The Chaebol Who Flies From Space - Chapter 103
Only Noblemtl
The Tycoon Who Flies Into Space Episode 103
Episode 103. Ssangyong Motors Acquisition (2)
The person on the phone was Oh Seon-woo, the former government’s chief economic advisor. After leaving the Blue House, he returned to Kangseo University, where he had originally worked.
“Mr. Oh Soo-seok, I heard you’re feeling very comfortable these days?”
– Chief Inspector, it’s very comfortable, just as you said. If I had known it would be this comfortable, I would have come back sooner. But what happened?
“What’s going on? I’m calling to see how you’re doing.”
– Heh heh, why are you like that? We’re both people you know, so tell me why you’re calling.
“I am planning to acquire Ssangyong Motors this time.”
– Ssangyong Motors? You’re trying to take a difficult path. If WD were to take over, Hyundai Motors would likely put up a big obstacle. Isn’t that a formidable competitor emerging?
“I thought so, so I called you in advance.”
– I’m just a piece of trash that has lost all its freshness. Do I have any strength?
Even though Oh Seon-woo said he was dying, I didn’t believe him.
“Why are you doing this? I heard that whenever there is an important economic policy discussion at the Blue House, you always call the professor.”
Although he stepped down from his position as chief economic adviser, he was not completely out of touch. Oh Seon-woo was an economic expert who was on good terms with the ruling party’s powerful figures.
I don’t know what tricks he used, but he was on good terms with the newly inaugurated president.
– I can help you. Are you confident that Mr. Cho will be able to take over the company? It may sound like nagging, but the auto industry is not easy.
“Do you know me? I have already completed the development of a new car engine. It is an engine that is 20% more fuel efficient than the existing engine.”
– Oh my! Already? I can’t believe that they’ve already developed an automobile engine with that level of performance without any acquisition. Is that as easy as it sounds? I heard that Hyundai is having a hard time developing its own engine.
I honestly confessed to Oh Seon-woo’s reaction that I was not convinced.
“Originally, we planned to acquire Chrysler. While we were negotiating with Daimler to acquire Chrysler, we heard that Chinese companies were targeting Ssangyong Motors, so we decided to acquire it first. You know what would happen if it were to go to a Chinese company, don’t you?”
– As expected! If we hand over Ssangyong Motors to a Chinese company, they will focus on stealing technology rather than saving the company. The creditors only think about their own position rather than the national interest. Okay. Since the investigation team has made up their mind, I will step forward and take a look.
After finishing the call with Oh Seon-woo, Ssangyong Motors’ creditors reversed their initial position of proceeding with a competitive bidding and announced that they would negotiate exclusively with WD.
The news that WD, which has ample to overflowing financial resources, is taking steps to acquire Ssangyong Motors sent its stock price soaring.
We formed an acquisition TF and worked with WD Investment’s M&A department.
“We purchased a 5% stake through a block deal.”
“What is the price per share?”
“We agreed to pay 14,500 won per week.”
It was 1.5 times higher than the market price, but it was better to increase the stake as much as possible by any means possible.
The stake to be transferred from the creditors was 49.8%.
The plan was to secure a stake of more than 60% by the end of the acquisition negotiations.
“Are you still buying at the market?”
“The amount of stock in circulation has decreased significantly since word spread that they are negotiating a takeover with us. There are high expectations that the stock price will rise if they are acquired by WD.”
Rumors were circulating that WD Group was serious about acquiring shares.
They bought as much stock as possible from each company they acquired.
And as a result, the number of stocks circulating in the market decreases and stock prices rise rapidly.
A representative company was Ddukkeobi F&B.
WD started purchasing stocks below par value and did not sell them even when the stock price exceeded 2 million won per share.
Existing shareholders, who judged that the stock price would continue to rise in the future, although it would not rise as much as a toad, were reluctant to put up their stocks for sale.
The task given to the WD Investment stock team was to secure as much quantity as possible.
“Then, the stake acquired so far is 12%, and if you add the stake transferred to the creditors, it’s a little over 61%. Acquire an additional 10%. Negotiate the price per share as much as possible. We will also continue to purchase on the market.”
“How much do you plan to acquire?”
I thought that was enough, but he looked fed up because I wasn’t satisfied.
“It’s okay if the company is delisted. After the acquisition, we will dilute the existing shareholders’ stake by increasing capital on a large scale.”
“Delisting will be difficult.”
If the story of the engine I developed spreads to the market, I don’t know how high it will go.
After securing as much equity as possible, we would announce the development of a new concept engine.
This time, it was planned to purchase up to 80% of the shares.
“Why?”
“When I entered the Ministry of Health and Welfare, I was very excited about the atmosphere.”
“It was the same for the Ministry of Finance.”
Damn it! You noticed.
“Yeah, if they delist, there’ll be a lot of pressure.”
“It’s going to be huge. I was wondering how high it’s going to go this time.”
“Somehow, as soon as we told them we were taking over, they immediately started cooperating.”
It was a lightning-quick progression.
As soon as the word was out, permission was granted and the process of negotiations for the acquisition proceeded smoothly without any difficulties.
It was literally full cooperation.
I wondered why, and it turned out that they all had their own ulterior motives.
It tastes bitter, but what can I do?
“Let’s try to secure as much equity as possible. It’s fortunate that we have a lot of capital.”
Ssangyong Motor’s capital recently increased to 320 billion won through a capital increase.
“Okay, I will do my best to purchase the shares.”
President Seo Ki-myeong came hurriedly into the conference room where Kim In-young was having a meeting.
“Sir, I have received a call from New York. The negotiations to acquire Bush Beer have come to an end.”
“Really? How much was decided?”
“It was decided that it would be $32.7 billion at $22.50 per share.”
“$32.7 billion? That’s not bad.”
The acquisition was expected to be worth up to $40 billion.
“We can secure additional shares with the remaining $7.3 billion from the pre-arranged acquisition funds. When did you decide to sign the contract?”
“We decided to sign the contract on the 15th of next month.”
“Then I can go to New York and sign the contract.”
“Things are progressing one by one. The only thing left is the Chrysler acquisition.”
“I think that’s something I need to think about.”
Director Kim In-young was excited by the series of good news. I felt bad for pouring cold water on it, but the Chrysler acquisition was just a test run.
The problem of defective vehicles being sold was serious, and the organization was in disarray after being acquired by Daimler.
In short, the marriage between Chrysler and Daimler-Benz was a mismatch from the start.
Inflexible and overbearing Daimler executives were eating away at Chrysler.
“Actually, Chrysler is not that attractive because of its chronic labor-management problems.”
Unions at American auto companies have a reputation for being strong.
One of the reasons Detroit, once a city of cars, fell into decline was its strong labor unions.
I didn’t feel like embracing it at all.
If we were to acquire Chrysler, we would have to turn everything upside down and start from scratch, so it would have been much more efficient to acquire a Korean car company and build a new factory in the U.S.
“Hasn’t WD Automobile’s labor-management issues already been resolved?”
WD Automobile went bankrupt during the IMF crisis, but when it barely recovered, its strong labor union disappeared.
The Chrysler acquisition was just part of the negotiation process for the Busch Beer acquisition, and I never really had any intention of acquiring it.
“Then what about the acquisition negotiations?”
“Just tell President Park to keep going through the motions. Once the Bush Beer acquisition is finalized, we can break off the negotiations.”
“President Park had already been grumbling a lot about Daimler being uncooperative.”
“It’s probably because Daimler’s nose is really high. I heard that Daimler’s performance is really good these days. If Chrysler gives it a hard time, it will actively negotiate.”
Do you think I’m just a loser at Chrysler? Chrysler was going to be in the red for a while.
Even Daimler will realize that they made the wrong choice only after experiencing the heat.
Finally, a contract was signed to acquire the 49.8% stake in Ssangyong Motors held by the creditor banks for 670 billion won.
During the week-long trading suspension, Ssangyong Motor changed its name to WD Motors and hit the upper limit as soon as trading resumed.
Trading was halted at 15,000 won, but when trading resumed, the stock price suddenly rose to 32,000 won.
Director Kim In-young supervised and directed the overall stock purchase operation.
“The trading volume has definitely decreased.”
“Because we are collecting supplies.”
“But it has decreased too much. If I buy more, the stock price will rise too quickly, so I will stop buying for the time being.”
The stock price rose due to expectations, but the company’s value did not actually change.
“We need to make a big change to the executive team. Are there any suitable candidates for the new CEO?”
“I think it would be a good idea to send Managing Director Cho Young-soo of Holdings. He is an automobile expert who used to work at GM headquarters and was scouted by us.”
Director Kim In-young showed Executive Director Cho Young-soo’s resume.
“You’ve worked hard to recruit someone who spent most of his career at GM and even rose to become president of GMC.”
“I am a college classmate of Park Young-joo, CEO of Holdings. He studied abroad and got a job, and we kept in touch, and I scouted him during the recent Chrysler acquisition negotiations.”
“His performance was good, so why did he leave the company… … No, it was clear that there was a limit to how far Asians could rise in large American corporations, so he had no choice but to leave in the end.”
Even though American companies were nominally global conglomerates, there was a clear glass ceiling at the top.
The limit to which an Asian could rise at GM was the position of president of a subsidiary.
* * *
Since we were in the same building, I was able to meet Executive Director Cho Young-soo right away.
Executive Director Cho Young-soo had a small, stocky body and sharp eyes. Anyone who saw him would immediately think that he was no ordinary person. He was never one to be intimidated even among large white people.
“I had no idea that Holdings had a dedicated automotive team.”
“I didn’t rush the Chrysler acquisition because I thought I had enough time. Things got more urgent when the Ssangyong acquisition story came up. I was also busy overseeing the due diligence process for the Ssangyong acquisition.”
In short, I was scouted and mobilized to take over Ssangyong Motors as soon as I entered Korea because I was in such a hurry to take over the company.
“So, have you found someone to work with?”
“Some of the people I used to work with have decided to come to Korea. After doing some due diligence, I found that WD Automobile is very poor in new technology research. They need to develop new engines and transmissions, but it is difficult to find development personnel for the relevant fields.”
Director Cho had no knowledge of the technology development at all. He was making such absurd remarks when the development of the new engine had already been completed.
I asked Director Kim In-young.
“What happened? Didn’t you tell Vice President Cho about the engine development in advance?”
“Because of security issues, I didn’t tell Vice President Cho about the technical issues in advance. I planned to reveal the technology later when the Chrysler acquisition negotiations were finalized. Vice President Cho, our company’s engine research center has already completed the development of the car engine. We also completed the development of the mission, which had many problems, on our own.”
“… … .”
“If you take up the position of president of WD Automobile, you will receive relevant research data.”
“Wow, I’m dumbfounded. Developing a car engine is definitely not an easy task, but you’ve already completed development. How does the new car engine perform?”
“The engine performance developed with new technology has been significantly improved compared to existing products. It has a driving performance of 34 to 45 km per liter.”
“Is this an engine that would fit into a compact car?”
“No way. It’s an engine for large cars and SUVs.”
Two types of engine models were developed.
One was a gasoline engine for existing large vehicles, and the other was a diesel engine for the SUV series.