My Peninsula 2007

Chapter 494 Raise the price
"Dick Parsons has been actively pushing this deal for some time now. As the current CEO of AOL Time Warner, he has been under immense pressure over the past two years, not only from shareholder dissatisfaction but also from strong market pressure."

The large-screen television was playing an English program, which was clearly a news broadcast. A blonde, blue-eyed female host was repeating a news report in a monotone tone, and the content was about economic matters.

Directly opposite the large-screen TV was a swaying bed. It was a waterbed, a large, round waterbed with soft edges. Inside the red leather edging was a water bladder shimmering with azure blue water. As a high-end waterbed imported from Japan, it even had a self-heating function, though it wasn't needed right now.

At this very moment, right here on this large waterbed, An Rusong is covered in sweat.

Previously, market analysts believed that AOL Time Warner's predicament stemmed from the indigestion caused by overexpansion. With a market capitalization of $350 billion and the world's seventh-largest conglomerate, AOL Time Warner brought not only profits and market share, but also a heavy burden.

The television broadcast continued.

"ICQ was not a core part of AOL Time Warner's overall business. When Steve Case acquired it from the Israelis, it was widely criticized, with many believing the acquisition was too risky. Subsequently, with the bursting of the dot-com bubble, the cold reality proved the accuracy of these opinions. It's believed that the flawed decisions regarding ICQ contributed to Steve Case's forced resignation."

On the waterbed, An Rusong lay down and rested for a while.

"BlackRock's acquisition of ICQ is likely closely related to its previous acquisition of a stake in South Korea's NGN, a rising IT company that has garnered significant attention from the investment community over the past year. Its instant messaging software, NGN, has experienced rapid growth and has fundamentally changed the current instant messaging market."

"call!"

With a sigh of relief, An Rusong shifted her body on the waterbed, crawled two steps, moved to the head of the bed, sat down with her back against the soft cushions, and then reached for a cigarette from the head of the bed while looking at the television opposite her.

Only then did the girl, who had been hidden beneath him, reveal herself, showing off her petite figure.

The young girl was naive and inexperienced, with no experience of worldly affairs. She was a girl whose mind was full of thoughts of becoming famous and getting rich quickly, and she was also a trainee in Kim Sung-hoon's company.

Now, lying there with her eyes wide open, she looks pitiful yet undeniably foolish, lost yet hopeful for the future, as if a happy life awaits her once she gets through this day.

Of course, many of the girls controlled by Kim Sung-hoon were just like this little girl. An Rusong had experienced a lot. He glanced at the girl and quickly turned his gaze back to the large screen TV opposite him.

At this moment, the television screen no longer showed the female announcer from before, but switched to a recorded video screen, although the narration was still introducing the news about BlackRock's acquisition of ICQ business from AOL.

Only then did An Rusong turn his attention entirely to the television program. He was very interested in this news, as it directly concerned the future development of NGN.

As reported in the news, AOL is a large multinational corporation, and Steve Case was its former president. It was under his leadership that AOL grew to its current size.

Several years ago, after AOL merged with Time Warner to form "AOL-Time Warner", its market value once exceeded $3500 billion, making it the seventh largest company in the world. Its strength is self-evident.

However, it was precisely because of its rapid expansion that a series of operational problems arose, ultimately leading to a continuous decline in the company's profitability in recent years.

The news report just now stated that AOL was experiencing losses, which is incorrect. They are not actually losing money; their profitability simply isn't as strong as it was five or six years ago. This is precisely why Steve Case was forced to resign by shareholders. In fact, Steve Case's experience offers a cautionary tale for An Rusong, as the former was not only AOL's president and CEO but also its co-founder. His importance to AOL was roughly equivalent to An Rusong's importance to NGN.

As AOL rapidly developed, Steve Case and his partners had to continuously bring in investment to secure funding for the company, adding one shareholder and investor after another.

Ultimately, having lost absolute control, and when his decisions led to a decline in AOL's profitability and even the risk of losses, investors ousted the company's founder from his home.

As for An Rusong, he is now facing the same situation that Steve Case faced. For the development of NGN, he needs to bring in external investment, but as a potential investor, BlackRock wants to take too many shares from him. Once he accepts their demands, he will lose absolute control of NGN in the second round of financing, without even waiting for the third round of financing or subsequent listing.

Of course, NGN is a modern enterprise, and a large one at that. As the founder and helmsman of such an enterprise, An Rusong cannot always maintain absolute control over the entire enterprise, unless he does not intend to develop NGN.

But how to put it... for the founder who built the entire company from scratch, NGN is like his child in An Rusong's eyes. In the past, this "child" belonged to him alone, and he was the undisputed father of the "child." But now, someone has stepped forward, offering to pay for his "child's" tuition, buy him clothes, and send him good food, but on the condition that his role as the father is shared with someone else.

Imagine, faced with such a situation, even if An Rusong knew he had to choose this path, how could he possibly feel at ease when making this decision?

In their initial contact two days prior, An Rusong proposed a collaboration to Susan: in exchange for BlackRock's $400 million investment, he would offer 8% of NGN's equity to BlackRock for the company's future development.

Based on this condition, it is easy to calculate that An Rusong's current overall valuation of NGN is $50 billion. This valuation seems a bit outrageous, but in reality it is not high at all. In fact, he has already made concessions to BlackRock on the valuation issue.

To be honest, if An Rusong were to announce these terms and seek international funding, the number of people coming to his door with cash would probably wear out his doorstep.

As for why An Rusong offered such a price and was prepared to give up 8% of his shares, it was because he still wanted to maintain absolute control over NGN.

Currently, BlackRock holds 20% of NGN's dividend-paying shares, Apple holds 5%, and Han Meiyan holds another 5%. Although a certain percentage of shares are reserved for employee incentives, according to the agreement signed between An Rusong, Apple, and DFJ, these incentive shares are held by him on their behalf. Therefore, it can be considered that he holds 70% of the company's shares.

In this second round of financing, An Rusong plans to offer 15% of the total equity. Of this 15%, he intends to give only 8% to BlackRock, while he plans to bring in a fifth-party investor for the remaining 7%. For him, the founder, largest shareholder, and actual operator of the company, the more dispersed the company's equity, the more advantageous it is for him.

However, his proposal was not accepted by Susan. She didn't raise any other objections, but she believed that according to An Rusong's plan, the funds raised in NGN's second round of financing would not be sufficient to support the company's subsequent development needs. She even directly stated that An Rusong's overall valuation of NGN was too low. Given NGN's current development status and prospects, 8% of the equity could not be worth only $400 million; it should be worth at least $600 million.

Don't think that Susan is doing something good by proactively raising the price of NGN shares; she is simply considering things from BlackRock's perspective.

Don't forget that BlackRock will also become a shareholder of NGN, and a major one at that. Even without considering NGN's upcoming second round of financing, BlackRock will hold 20 percent of NGN's equity after the transaction with DFJ is completed.

An Rusong doesn't yet know how much BlackRock will have to pay to acquire the 20% stake from DFJ, but it certainly won't be less than two billion US dollars.

(End of this chapter)