Return to 1958 and build a century-old giant

Chapter 893 Investing in Coca-Cola
Welch became interested again and asked, "Mr. Yang, what reforms do you think General Electric needs?"

After all, the other party is also a self-made entrepreneur who has developed into an entrepreneur comparable to the top American conglomerates. They must have their own unique advantages in business acumen.

Yang Wendong shook his head and said, "I don't know about that. GE's business is completely different from my company's, and considering the laws in the United States, it's best if I don't ask too much."

However, from what I understand, the biggest problem with reform is not actually identifying problems, nor how to solve them, but rather whether we have the capacity to take action.

In fact, the biggest problem with reform is not understanding, but how to implement it.
When a conglomerate has various stakeholders, even if they all know that not reforming means certain death, they will not sacrifice their own interests. In the end, the whole tree will be dragged down and collapse, just like Nokia, Kodak, and even some dynasties.
These individuals who become top 100 CEOs of the century are all experts capable of balancing different approaches and implementing gradual reforms.

“You’re absolutely right.” Welch wholeheartedly agreed: “Chrysler is facing a crisis, so it’s an easy time to take action; General Electric is doing quite well right now, so it’s much harder to take action against it.”

Yang Wendong smiled and said, "That's why this is the most difficult part, and my investment can also help you reduce the pressure at shareholder meetings or board meetings."

"Yes." Welch didn't dwell on the issue any further.
The two then exchanged views on various business matters, particularly in the field of home appliances;
When Welch asked how to deal with the competition from Japanese home appliance companies, Yang Wendong did not answer in detail. The best way would naturally be to invest in domestic bases, but he had other purposes, so he did not disclose them.

In the future, Welch will introduce a "first and second" policy, which means that if a business under General Electric cannot achieve the level of being number one or two globally, it should be sold.

This was the core objective of its streamlining and decentralization efforts: to eliminate a bunch of small businesses from bloated companies. Although it faced a lot of opposition, it was ultimately successful, and history has proven that this policy was very effective for General Electric.
While some of GE's businesses are not considered top-tier, their technological capabilities are quite good. If a suitable opportunity arises, such as in the home appliance business, Yang Wendong would be interested.

However, this matter cannot be discussed at present. First, the timing is not right since the investment was just made. Second, General Electric must sell first so that he is not the one who initiated the transaction. In this kind of business transaction, whoever initiates the transaction first is at a disadvantage.
The meeting with Welch was relatively successful. Now, all that's left is to wait for Welch's news. If the board agrees, he will prepare to invest directly. If they disagree, he will have to go through conventional means and acquire shares on the stock market.
However, regardless of the method, a foreign company acquiring shares in a top industrial giant like General Electric still needs to notify the U.S. Department of Commerce.
This matter was naturally handed over to Goldman Sachs, which is their forte. With Goldman Sachs's reputation for focusing solely on economic investment and not interfering in GE's operations, along with their connections and Welch's approval, the chances of the U.S. Department of Commerce granting permission were very high.

Now, we just have to wait for news.

On the other hand, Yang Wendong has recently targeted not only General Electric in the US stock market, but also another giant: Coca-Cola.

With the influx of large sums of money, some people in the stock market have clearly sensed something amiss.

On May 22, a surprising piece of news spread through the US stock market: Yang Wendong, who had just become famous in New York for Best Buy's listing a few days earlier, issued another announcement, declaring that he already owned 5% of Coca-Cola's shares and that he would continue to acquire Coca-Cola stock.

The news caused an uproar in the American media.
Media outlets that know a little about Yang Wendong are aware that his businesses include the beverage industry, but now he is acquiring Coca-Cola. Could it be that he is preparing to swallow up this top American beverage company?

It's important to understand that while Coca-Cola is a well-known American company, it is just a beverage company and does not involve national security. Given the current US government's promotion of global free trade principles, it's unlikely they will intervene to stop this matter.
As for strength, many people believe that this is not a problem. Although Coca-Cola has a market value of four to five billion US dollars, the equity of a century-old company has long been dispersed. If a large capital acquires about 20-30% of it and maintains good relations with the existing directors and management, then it can basically be considered a success.

Following this news, Coca-Cola's stock price surged by nearly 11% in a single day.

Many media outlets also tried to contact Yang Wendong's assistant through various channels, but the response was "no comment," which only made the media personnel more excited.

Coca-Cola's top management was equally excited. They immediately convened a board meeting to discuss the matter and ultimately decided to authorize the current CEO, Robert Goizueta, to travel to New York to communicate with Yang Wendong, the head of the overseas conglomerate.
Yang Wendong, who was in New York, naturally agreed to Robert Goizueta's request for a visit after learning that it was all part of his plan.

On May 24, at the Four Seasons Hotel in New York City, Yang Wendong met again with Robert Goizueta, one of the top 5 CEOs of the 20th century.
This newly appointed CEO also carried out major reforms within Coca-Cola, eliminating bloated operations and then fully developing new markets in Asia and South America. Ultimately, this led to Coca-Cola's scale increasing more than 30 times in just over a decade, with its market value rising from $40 to around $1500 billion.
Of course, with the emergence of Very Cola, Coca-Cola may not be able to achieve its previous success in the mainland market. However, it will be very difficult for Very Cola to challenge the two giants in other regions. Overall, the impact on its market value should be minimal.

“Mr. Goizueta, please have a seat,” Yang Wendong said politely.

“Mr. Yang, you can just call me Robert,” Robert said with a smile.

Yang Wendong nodded and said, "Okay, then you can just call me Eric. It'll be easier to communicate that way."

Without much small talk, Robert went straight to the point and asked, "Mr. Yang, there have been rumors in the market lately that you are preparing to acquire Coca-Cola. As the CEO of Coca-Cola, I would like to inquire whether this is true?"

"It's not true. I just want to invest and I'm optimistic about Coca-Cola's future," Yang Wendong said with a smile.

Perhaps if Coca-Cola were to acquire it itself, with Goldman Sachs mediating, the U.S. Department of Commerce might not interfere. However, one of the important reasons why Coca-Cola has been able to grow so big and strong is that it has the U.S. government backing it.

Once the ownership changes hands, this advantage will be gone, and Americans will definitely support Pepsi.

If that's the case, my losses will be in the billions of dollars; so it's better to buy more stocks, become a major shareholder, and then sit back and enjoy the huge dividends in the future, just like Buffett did.

"I see." Robert breathed a sigh of relief and then asked, "So, how many shares are you planning to acquire?"

Yang Wendong smiled and said, "I'm also planning to discuss this matter with you. I'd like to acquire about 20% of the shares."

"20%, that much?" Robert's expression changed;
Although it's only 1/5, Coca-Cola is a century-old company, and its stock has long been diluted. There are basically no major shareholders, which is why the management can maintain complete control of the company. As long as there are no huge losses, it's impossible for so many shareholders at the shareholders' meeting to unite and cause them trouble.

However, once there is a major shareholder, the influence becomes stronger, and such a shareholder can also interfere in the company's operations to a certain extent, which is a right granted by law.
Yang Wendong said, "Yes, but if I acquire it through the stock market, the cost will increase significantly. However, if Coca-Cola issues shares to me through a private placement, the funds can flow directly into Coca-Cola's company."

You should understand this; I don't need to elaborate. In recent years, Pepsi has posed a significant challenge to Coca-Cola. Having an extra few hundred million dollars is certainly a good thing for Coca-Cola.

“A private placement would indeed benefit both of us, but 20% of the shares is too much,” Robert gently cautioned.
Yang Wendong shook his head and said, "Whether you agree or not, I will acquire them on the stock market. It will just take a little more time. So this request is inevitable. Coca-Cola shares are widely available. Unless you ask the U.S. Department of Commerce to intervene, you can't stop me."

Robert frowned.
The U.S. Department of Commerce will not interfere in this matter because it is a normal stock investment. Given Coca-Cola's corporate nature, even if it faces a takeover, the Department of Commerce will only inquire about issues such as whether jobs and taxes will be affected.
President Reagan's policy was to deregulate, let the market be the guiding principle, and encourage foreign investment.

Yang Wendong then asked, "Are you worried that I will interfere with Coca-Cola's operations?"

Robert said, "Yes, after all, you also own a Coca-Cola company, although it's not in the United States, and your Red Bull also has a very high status in the US market."

"The impact is not significant. Although they are both in the beverage industry, their main markets and products are completely different." Yang Wendong shook his head and said, "It's like home appliances. One makes color TVs and the other makes air conditioners. The impact on each other is not significant."

Robert thought for a moment and said, "That's true, but Coca-Cola originally planned to focus on the energy drink market, specifically Red Bull. Now that you've become a major shareholder of Coca-Cola, that plan will..."

“Actually, I suggest you stop going head-to-head with Red Bull.” Yang Wendong shook his head and said, “Before Red Bull, nobody cared about this market. Now that Red Bull has taken over this market, the profit margin is very high, you know that.”

I can tell you definitively that Red Bull will not pursue profitability for the next five years; all profits will be invested in advertising and promotion. I'll even be willing to subsidize it. If Coca-Cola were to get involved, every penny they invested would be a pure loss.

Robert was shocked; he hadn't expected Yang Wendong to be so ruthless.
But thinking about it, it makes sense. With Yang Wendong's financial resources, this is indeed something he could do. His Best Buy alone is only slightly smaller than Coca-Cola, and he also owns KFC and several other major companies in Hong Kong.

Yang Wendong added, "The reason I'm telling you this is because I'm about to become a shareholder of Coca-Cola, and I don't want to see our two companies fighting amongst themselves."

“However, our board of directors is also very envious of the energy drink market.” Robert thought for a moment and said, “How about this, would Red Bull accept investment? If Coca-Cola can invest, then we’ll truly be one family.”

Yang Wendong holds shares in two companies, which have nothing to do with Coca-Cola. However, if Coca-Cola holds some Red Bull stock, then they are truly one family.

Yang Wendong shook his head and said, "That's impossible. As I said, Red Bull's future goal is not to make money in the short term. I will even invest other funds. If you or other capital participate, it will involve sharing the dispute."
However, if Red Bull completely monopolizes the market and has no other strong competitors, then Red Bull is open to investment and may even go public.

Although Red Bull also developed by leveraging its foresight, when it reached a large enough scale, it became just an ordinary large traditional industry, and it still made a lot of profits in many markets around the world.
In this situation, just like Best Buy and KFC, it is still necessary to release some shares to attract some companies with strong backgrounds.

Of course, this is not absolute. Going public or not going public each has its own advantages. We'll see how things develop in the future.

After listening, Robert fell silent for a while before saying, "Eric, if you are determined to invest in Coca-Cola, we really can't stop you. How about this, I'll go back and discuss it with the board of directors and management."

The advantage of being a listed company is that it's easy to exploit retail investors and reap profits from them; if done well, it can even generate more money than the company itself.

However, every advantage has its disadvantages. Once a listed company enters the market, although it is the one who reaps the benefits most of the time, there are always stronger forces out there. If too many shares are released after the listing, it will give others the opportunity to take advantage of you.

As a long-established company, Coca-Cola no longer has any major shareholders in the strict sense. If a large amount of capital were to enter the market, no one could stop it unless the government intervened.

"That's good. I hope we can get the results soon." Yang Wendong smiled and said, "In addition, once I successfully take over Coca-Cola, I will support your various reform strategies. I also hope that Coca-Cola can achieve further development."

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(End of this chapter)