying's gaze was firm as he continued, "Moreover, the added value that Chiba Investment can provide is unmatched by any private equity firm—$5000 million for localization promotion in Asia, exclusive content support from EA, and a $3000 million low-interest loan from ZDNET. These will revitalize the business you leave behind."
The three brothers discussed the matter in hushed tones for less than five minutes before the eldest brother, Deco, raised his head and extended his hand: "US$14.6 billion, we agree to the full transfer of the publishing business."
Chen Wenying grasped his hand, a calm smile on her face.
As the legal team drafted and signed the agreement on the spot, the enormous sum of $11 billion was transferred in real time to the Ziff family's trust account via a dedicated line from a Swiss bank.
After their father died, the three brothers had no intention of inheriting the business; instead, they wanted to use the cash to start an investment company.
Therefore, the acquirer's cash flow is very important, as is the payment method.
The Wall Street Journal received the news immediately and issued a breaking news report overnight: "The Japanese Chiba Group has made a lightning acquisition of Zif Davis's publishing business for $14.6 billion in cash, defeating private equity giant Forstmann Little and staging a cross-border merger and acquisition comeback."
When news of the acquisition reached Japan, the entire country was shrouded in the shadow of the bursting of the bubble economy.
In 1994, Japan experienced a stock market crash, land prices plummeted, a wave of corporate bankruptcies swept the country, banks had high levels of bad debts, and the public was filled with anxiety about the economic outlook.
Against this backdrop, the news that Chen Wenying, chairman of EA and Chiba Bank, had offered US$14.6 billion (approximately 1900 billion yen) to acquire US assets instantly ignited the Japanese media and society.
The Yomiuri Shimbun devoted a full page to the acquisition, titled "Chiba Group Makes a 1900 Billion Yen Bottoming Out of the US Market! Fires the First Shot in Japanese Corporate Overseas Expansion." The article stated, "At a time when domestic companies are shrinking their operations and hesitant to invest, Mr. Amada's boldness has shown the world the resilience of Japanese companies. Zif Davis's publications, such as *Personal Computer* and *Car and Driver*, will become bridges for Japanese technology and culture to reach the world."
The Asahi Shimbun provided an in-depth analysis, stating: "After the bursting of the bubble economy, Japanese companies' overseas investment plummeted by 67%, while Amata's $14.6 billion acquisition is the largest cross-border merger and acquisition by Japanese companies this year. This is not only a business transaction, but also a boost to confidence in the Japanese economy—we still have the strength to establish a presence in the global high-end industry sector."
Nikkei focused on ZDNET's internet potential: "Ying Amata's acquisition is not just about publishing, but also about securing a ticket to the future of technology media. While Japanese companies are still struggling, the Chiba Group has already used this acquisition to connect American technology publishing resources with Japanese gaming and telecommunications resources, building a technology ecosystem spanning Japan and the United States."
Newspapers were sold out at convenience stores in Tokyo.
Commuters on the tram were discussing: "After the bubble burst, no one dared to spend money, but Yutian Ying took out 1900 billion to make acquisitions in the United States. That's true foresight!"
"He wasn't investing blindly; he saw potential in science and technology publishing, which might be a new way out for the Japanese economy."
Chen Wenying's acquisition has propelled the Chiba Group's reputation and influence to new heights. Companies already with significant influence, such as Chiba Bank, EA, and Blue Sky Properties, have gained global attention as a result of this cross-border merger.
At a press conference in Tokyo, facing questions from hundreds of reporters, Chen Wenying calmly stated, "The bubble crisis is not the end, but rather an opportunity for adjustment. Japan possesses excellent technology and capital; it simply needs more precise overseas expansion. Ziff Davis's publishing business and ZDNET will serve as a link between the Chiba Group and the Japanese and American technology industries. In the future, we will continue to deepen our involvement in the technology, internet, and telecommunications sectors."
These words were described by Japanese media as an "economic declaration of the post-bubble era," and Chen Wenying was also voted by the public as "the most courageous entrepreneur of the year."
In the villa in Tokyo, the three siblings, Chen Wenying, Chen Wensheng, and Chen Yingyi, stood respectfully, awaiting their father's instructions.
On Chen Guangliang's desk in his study were documents about the Chiba Group, and he was giving advice to the group.
The Chiba Group is a newly established conglomerate centered around Chiba Bank, one of Japan's top ten banks. Currently, the core of the conglomerate consists of the three siblings, Chen Wenying, Chen Wensheng, and Chen Yingyi.
Of course, in Japan, calling it a conglomerate is just media exaggeration; it's not a large conglomerate in the true sense.
But Chen Guangliang was able to transform this company into a top-tier conglomerate within five or six years.
First, the financial institutions within this consortium are Chiba Bank (a commercial bank) and Chiba Investment (an investment bank). Chiba Investment has already acquired Japan's third-largest telecommunications company and become a software publisher in both Japan and the US, with total assets exceeding $50 billion. In essence, Chiba Investment is the reincarnation of SoftBank, having snatched the partnership from Cisco and acquired Ziff Davis's publishing business in the US; its next step is naturally to invest in Netscape and Yahoo!
Secondly, this conglomerate has two core businesses: EA and Blue Sky Realty. EA's profit last year (1993) was over US$4 million, while Blue Sky Realty still controls billions of dollars worth of commercial real estate.
Finally, there are some small investment industries, including peripheral industries such as comics, game software, or securities investment.
"Next, Chiba Investment plans to invest in or establish more companies in Japan and the United States to form a large conglomerate. Of course, the next era is the era of the Internet and technology, and investing in these industries is the only promising prospect."
Chen Wenying quickly replied, "Thank you for informing me, Father. During my recent trip to the United States, I discovered that Netscape Navigator has already been developed. I invested $100 million in a 10% stake, and I will keep an eye on its future developments."
As for Yahoo, Chen Guangliang simply asked them to pay attention to the young man Yang Zhiyuan, believing that he would eventually invest in him.
Chen Guangliang said with satisfaction, "As long as we invest in two promising internet companies, Qianye Investment will never be short of money later. Just think about how many times we made when we invested in Cisco."
Cisco went public in 1990, and Chen Guangliang's family office also invested in a 2% stake, but it was purchased on the public market; the same was true for Microsoft, which also invested a 2% stake.
Cisco's stock price was $0.09 when it went public, and it's now $1.85, a 20-fold increase. Of course, its market capitalization at that time was only a little over $20 billion, while in the early 2000s, Cisco's market capitalization was as high as $5500 billion.
Microsoft's current market capitalization is only over 300 billion US dollars, but it was expected to rise to 6000 billion US dollars in the early 2000s.
The Chen Guangliang family office only needed to acquire a certain amount of stock from the public market and then start cashing out at the end of 1999 to naturally obtain a return of tens of billions of US dollars.
Chen Wenying said excitedly, "We will definitely live up to our father's expectations. Next, we will increase our investment in the technology and internet fields, whether in Japan or the United States, and we will not miss this opportunity."
Chen Guangliang nodded. He gave this opportunity to the fourth branch of the family purely because it was originally SoftBank's investment in Japan, and the fourth branch also needed to contribute to Yahoo's introduction to Japan.
Of course, the well-known companies allowed the four siblings to invest in Netscape and Yahoo, cashing out one or two hundred billion US dollars around the turn of the millennium for subsequent strategic investments. On the other hand, Chiba Investment can also invest in other related companies over the next five years; this direction is already largely established, and it's believed that the Chen siblings will make the right choice.
Time quickly passed to mid-December.
The weather in Southeast Asia was still hot. On the lawn of a villa in southern Singapore, Chen Guangliang was lying in a chair reading a magazine.
As he got older, he stopped studying and preferred reading magazines or newspapers, or playing computer and video games, just like a playful old man.
Of course, Chen Guangliang, who is approaching 85, is still in good health and can enjoy the good things in life. After all, an ordinary man at 85, as long as he was young and didn't engage in physical labor, and with proper care of his body, is still a man. There are many examples from my past life, including the great physicist and that painter surnamed Fan.
Since Chen Guangliang's body has been genetically modified, it is possible that he could still accomplish this feat at the age of 100.
"Tick-tock. Tick-tock"
The sound of high heels echoed from the villa, followed by two 'urban beauties' walking towards Chen Guangliang; they were Li Zhi and Zhang Min.
The two women were "driven out" of Hong Kong and settled in Singapore. Their businesses are diversified across Singapore, Hong Kong, and mainland China. For example, they have investments in commercial buildings, luxury homes, and securities in Singapore, as well as properties and securities in Hong Kong, and real estate and collectibles in mainland China.
They were originally from mainland China, so they could naturally adapt to life there, especially with people looking after them. Currently, the two women have invested in two commercial office buildings in Shanghai, as well as real estate projects and established a real estate company.
"Sir, we have started shorting the Nikkei index. From now on, my sister and I will have $500 million in short-selling margin deposited into our account every day."
Chen Guangliang looked up and saw that Li Zhi and Zhang Min were both wearing work uniforms, with black stockings underneath their pencil skirts, making them look incredibly alluring. They appeared to have just returned from the company, but weren't they deliberately dressed like that?
These young lovers are now racking their brains to capture Chen Guangliang's heart and prevent him from having any new lovers, of course, casual flings don't count.
On the other hand, the two women each have a net worth of only a little over HK$1 billion, while their liabilities are much higher than their net worth, so they also need money.
This time, Chen Guangliang had the two women short the Nikkei index, and he personally took out 1 million US dollars to have them short the index for twenty trading days.
This is because Chen Guangliang still remembers that a major earthquake is about to occur in Japan, and the Nikkei index is currently hovering between 19000 and 20000, still with a significant drop.
A single job could net them two or three hundred million dollars, significantly increasing the assets of these two women. After all, Li Zhi had given birth to two sons for Chen Guangliang, and Zhang Min had also given birth to a son and a daughter.
"Yes, maintain this frequency of short selling every day, and don't worry about anything else, even if you get liquidated."
Liz immediately bent down and said in a flattering tone, "With you around, we don't need to worry at all. You won't lose money anyway. Without you, even if it's $500,000 a day, we definitely wouldn't be able to sleep at night making such a risky investment!"
Chen Guangliang said, "I'll deal with you two tonight."
Lizhi said charmingly, "Okay, we sisters will make sure you have a good time. By the way, the children are eager to see us!"
"Let them come."
It's not easy for these illegitimate children to see their fathers; even if they come to the villa, they still have to wait for an 'decree' to be issued.
As for whether he would become rusty, Chen Guangliang didn't care or worry, after all, he was a wealthy father.
After playing with the children for a while, everyone ate dinner together. Finally, Chen Guangliang took Li Zhi and Zhang Min upstairs. The children were then led to their rooms to rest by the maid.
That night, Li Zhi and Zhang Min opened the last door, and Chen Guangliang collapsed onto Li Zhi's limp body.
He's really getting old. Before, Chen Guangliang could still be full of energy after sex, but now he just wants to lie down on the soft bed and rest.
Back in Hong Kong, Kwan Ka-wai and Lee Ka-yan reunited with Chan Kwong-leung with their children, naturally choosing to stay on the "Tranquility" superyacht for its high security and privacy.
“It’s time to buy at the bottom. Starting from the beginning of next year (1995), buy securities over three months and gradually buy real estate over five months.”
Guan Jiahui and Li Jiaxin were overjoyed. They had been holding back for more than half a year, and now they finally had the opportunity to buy at the bottom.
The second round of decline in Hong Kong securities and real estate saw an overall drop of 30%, which was not actually a large drop, because in the three years from 1991 to 1993, the annual increase was 40%.
In reality, it's just a drop of one year's gains, roughly back to the level of the first quarter of 1993.
Guan Jiahui took Chen Guangliang's arm first and said in a sweet voice, "Mr. Chen, what kind of property should we buy?"
All six lovers addressed Chen Guangliang with respectful titles, such as Sir Chen or Mr. Chen, given the age difference.
Chen Guangliang said with a smile, "Given your current size, you'll naturally target luxury homes, office buildings, and shops, with each property valued at least 500 million. Of course, Cheung Kong and Wharf Holdings will take care of you in terms of real estate agency."
Both women's investment companies can obtain agency rights from the Chan Group. For example, when a large housing estate goes on sale, they can purchase a batch of properties in advance for speculation.
"I'm so happy! From now on, I can just happily collect rent. Why bother with any business!"
"Real estate speculation is so profitable," Kwan Ka-wai remarked. She currently has assets exceeding HK$3 billion, which will more than double by 1997, reaching a net worth of HK$7-8 billion.
Of course, she has been with Chen Guangliang for seventeen or eighteen years, and their son is already ten years old.
Taking the opportunity, Li Jiaxin said, "Okay, how about you transfer some of your IT shares to me?"
Guan Jiahui immediately bristled and said, "Dream on! You're always thinking about climbing the social ladder, aren't you? Do you even have the skills?"
She has some business acumen, but Li Jiaxin certainly doesn't have that talent.
Li Jiaxin also linked arms with Chen Guangliang and said with a smile, "You said you didn't want to run it yourself, it's not like I forced you!"
Chen Guangliang's mood didn't worsen as he watched the two women bickering, because their rivalry was a love-hate relationship.
Guan Jiahui tossed her hair and said, "The IT department is already established; we can just develop it step by step. But aren't the real estate and securities departments within IT also involved in speculation?"
Li Jiaxin was speechless.
IT went public at the end of 1993, raising HK$1.25 million. In addition, with the profits on the books, it had a cash flow of HK$1.5 million.
"By the way, this time IT can go to Ping An and Hang Seng Bank to get a lot of loans and try to get HK$5 million to buy at the bottom."
Guan Jiahui was overjoyed and quickly said, "Yes, I'll arrange it as soon as possible!"
Li Jiaxin seized the opportunity to add, "I want to participate too!"
Chen Guangliang smiled and shook his head. Guan Jiahui and Li Jiaxin's identities were becoming more and more exposed. Now, he could only meet with them on the Tranquility superyacht. His villa on land might be photographed as evidence.
As for those rumors, they don't matter as long as there's no substantial evidence.
On the yacht, Chen Guangliang also met with the children of the two women. The meeting was mostly brief, involving only a few words and some instruction. The emotional connection was far less than with his previous fifteen children, and even less with some of his grandchildren. (End of Chapter)