What's wrong with me being a rich man?

Chapter 576 The Final Solution

Following 360's increase in its acquisition price, Baidu also sent a new offer to Lingang.

Yu Xing knew from the price of $6.8 million that the two companies still had a certain understanding, which meant that a new buyer had to be brought in.

While the selling price he expects may not reach the record set by Baidu's previous acquisition of 91 Assistant, it is certainly not something that can be easily achieved. And now, considering the introduction of international private equity firms such as Silver Lake or Blackstone requires a prerequisite.

That is, whether or not approvals and permits can be obtained from multiple departments.

Universal Key provides Wi-Fi connectivity services, which are value-added telecommunications services. According to the "Regulations on the Administration of Foreign-Invested Telecommunications Enterprises", foreign ownership cannot exceed 50%, and the Chinese party must be the single largest shareholder.

Moreover, with a potential transaction volume exceeding $3 million and data on hundreds of millions of users, data security must be properly addressed.

Therefore, if a company wants to attract foreign investment, it faces approval from six departments, including commerce, development and reform, industry and information technology, and the process takes at least several months.

The approval process for the construction of the silicon carbon group did involve dealing with many departments, but these procedures were all expedited.

Taking these factors into consideration, Yu Xing first consulted Shao Xu, the director of the business department whom he was familiar with.

Shao Xu reacted directly, asking President Yu on the phone, "Isn't this just like when Silver Lake acquired Hao?"

In 2010, Silver Lake spent $1.24 million to acquire a 62% stake in Goodye from Fenzhong Media, which was one of the largest private equity investments in China at the time. All the relevant data was stored domestically, and foreign investors could only access anonymized and aggregated data reports.

Before making the call, Yu Xing did his homework and knew roughly what it was about, so he replied, "It's somewhat similar, except that our scale is probably larger and we have more user data."

"Mr. Yu, if you can get this data right, the normal process should be fine." Shao Xu spoke frankly in private, reminding him, "There is a problem: with 50% of the shares, the VIE structure still has uncertainties. It cannot be used to circumvent foreign investment access restrictions."

VIE structures can be used for normal fundraising, but they cannot circumvent access restrictions, especially security audits, otherwise they could become a ticking time bomb.

"Understood, we will definitely follow the rules." Yu Xing thanked them for their reply and had more ideas for the new direction.

This transaction itself requires Chinese ownership. Since 360 ​​and Baidu think it's too expensive, they might try to buy half of it. Private equity firms like Blackstone and Silver Lake generally don't participate in day-to-day operations.

After studying the domestic approval process for several days, Carbon Silicon Data Company formally contacted Blackstone and Silver Lake.

Surprisingly, Blackstone showed great interest in the Master Key, not only willing to discuss it but also directly proposing a solution.

Blackstone could launch a joint acquisition of MasterKey together with Boingo Wireless, a US-listed company, which is a Wi-Fi and DAS service provider.

Boingo went public on NASDAQ in 2012 under the ticker symbol WIFI. Its business covers 50% of airports in North America and 30% of airports worldwide. In April of this year, it partnered with US carrier Sprint to provide Wi-Fi offloading services.

Although the company is currently operating at a loss, it has ambitious development plans and is eager to further expand into the global market.

Boingo itself does not have sufficient funds, but Blackstone can provide or jointly complete this cross-border transaction. In terms of both business scope and capital operation, the Master Key is at least a very good piece of the puzzle on paper.

Yu Xing felt that the draft cooperation proposal was very feasible. Blackstone was no novice; it was already clear about the limitations of domestic policies and also had strong lobbying capabilities.

There's always a sense that 360 and Baidu are being taken advantage of, but now that a middleman like Blackstone has emerged, things might be easier to negotiate with.

On the first day of June, Silicon Carbon Group released its May sales figures on time. After breaking the 6359 mark in April, sales stabilized at 6430 units. The new Highlander, which was expected to strongly target Kyushu, only sold 4872 units in May.

The all-new Highlander received extensive advertising after its debut at the auto show, with dealerships nationwide actively recruiting customers, but...

Some media outlets offered explanations: the new Highlander model has just been launched, and production capacity is still ramping up. The delivery figures for the first month are already quite good, and sales in the second half of the year are bound to increase rapidly. In addition, compared to Kyushu's sales increase in April compared to March, sales in May were only less than 100 more units.

This is precisely why: Kyushu Carbon Silicon's sales reached only 6430 units, showing a decline in growth, while Toyota Highlander's deliveries reached 4872 units, poised for a surge.

Yu Xing believes the media's assessment is quite accurate. The sales volume of Carbon Silicon Kyushu in April and May was almost the same, indicating that it was indeed unable to grow, as it had reached the current production capacity limit. The good news is that the capacity expansion of the first phase of Carbon Silicon's Lingang plant will be completed at the end of this month, and the production capacity supply in the second half of the year will be significantly improved.

On June 2nd, the negotiation team from Blackstone arrived in Lingang, while Zhong Zhiling, president of Silicon Carbon Data, appeared to negotiate. Both parties initially agreed on a sale plan that Universal Key could execute.

In a three-way transaction involving Silicon Carbon Data/Blackstone and Boingo/360 or Baidu, Silicon Carbon Data would relinquish 100% of its equity, Boingo's expansion of its business scope would inevitably boost its stock price, Blackstone would profit from the capital operation, and 360 or Baidu would be responsible for domestic operations.

The final question comes back to money.

Blackstone believes the overall selling price of MasterKey could reach $9.5 million, while Silicon Carbon Data has lowered its initial estimate of $20 billion to $16 billion.

Significant differences remain between the two sides, but since Blackstone holds a 50% stake, the stake is not as tight.

After three days of continuous negotiations, both sides made concessions, with Blackstone raising its offer to $11 billion and Silicon Carbon Data lowering its offer to $15 billion. Yu Xing then posed the question to Zhou Hongyi of 360, speaking with him late at night.

“Blackstone? Boingo?” Zhou Hongyi was very surprised. “Will this process work? President Yu, you really have a lot of tricks up your sleeve. Baidu didn’t work, and now you’re going to Blackstone. You really have to come up with another plan when one fails.”

“Then we’ll need everyone’s joint efforts. I know you want to make short videos. 360 can join the negotiations and acquire the operating rights of Universal Key, just like we’re using it to drive traffic to Douyin now. The traffic-driving fees can be negotiated further. Boingo’s stock price has improved, so they probably won’t be too stingy. Besides, Universal Key’s app downloads are also quite good in Southeast Asia,” Yu Xingyou said.

Zhou Hongyi still had objections to the price: "Your $15 billion is still an astronomical price, I can't accept it, even half of that is $7.5 million."

They offered a higher price than the previous quote but only received 50%.

“Mr. Zhou, I think you should consider this: if you negotiate the operating rights, it’s equivalent to having the right to use $15 billion worth of assets for $7.5 million.” Yu Xing still spoke frankly, “Blackstone is currently offering $11 billion. If you raise the price now, you can negotiate with others for $15 billion if you really want to sell in the future.”

After thinking for a while, Zhou Hongyi still wanted to reduce the investment scale and asked, "I can only offer $6.5 million. If you want to offer $15 billion, then we'll find another company to fill the gap."

Yu Xing sighed: "President Zhou, if you are unwilling to accept it, then I will talk to Baidu. I believe Baidu will accept it this time. Although it lags behind Alibaba and Tencent, it is still one of the BAT companies."

Zhou Hongyi asked, "Didn't you talk to Li Yanhong about Blackstone?"

“You’re always my first choice,” Yu Xing said. “But if we can’t reach an agreement over this phone call, I’ll call him back later.”

This time, Zhou Hongyi completely believed what President Yu said.

After thinking it over, he stopped asking about the price and instead pressed for the reason: "Mr. Yu, if you want to sell master keys, why did you consider my company first?"

Logically speaking, Baidu has more abundant funds, and Zhou Hongyi is not being arrogant; her reputation in the industry is indeed mixed compared to Li Yanhong's.

Yu Xing said calmly, "When faced with two evils, choose the lesser one."

Zhou Hongyi was satisfied.

Wait a minute, this doesn't seem like he's praising himself!

He frowned and remained silent, while the person on the other end of the phone patiently kept the call connected.

When Yu Xingdu thought that Zhou Hongyi probably disagreed again, he finally made a decision: "President Yu, do you think 360 can do well in short videos?"

"Haha, how am I supposed to answer that question?" Yu Xing laughed. "I can only say that what lies ahead is an opportunity to try, and now that opportunity has the added options of Blackstone and Boingo. The choice is up to you, the red-coated cannon."

Red Cannon is determined to make a splash in the short video market.

Zhou Hongyi embraced the emerging adventurous spirit and decisively said, "Okay, then you don't need to talk to Baidu anymore. I'll take people to catch the evening flight to Lingang right away. Let's finalize the plan as soon as possible, because we still need to go through the sales process in the second half of the year."

Yu Xing confirmed, "Okay, I'll communicate with Blackstone again tonight."

Previously, it was Zhong Zhiling who negotiated with Blackstone. Now that 360 is willing to join, he can bring more certain factors to the negotiations.

Regardless of the pricing, Blackstone or 360 will only get half.

Yu Xing asked his secretary to contact the Blackstone team on short notice. While he was still considering his words, he suddenly received a call on his phone from Kong Huilin of Baixiaosheng Company.

He answered the call with some surprise.

Kong Huilin used to be a reporter for Tencent, and later fell in love with the tough guy Song Yufeng. She has been working at Baixiaosheng ever since.

Yu Xing hadn't seen the couple for a while, but with Bai Xiaosheng about to move to Lingang, they would definitely run into each other more often.

"President Yu, there's something..." Kong Huilin hesitated for a moment, "I want to talk to you about Song Yufeng."

Yu Xing frowned upon hearing this tone: "You speak."

Kong Huilin explained the situation: she had just seen information about Song Yufeng pledging his shares on his phone last month, and he had been traveling to and from Macau several times this year without restraint in his spending.

Yu Xing listened silently, then said only a few words: "Bring him here tomorrow."

Making money is a problem, spending money is a problem, and correcting these issues in time will prevent bigger problems from arising.

(End of this chapter)