In Hong Kong, we build a global business empire

Chapter 167: 10 billion to buy 2 buildings, seeking to buy Lane Crawford

Chapter 167: Buying two buildings for 10 billion, seeking to buy Lane Crawford

"A commercial building in Central? There really is one." Chen Shoulin said after thinking for a while.

"Who is the seller? Which building? What price do you plan to offer?" Lin Haoran asked.

"The seller is Wheelock & Co., which is planning to sell two properties owned by its subsidiary Federal Realty, namely Federal Building and International Building. Federal Building was the tallest commercial building in Hong Kong from 1964 to 1966, and was replaced by the Kiu Kwan Building in North Point in July 1966.

According to their outgoing news, Wheelock & Co. hopes to sell it for HK$12 billion, but this price is a bit high for now, so after the news was released, there is no interested buyer for the time being. " Chen Shoulin replied.

"The Federal Building and the International Building?" Lin Haoran nodded. He knew the locations of these two buildings.

Central is actually not that big, and the Federal Building is actually less than a hundred meters away from the Hengfeng Building where he previously lived.

Lin Haoran had heard of these two buildings in his previous life.

Because these two buildings are also related to Li Jiacheng.

Not surprisingly, by the end of the year, Hong Kong's housing prices had nearly doubled compared to now. At that time, it would not be so easy to sell the building at a high price. After all, more than 2 billion is not a small amount of money.

Therefore, Wheelock & Co. came up with a way to sell the two buildings. It let its subsidiary Federal Realty Corporation set up a joint venture with Li Ka-shing's Cheung Kong Group, and then let Federal Realty Corporation sell the two buildings to the newly established joint venture for HK$10 billion. In other words, Cheung Kong Group and Federal Realty Corporation each invested HK$5 million.

Of course, since these two buildings are the properties of Federal Realty, Federal Realty did not actually invest any money. Instead, it first recovered the HK$5 million investment of the Cheung Kong Commercial Group.

Relying on the reputation and strength of Cheung Kong Group, the two buildings were quickly sold for HK$22.35 billion.
In the end, Federal Realty received more than HK$11 billion in cash, and actually obtained a total of more than HK$16 billion from the two buildings.

As for the Cheung Kong Group, minus the HK$5 million it had previously invested, it actually made a profit of more than HK$6 million, which can be said to be a win-win situation.

And now, at the beginning of 1980, they were already planning to sell.

However, HK$12 billion is indeed high compared to today, and it is no wonder that it was not sold in the end.

The Hutchison Whampoa Group is really working hard to develop its shipping company!
In order to develop the shipping industry, the so-called "strategic transfer" of the group's assets was implemented, that is, fixed assets (properties) on land were converted into movable assets (ships) floating on the sea, various properties under Wheelock were sold on a large scale, and the strength of Wheelock Shipping Company was continuously expanded.

In the short term, there seems to be nothing wrong. Many British financial groups have no confidence in Hong Kong's future and are trying to withdraw from Hong Kong.

But who could have imagined that the shipping industry was about to face a great depression, and Wheelock & Co.'s idea was undoubtedly digging its own grave.

Look at Bao Yugang now. He is so smart. He knew that the shipping industry was about to enter a trough, so he quickly led the Global Shipping Group to evacuate, kept selling ships, and even gave up the honor of "the first shipping king".

"HKD 12 billion." Lin Haoran frowned. This price was indeed a bit high.

If another two or three months pass, HK$12 billion will be fine, but it is not even February yet, so obviously around HK$2 billion is more appropriate.

Even at the end of the year, when Hutchison Whampoa successfully sold the business, it only made a profit of HK$16 billion.

But the housing prices at that time were almost twice as much as they are now.

"Mr. Chen, according to market valuation, how much are these two buildings worth now?" Lin Haoran asked.

"One billion Hong Kong dollars, about this price, with a small fluctuation. Someone has already estimated it." Chen Shoulin replied.

Lin Haoran nodded and said to him, "Mr. Chen, please help me contact John Madden. I will offer him HK$10 billion to buy these two buildings!"

John Madden is the current chairman of the board of directors of Wheelock Group.

It is precisely because John Madden lacks confidence in Hong Kong's prospects and is wary of investing in Hong Kong that he is thinking about continuously selling off Hong Kong's assets and investing in the shipping industry.

Lin Haoran also had no intention of purchasing at a price lower than the market price. The real estate industry in Hong Kong is booming now, and houses are only being priced higher. It is simply impossible to purchase at a price lower than the market price.

If you can buy it for HK$1 billion, it will definitely be a good deal.

If you spend HK$1 billion now and want to sell it at the end of the year, you can even get more than HK$2 billion, more than double the price.

"Okay, boss, I'll contact him now!" Chen Shoulin acted decisively and quickly.

Two minutes later, Chen Shoulin took the phone and did not hang up in a hurry. Instead, he said to Lin Haoran: "Boss, Mr. John Madden, chairman of Wheelock & Co., wants to talk to you in person. He is going to come over to our side."

"Okay, tell him I'm waiting for him here." Lin Haoran nodded in agreement.

Chen Shoulin then continued talking to the other party and relayed his boss' words to him.

"Boss, the other party said they will be here in about half an hour." After hanging up the phone, Chen Shoulin continued.

Lin Haoran nodded and asked, "Mr. Chen, do you think the other party is willing to sell it for HK$10 billion?"

"Boss, since the other party took the initiative to come here to negotiate, it means they really want to sell it. The chances of a deal are still very high. After I told them the price you offered, they said they would come over to negotiate with you without any hesitation, so I think the deal can be done." Chen Shoulin replied after thinking for a while.

"I hope so. I am still willing to buy these two properties." Lin Haoran said with a smile.

As for stocks, it is impossible to spend all the billions of Hong Kong dollars in a short period of time.

It's better to invest this money than put it in the bank.

Just like the current housing prices, which are constantly rising, the increase in half a month is enough to cover the interest earned on a bank deposit for a year.

At this moment, Chen Shoulin was becoming more and more surprised at Lin Haoran. After spending such a huge price to acquire the Hong Kong Electric Group, he could still easily take out HK$1 billion, and he planned to buy it in his personal name instead of in the name of the Hong Kong Electric Group, which meant that the money was paid by the boss himself.

Such economic strength is simply terrifying.

In less than half an hour, John Madden had arrived at Chen Shoulin's office. John Madden was a little old man in his sixties. When he saw Lin Haoran, he took the initiative to smile and shook hands with Lin Haoran and said, "Mr. Lin is really young and promising."

"Hello, Mr. John, please take a seat!" Lin Haoran just smiled in response to John Madden's compliment.

Speaking of which, although Wheelock & Co. was once one of the four largest trading companies in Hong Kong, its market value on the Hong Kong stock market is now less than that of Hong Kong Electric Group.

In fact, the market value of Wheelock & Co. is only half of that of Hong Kong Electric Group!
The reason why Lin Haoran did not target Wheelock & Co. was because he knew that the controlling rights of Wheelock were now solely in the hands of John Madden, and the management of Wheelock by another important shareholder, the Zhang family, was entirely determined by John Madden.

Therefore, even if he secretly bought shares of Wheelock & Co. in the stock market, he could not take control of Wheelock & Co., unless he could take over the shares of John Madden or the Zhang family, then he would have a chance to take over Wheelock & Co.

Moreover, the Wheelock Group is now putting all its funds into the shipping industry. Taking over the Wheelock Group means taking on a hot potato.

In another world, Bao Yugang dared to acquire Wheelock Group in 1985 because he was a giant in the shipping industry. In order to avoid being affected by the depression in the shipping industry, he had to start adopting the strategy of "abandoning the ship and landing".

Although he suffered heavy losses in the Wharf Holdings increase, he was able to land successfully in the end. By 1985, he had already recovered and his strength increased again.

The shipping industry is where Bao Yugang started his career. As his economic strength increases, he has no worries about taking over Wheelock.

But Lin Haoran is different. He knows nothing about the shipping industry and has no connections in this area. If he were to take over Wheelock, which is already suffering from heavy losses, he would only sink Wheelock into a deeper quagmire.

Throughout the 80s, the global shipping industry entered an extremely difficult period of depression, the fundamental reason for which was the decrease in demand for seaborne trade and the increase in the supply of ship capacity.

In the early 80s, the shipping industry was in an extremely difficult situation. Even from 1986 to 1997, the international shipping market was basically in a period of volatile consolidation, and the market freight rates did not show a cyclical trajectory of obvious recovery or decline.

Wheelock & Co. originally owned a large number of properties in Hong Kong, but in order to develop the shipping industry, it continued to sell these properties, resulting in most of Wheelock & Co.'s assets being invested in the shipping industry.

Therefore, Lin Haoran does not plan to touch the shipping industry for the time being unless he has sufficient demand.

Because of this, Lin Haoran has no interest in the Wheelock Group for the time being.

At the very least, it is enough for him to currently target assets that he believes are worth acquiring.

After Lin Haoran, John Madden and Chen Shoulin sat down, they started chatting.

Although this matter has nothing to do with Chen Shoulin, Lin Haoran is now his boss after all. If he can help, he will naturally try his best to help.

"Mr. John, after I learned that Federal Realty wanted to sell Federal Building and International Building, I was interested in purchasing them. However, your offer of HK$12 billion is obviously much higher than the market price. The market price I learned is about HK$10 billion.

I am a straightforward person and I will not negotiate with him for a price lower than the market price. I will buy it at the market price, which is reasonable. At the price of HK$12 billion, I believe Mr. John will not find any buyers in Hong Kong." Lin Haoran said with a smile.

"Mr. Lin, I have come here specifically for this matter. It is not impossible to sell it to you for HK$10 billion, but I have a request. That is, I need cash payment, not other collateral. Weland Group is in urgent need of funds for development!" John Madden stated the purpose of his visit this time.

In business transactions, when huge amounts of money are involved, requiring the buyer to pay the full amount at once does pose considerable challenges.

Therefore, it is common practice for the buyer to propose to use part of the assets or shares as collateral to alleviate financial pressure and facilitate the smooth progress of the transaction.

Mr. John Madden obviously took this into consideration. He may have thought that it would be difficult for Lin Haoran to raise such a huge amount of funds in a short period of time, so he insisted on cash payment, which was crucial for Wheelock, which was in urgent need of cash flow.

However, Wheelock's current strategy is to actively monetize Hong Kong's assets. Their goal is to obtain funds directly rather than adding more fixed assets or corporate shares.

This strategy also reflects their high demand for liquidity.

"Mr. John, I can agree to your condition. I have enough funds. As long as we sign this deal, my HK$10 billion can be transferred to you at any time. In addition, I would like to ask if Mr. John has any plans to sell Lane Crawford. I am very interested in your Lane Crawford Group.

Lane Crawford Group is a luxury brand company with a long history in Hong Kong. It was established in 1850 and has a history of more than years.

What Lin Haoran was attracted by was not its achievements in luxury goods, but its retail department store business.

Lane Crawford owns Dah Sing Department Store and China Department Store, two of the four largest department stores in Hong Kong. In addition to operating high-end consumer goods, it has also expanded into interior design business, and sells antiques, jewelry and cosmetics. Its chain stores are spread across the bustling areas of Hong Kong city center, making it one of the largest retail department store groups in Hong Kong.

The future prospects of Hong Kong's retail industry are very good. Taking over this large retail group will definitely be of great help to his future career.

The most important thing is that the market value of Lane Crawford Group is not high, only HK$3.9 million.

Lin Haoran also considered secretly acquiring it from the stock market, but after looking at its shareholding structure, Lin Haoran gave up.

Because Lane Crawford Group is controlled by a property trust controlled by Wheelock & Co., Ltd. with a 56.5% stake. Even if he buys all the Lane Crawford Group shares from shareholders, he will not be able to seize control.

"Mr. Lin is actually interested in Lane Crawford Group?" John Madden was a little surprised.

"Yes, Mr. John, I am very interested in the retail industry." Lin Haoran nodded and smiled.

"Mr. Lin, this is a very serious matter. I need to convene a board meeting to discuss this matter. This is not something I can decide alone." John Madden did not immediately agree to Lin Haoran.

In fact, he had almost the final say in the Wheelock Group, but the condition proposed by Lin Haoran was too sudden, so he didn't have time to think carefully about it.

"Okay, Mr. John, I'll wait for your reply." Lin Haoran said with a smile.

According to the normal stock price, it would only cost a little over 56.5 million Hong Kong dollars to acquire the Real Estate Trust which controls 10% of the shares. Even if the other party asks for a price higher than the market price, it is unlikely to be that high. Lin Haoran can accept a price 20% or % higher.

Now, it depends on whether the other party is willing to sell this high-quality industry.

"OK, then let's complete the transaction of the Federal Building and the International Building first!" John Madden changed the subject again.

(End of this chapter)

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