What's wrong with me being a rich man?

Chapter 445 Changes
Vania was in the midst of a hostile takeover bid when, unexpectedly, its own situation quickly made it the primary target of the attack.

The public questioning of Guo Shanfeng was addressed by a variety of media outlets, including business-focused digital media like Business Insider, top-tier media like The Wall Street Journal, and even by nationally renowned programs like The Daily Show.

The reason it gained such widespread popularity, besides the credibility endorsed by the mountain itself, is also due to an important factor.

The article lists the price increases of drugs produced by Vania Pharmaceuticals over the past two years.

“Zegerid, a treatment for stomach ulcers, has increased in price from $888 to $2600, a rise of 193%.”

"Syprine, a treatment for Wilson's disease, has increased in price from $1395 to $4200, a rise of 201%."

"Glumetza, a treatment for diabetes, has increased in price from $896 to $3000, a 235% increase."

"Calcium EDTA, used to treat lead poisoning, rose from $950 to $7116, an increase of 649%."

Drug prices can be raised, but this price increase far exceeds the industry average. At the same time, Vania's R&D investment accounts for only about 4% of its sales revenue, which is also far lower than the 15-20% level of similar companies.

Since 1992, healthcare costs and insurance have been a recurring topic in every US election. After Obama took office, healthcare reform was listed as one of his four major governing principles, demonstrating the growing public attention to this issue.

In a hostile takeover of a pharmaceutical company involving hundreds of billions of dollars, another mysterious short seller appeared and listed the price increases that were most likely to spread and be discussed, and the scope of public opinion did indeed expand as desired.

However, Guo Shanfeng merely stated the facts without inciting emotions, using data to support the conclusion of this section, arguing that "Vanlia's aggressive strategy of treating R&D investment as a cost rather than an asset, with high leverage, unhealthy price increases, and predatory acquisitions, is bound to be unsustainable."

Guoshanfeng's open letter was a collaboration between Yu Xing and Liu Wanying. The arguments about the business model were written by Yu Xing, and this can be considered the cornerstone that determined Guoshanfeng's fate.

Besides rejecting its business model, Liu Wanying was responsible for analyzing Fanlia's current financial situation. She compared Fanlia with its peers and used appropriate data to concisely illustrate its dire situation of using debt to pay off other debts.

"As of the end of 2013, Vania's total liabilities were $314.3 billion, with a net debt ratio as high as 4.2 times, far exceeding the pharmaceutical industry average of 2.5 times."

"Vanlia had only $18 billion in cash reserves in February. Whether it was the hostile takeover of Allergan or the $87 billion acquisition of Bausch & Lomb last year, it relied almost entirely on external financing. Even if this hostile takeover is completed, the total liabilities of the two companies will exceed $47 billion, and the net debt ratio will soar to 6.1 times."

"This highly leveraged debt-driven expansion model is extremely fragile and is very prone to liquidity crises."

Guo Shanfeng mentioned the financing details that had just been exposed by the media, in which Vania used a $155 billion bridge loan, and commented that "Vania has fallen into a vicious cycle of debt-driven problems."

In short, Vania, this price-increasing monster, has gradually lost control of its aggressive behavior and has had to launch round after round of acquisitions to cover up its problems.

The first half of the open letter mainly focuses on Vania, while the second half delves into the ongoing hostile takeover attempt, raising compliance issues regarding Pershing Square's involvement in the acquisition. As a shareholder of Allergan that recently secretly increased its stake, Pershing Square's stance is completely biased towards Vania, which is quite rare.

Furthermore, the concerted action between Pershing Square and JV must also be examined.

At the end of his open letter, Guo Shanfeng warned Vania and reminded the public that if Algen had to succumb to the bully this time, it would harm the interests of the entire society, and those in the know should expose the various problems that Vania had.

A pharmaceutical company with a market capitalization of $400 billion, an acquisition exceeding $500 billion, a hostile takeover backed by a well-known fund, and a crazy price increase exposed by the entry of a mysterious short seller...

In addition, the extensive collaboration with top media outlets, just as David, the CEO of Company A, was pleasantly surprised, Vanilla and Ackerman, the other two parties involved, were extremely shocked when they learned of the news.

Ackerman, in particular, was both angry and agitated.

He received a call from Vania CEO Pearson, and patiently reassured him: "It's no problem, it's just an open letter. I've read the whole thing, and there's nothing offensive about it. I will respond, I will."

However, after ending the call, Ackerman slammed his phone against the office wall.

Still not satisfied, he crumpled the documents in front of him into a ball and threw them at his secretary.

The secretary didn't dare to utter a sound or make any move.

"Over the mountain peaks, over the mountain peaks..."

Ackerman closed his eyes and murmured a few names of his colleagues, feeling utterly miserable.

This hostile takeover, originating from Vania, puts his Pershing Square in a very advantageous position. Whether Vania ultimately succeeds in the acquisition or David does find a white knight willing to raise the price, the shares already held by the fund will appreciate significantly.

Based on the current asking price, Pershing Square's equity is already worth $51.3 billion. After deducting capital costs and potential legal costs, the final profit could approach $20 billion, making it an extremely shrewd move.

Regardless of whether Vania or Elgin wins, Pershing Square and his Ackerman will be the winners!

Unfortunately, the attack on Vania by the mountain peak might force Vania to cancel the acquisition. Without the pressure of a hostile takeover from the outside world, Allergan would not continue to look for a white knight, leaving his stock in an awkward situation.

In addition, Ackerman secretly increased his stake in Vania, believing that there is still room for further growth in its capital operations this year.

If the mountain pass succeeds, Ackerman will lose twice.

Good thing...

Guo Shanfeng clearly lacks further evidence and can only exert pressure through public opinion, attempting to stir up public sentiment to create problems.

Ackerman himself is a master of short selling. After reading Guoshanfeng's open letter immediately, he checked Vania's current short position, which was not very high and the fluctuations were not large. This means that short selling funds from Guoshanfeng have not entered in large quantities recently.

Regardless of what the mountain peak says, its tickets are the most convincing evidence.

If there were solid evidence of this short selling, the short positions wouldn't be in the current state.

Ackerman controlled his emotions and focused on Vania's stock price at the opening of the morning session. Seeing that it had only fallen by 2.3%, he felt more at ease. The stock market had also clearly noticed the appearance of the peak, but he was also examining the other party's short-selling tactics.

Although this 2.3% drop represents the loss of nearly $10 billion, it is nothing compared to the ferocious situations in past cases of mountain peaks.

Ackerman beckoned to his secretary, received a new phone, and then posted several tweets with a cold smile.

"When did it become the turn of a small short seller like Shanfeng, who doesn't even know where he is, to question whether I am in compliance with regulations?"

"I heard that the Japanese police are investigating the mountain, but it seems that the investigation is not thorough enough."

"Pershing Square's operations are compliant, and we welcome Guo Shanfeng to make a public appearance and confront me."

"Short selling cannot succeed if it is not convincing."

"Successful people will continue to move forward despite criticism!"

Ackerman posted the size of Pershing Square's funding on Twitter, along with a cross mark on his open letter to the mountain peaks, clearly supporting Vania and this round of hostile takeovers.

Besides mocking the mountain's secretive nature, he also compared the criticism Vania was currently facing to the emergence of the iPhone. Just as Apple was initially met with skepticism when it made its phones, the mobile phone market has now completely changed, with even old brands like Nokia being phased out. With Ackerman's comments, Vania's downward trend halted and even narrowed in the afternoon.

Guo Shanfeng did not come forward to refute, but his old rival Carl also spoke out on social media in a sarcastic tone, talking about the issue of concerted action.

He is a veteran of hostile takeovers and doesn't mind getting involved in controversy.

"Based on my experience with hostile takeovers, there is no such thing as a JV company. The concerted parties with Pershing Square are simply funds mobilized by Ackman himself."

"All that talk about value investing and being optimistic about Allergan's prospects is just a cover-up."

"Ackman had already agreed with Vania to buy the shares ahead of time, and the biggest problem is that the SEC didn't investigate quickly!"

Ackerman was already in a bad mood, and when his old rival showed up, he mocked and cursed him on Twitter, including Carl in the category of old-fashioned people.

His assessment of Guoshanfeng was that it was a small short seller with a reputation that outweighed its actual strength, and that it was just trying to ride the coattails of the acquisition of Vania Corporation in an attempt to keep the topic within the small circle of short sellers.

Meanwhile, both Vanilla and Pershing Square are contacting the media outlets that appeared today in an effort to minimize the impact.

The media is a complex matter; sometimes it can seem very big, and sometimes it can seem very small.

This is like the invincible reputation of the mountaineering company, which caused Vania to lose $10 billion without any real evidence. This may be a harbinger of a landslide, or it may just be the end of the story.

From the opening bell to the closing bell, the parties involved, including Vania, Allergan, and Ackerman, closely monitored Vania's stock price. They were relatively calm as the decline narrowed to 1.2%.

Vanilla and Ackerman shared similar sentiments: This should be it, otherwise, the mountain peak should have smashed out even more debris from the start.

Allergan CEO David: Since Guoshanfeng has made a move, it can't be that simple, there must be more to it.

The market value of one billion dollars evaporated, but only half of it did.

There was no further movement after passing the mountain peak.

It was like a brief storm, or the calm before the storm.

Compared to the reports from Western media and the voices that were gradually being silenced, things were much more lively in China.

Guoshanfeng is the most well-known short seller in China, bar none.

Whether it's its past targeting of Chinese concept stocks, its motto of "deception will last forever," its undefeated record, or the suspected situation of the CEO of Huaxia Bank, all of these have piqued the interest of the media and the general public.

Many professionals, including those in the financial sector, have always been curious about who is behind the mountain peak.

This time, the short-selling style is completely different from that of the West. In China, almost everyone is on the opposite side of Vania.

"A six-fold price increase? Is this even human?!"

"Buy the company and then raise prices? How can this business model continue?"

"Holy crap, how did Vanlia Company manage to reach such a huge market capitalization? Is there no regulation? I'm shocked, truly shocked!"

Discussions have emerged on platforms like Baidu Knows, Weibo, and even WeChat and Wechat Moments, with many expressing surprise at the business model and development of Vania Pharmaceuticals.

If you cover up the name and tell the story, Vania Corporation would seem like a fabrication to everyone. But the fact that it actually exists and is currently undergoing a hostile takeover makes it seem absurd.

Guo Shanfeng made his move in the evening in China, and the related discussions only reached their peak the following day.

Yu Xing overheard gossip even in his own canteen, some of it revolving around a hostile takeover, and others discussing Vania's business model.

He wasn't too disappointed by the strong performance of Vania's stock price.

As discussed earlier, the price increase of Vania has been investigated. Although there are some flaws in some aspects of this hostile takeover, it is generally within the scope of procedures. Therefore, the stock price is not the focus for the time being. The focus is on the attention and changes it has caused.

As for whether there have been any changes...

At 9 p.m. that same evening, Guo Shanfeng spoke out again, this time in an email interview with The Wall Street Journal, briefly responding to a few questions, mainly discussing the situation of Vania Corporation.

Compared to his previous lengthy arguments, Guo Shanfeng's approach this time is much simpler, suggesting that Vania Corporation is like Enron in the pharmaceutical industry.

Enron was once a well-known energy company in the United States, but it eventually went bankrupt due to accounting fraud, which was a major scandal.

Upon hearing this assertion from Guoshanfeng, Vanlia Company reacted swiftly, stating that it would sue Guoshanfeng to protect its legitimate rights and interests.

Although Ackerman was not mentioned this time, he directly offered a reward of tens of millions for investigating the identity of the person behind the mountain.

The stock price of Vania remained volatile but did not fall significantly after the initial skepticism and subsequent characterization. However, some unrelated comments still circulated regarding its drug price increases.

It even reached Hillary Clinton's ears.

The document she saw was very simple.

“Vanlia and Pershing Square are major donors to the Republican Party.”

“Vanlia spent heavily lobbying Congress last year to oppose drug price regulation legislation, and his lobbying team included Alan Blackmore.”

"Vanlia's chief legal counsel was a Republican federal prosecutor."

“Pershing Square channeled funds to the Republican Party through dark money channels and the Prosperity Foundation.”

Hillary Clinton focused on the information regarding funding and party affiliation, only glancing at the subsequent issues of price increases and acquisitions.

Then she made her request: "Can we talk about this drug price fraud?"

Hillary Clinton intends to win the presidency again, and unions, the elderly, and minorities are important voters. Healthcare reform is already a core campaign promise on her team's agenda, and legislation is being drafted that would require pharmaceutical companies to disclose costs and allow the government to negotiate prices directly.

The issue of drug prices is crucial; selling drugs for profit and then transferring them to competitors is fraudulent.

(End of this chapter)