Return to 1958 and build a century-old giant

Chapter 915: Coercing Rio Tinto
As Yang Wendong predicted, more than a dozen real estate companies, led by Hang Lung, also applied to the Hong Kong government for an extension on the phased payment of funds for real estate auctions, citing the economic crisis.

At this point, even the officials in the Hong Kong government who sided with Jardine Matheson fell silent, because once Jardine Matheson set the precedent, other companies would inevitably follow suit. As a result, the Hong Kong government, which was already facing fiscal constraints due to the economic crisis, would inevitably fall into a predicament of "no money".

A few days later, Fang Xianming came to Yang Wendong's office again and reported: "The Hong Kong government has rejected Hongkong Land's application. Hongkong Land needs to submit the second installment of HK$21 billion within the specified time."

"Okay, so which banks is Jardine Matheson currently in contact with?" Yang Wendong asked with satisfaction.
Fang Xianming said, "They must have sent people to communicate with Japanese and European banks. Hang Seng sent people to communicate, but they were just brushed off. I guess Jardine Matheson is still wary of us. They are worried that we might take advantage of the economic crisis to have designs on them."

“Yes, that makes sense. They’re not stupid. Setting up the mutual control mechanism is essentially to prevent us from doing anything,” Yang Wendong nodded and said.
Historically, without the capital tycoon Yang Wendong, and only with figures like Li Ka-shing and Pao Yu-kong, Jardine Matheson was bound together with other companies, fearing that Chinese capital would target them.

Now, needless to say;
Even passersby on the street were speculating that Yang Wendong might be interested in Hongkong Land. After all, which capable Chinese capitalist wouldn't be tempted by such a lucrative opportunity?
Fang Xianming continued, "I have already started acquiring shares of Jardine Matheson and Jardine Land in the stock market. Taking advantage of this, Jardine Land's share price has fallen, making it easier for us to make our move."

Yang Wendong said, "Okay, then let's proceed with the original plan and gradually acquire shares on the market. Once we're almost done, we'll contact the shareholders of Landmark."

“Mr. Yang, after Yizhi Mutual Control, our acquisitions in the stock market will be more passive and easier to be discovered,” Fang Xianming reminded us.

Yang Wendong said, "So what if we're discovered? If all else fails, we'll resort to an open strategy. This time, our target is Jardine Matheson. Relying on the stock market is unlikely. The most important thing is to leverage its huge debt."
"If the economic crisis lasts long enough, it's only a matter of time before Hongkong Land's cash flow collapses. At that point, we can join forces with the banks and force them to take action."

After the cross-control of Jardine Matheson and Jardine Matheson, each party holds nearly 40% of the other's shares. Coupled with the legal restrictions imposed by the Hong Kong government on a 35% general takeover offer, it has essentially become an impenetrable fortress.
From an external perspective, it is impossible to break through; only if there is a problem within itself will it become like the ships that were burned at the Battle of Red Cliffs.
Fortunately, in the past two years, Jardine Matheson was very confident in the future of Hong Kong's real estate market and expanded aggressively, which gave Yang Wendong the opportunity to add fuel to the fire.

If they were just a little more composed, they would be truly impeccable. Even if Yang Wendong's net worth were several times or even ten times theirs, he would be helpless against such a structure.
“Okay, I will try my best to keep it from being discovered by the market,” Fang Xianming said. “However, I am worried that when we make our move, other banks may not cooperate with us strictly.”
As creditor banks, they dare not act rashly when the debt is so heavy.

Yang Wendong thought for a moment and said, "Alright, starting now, we'll slowly contact some of the banks that owe us money and take their debts into our hands. That way, our family will have enough debt to not depend on others. We really can't put our hopes on others."

In the business history of both Hong Kong and mainland China, there have been many instances of companies becoming too big to fail.
On the one hand, the government had to step in to rescue the company in order to protect employment; on the other hand, the creditor banks withdrew their support. After all, if the target company really went bankrupt, they would have huge bad debts, which was intolerable for the banks. They could only provide assistance to help the company revive.
Orient Overseas is a case in point. In its early years, Tung Chao-yung's aggressive expansion led to insolvency, but the creditor banks sat down together to negotiate, and with the help of the mainland side, they eventually weathered the storm.
Of course, some companies are not so good. For example, Caring, a huge fraud company, was built entirely on a scam. Even a miracle couldn't save it, and it could only go bankrupt. This also led to serious losses or even bankruptcies of many banks in Hong Kong and Southeast Asia.

If I were a normal bank, I wouldn't just watch Hongkong Land go bankrupt. But my goal is to acquire them, so if they fall into financial difficulties, I'll have to go all out to destroy them.

"Okay, I'll take care of it right away," Fang Xianming replied.
"Hmm," Yang Wendong nodded, and asked, "How's the situation in Australia? The negotiations with Rio Tinto?"

After more than six months of continued exploration, the Christmas Creek iron ore deposit has yielded more accurate results. Both its total reserves and iron content are among the world's best, making this high-quality iron ore extremely valuable.

The only two problems are that we lack experience in development and that we need to rely on several traditional giants in terms of transportation.

Fang Xianming said, "We've almost finished discussing the cooperative development and transportation aspects. Now there are only two issues left."

The first issue is the sale of the iron ore. Rio Tinto wants to be in charge of it entirely, and we just need to receive a share of the profits. They will let us audit the financial aspects.
Secondly, there's the issue of shareholding ratio. They insist on buying 60% of the shares, while we're only willing to offer 45%.

“Their ambitions are truly grand; neither of these two conditions is acceptable.” Yang Wendong rejected the idea, saying, “Don’t waste any more time. Make it clear to them that the iron ore sales will be confirmed proportionally, with no room for negotiation.”

The same applies to equity; we can give them a maximum of 49%. Production management can be handed over to them, but each department also needs our personnel.

If they still don't agree, then we'll talk to BHP Billiton.

As a century-old mining giant, Rio Tinto could easily fabricate financial statements for its mines. Even hiring a third-party professional company to audit it might not be able to uncover the truth, as there are too many shady dealings involved.
On the contrary, the amount of iron ore produced is in the tens of millions of tons. These are not the figures in books. It is very difficult to fake them, and even if you do, there is not much room for error.
Furthermore, Yang Wendong also needs a large amount of iron ore to increase his influence in the international market, and it can also help his shipping business and strengthen cooperation with the mainland.
The same principle applies to equity ownership;

Even if production management rights are given to Rio Tinto, it's hard to guarantee that you won't be taken advantage of, no matter how many people you arrange yourself. But there's really no way to avoid this kind of thing. Since you're a newcomer to the industry, you can only pay your tuition fees in many cases. Even if you don't cooperate with Rio Tinto, it will be the same if you cooperate with BHP Billiton.
“Okay, we really should be more assertive,” Fang Xianming agreed.
Yang Wendong then asked, "How many shares of Rio Tinto have we acquired?"

“We currently hold approximately 6.3%,” Fang Xianming replied.

After considering for a moment, Yang Wendong said, "Then let's speed up the acquisition. Now we have common interests with Rio Tinto, so going further is not a problem. Let's get to about 10% first, and then we'll seek a new board seat."

A few years ago, Yang Wendong might have chosen to keep a low profile;

But with the listing of several giant American companies, Red Bull beginning to monopolize the sports drink market, Honor monopolizing the game market, and himself becoming a shareholder of several top global giants, he no longer needs to keep a low profile.
Most importantly, the Forbes list is about to be released. This organization focuses on individuals, and for billionaires of his wealth level, once a thorough investigation is conducted, much of their wealth cannot be hidden.
After all, the information of listed companies is public, and it is impossible for the owners of large properties to keep their information absolutely confidential. Even for large factories that cannot be valued, the national import and export departments can still find the corresponding data.
Since it's no longer possible to keep a low profile, then one should maintain a high profile and become a director of more top companies, thus increasing one's influence. This is the price of becoming a super-rich person; ordinary wealthy people can keep a low profile, but it's unlikely for super-rich people to do so.
“10%, okay. If you don’t mind, Mr. Yang, I’ll contact some Rio Tinto shareholders directly and buy them out.” Fang Xianming said, “That way, it will be faster and easier for us to negotiate the Christmas Creek cooperation with Rio Tinto. However, once the news gets out, our cost of acquiring the shares will increase slightly.”

“It’s alright, it’s only a 3 percentage point difference. A little more won’t make a difference. The assets at Christmas Creek are worth much more than Rio Tinto’s stock.” Yang Wendong said nonchalantly, “You can’t have everything. The most important thing right now is to finish the negotiations for the Christmas Creek iron ore mine as soon as possible so that we can start construction sooner.”

In asset-heavy industries, there is often a phenomenon where a project under a company may be more valuable than the entire company. The root cause of this is the use of financial leverage during the operation process.

For example, a certain large conglomerate in the previous life had a market value of several hundred billion, but its debt was 2 trillion. Theoretically, its actual assets must have exceeded 2 trillion at some point; the same is true for many real estate companies in Hong Kong.

Shipping and mining giants are even more ruthless in their financial operations than in real estate, which means they often use relatively small amounts of capital to leverage a large project.
Fang Xianming laughed and said, "Okay, I understand. If that's the case, I'm afraid Rio Tinto's board of directors won't be able to sleep well."

"Haha, that's how they'll come begging to me." Yang Wendong said with a faint smile, "I have no intention of actually seizing control of Rio Tinto; I just need to protect my own interests."

It's not that we don't want to; Rio Tinto will be one of the world's three largest mining giants in the future, with an influence comparable to some medium-sized countries.
However, because of his immense influence, and the fact that he is involved in many special ores, including nuclear ores, these are not things he can touch, and there is no need for him to cause trouble for them.
Therefore, even if he is involved in the mining industry, he only needs to be involved in ordinary industries such as iron ore, copper ore, and aluminum ore.

Ten days later, Rio Tinto's share price began to surge on the British capital market, with a large amount of capital showing a clear inclination to acquire it.

Meanwhile, rumors circulated in the market that large overseas capital was interested in Rio Tinto and intended to acquire part or even all of it. This immediately attracted Rio Tinto's attention, and its board of directors and top management held an emergency meeting.
"Everyone, does anyone have any accurate information regarding the rumors circulating outside?"

"Sir, I have received inside information from an investment bank that Hong Kong's Cheung Hing Group is contacting some minority shareholders with the intention of acquiring their Rio Tinto shares. Therefore, I believe that the recent stock market activity was orchestrated by Hong Kong."

"Yang Wendong? Weren't they in talks with us about a partnership in Christmas Creek? Why would they be buying our stock?"

“This is not impossible. Don’t forget, Yang Wendong is a top conglomerate in Asia. They have billions of dollars in assets in the United States and are shareholders of many top companies in Europe. If they want to become shareholders of Rio Tinto, it will not be difficult for them.”

“If they were just becoming shareholders, that wouldn’t be a problem. But what I’m worried about is whether their real target is our entire company?”

"Impossible, right? Even if he had the funds, the British government wouldn't agree."

"The Thatcher government also had a good relationship with him. It is said that Yang Wendong supported her before Thatcher came to power. The sale of Mini cars has always been one of Thatcher's achievements. Who can guarantee that that woman, Thatcher, will not really stand on our side?"

Many people hesitated because they lacked confidence.

While their side certainly wields considerable influence in the UK, the other side is no pushover either.

"What should I do?"

“Send someone to Hong Kong to meet with Yang Wendong and have an in-depth conversation to see what his purpose is. Also, we can make appropriate concessions on the cooperation in Christmas Creek.”

A few days later, Yang Wendong received the latest news;
Fang Xianming said, "Mr. Yang, our plan has been executed very successfully. We now have 10% of Rio Tinto's shares, which is enough for us to apply to become Rio Tinto's director."

Rio Tinto also sent representatives to Hong Kong. Cheung Hing Industrial made initial contact, and they indicated that the situation at Christmas Creek was negotiable, but a meeting with you would be necessary to determine the specifics.

"It seems they are really worried about Rio Tinto being acquired by us." Yang Wendong smiled and said, "Then let's make some arrangements. I also want to clarify some things with them to avoid misunderstandings in the future."

He will make it clear to any company he doesn't actually intend to acquire, unless he has ulterior motives, so that the other company and its management can operate with peace of mind. In this way, he can maximize his own interests.

“Okay, I’ll arrange it,” Fang Xianming replied.
Three days later, in the presidential suite of the Four Seasons Hotel, Fang Xianming introduced the two men: "Mr. Yang, this is Mr. Brad, the vice president of Rio Tinto; Mr. Brad, this is Mr. Yang, the chairman of our group."

"Hello," Yang Wendong said politely, shaking hands.

PS: Please give me a monthly ticket
(End of this chapter)