Father of France

Chapter 166: How come it's only 30%?
As for Ava Gardner, she remained as quiet as a chicken, minimizing her presence, listening to Koeman tell his compatriots things like, "I treated Gagzi like a child, and Gagzi treated me like a turtle."

"I think your American neo-colonialism is no worse than ours," Coleman said, spitting as he spoke to Holt. "Taking an apple is one thing, but wanting an apple tree too? If you can talk, then talk; if not, buy your ticket and leave Saigon. If I publish the content of today's conversation in the Paris newspaper, the French Communist Party's approval rating will increase by another five percentage points. I hope Mr. Holt will have the courage to take responsibility for all the consequences that may arise."

Holt swore he had never been so humiliated in his life. If it weren't for the intimidating presence of Koman's uniform, he would have slammed his fist on the table in anger.

Suddenly, the door was pushed open by Lefebvre, startling the two American company representatives who were preparing to unleash their power. Lefebvre came in holding a candied hawthorn, pinched the bamboo skewer, and handed it to Coman, saying, "Sir, it's solidified."

"Thank you for your hard work, Lefebvre." Koeman took the candied hawthorn, licked it to confirm the syrup had solidified, bit off the first hawthorn, and then handed it to Ava Gardner. "Where were we?"

Holt glanced at Ava Gardner and saw the femme fatale stick out her tongue. She coughed lightly and replied, "We were just talking about an 18% premium. If it were 10% of the shares, it could involve a net profit of ten million dollars."

Holt said this in the hope that Ava Gardner would understand what it meant. Although the woman claimed to have made movies in Hollywood, Holt didn't know her and probably wasn't a big star.

Even for big stars, Hollywood actresses earn tens of thousands of dollars per movie. Compared to the difference of ten million dollars, anyone with a brain knows which to choose.

Holt had high hopes for Ava Gardner, whom he considered to be intelligent... She said nothing, her body was still there mainly to keep him company, but her mind had already disappeared.

"A ten million dollar difference? That means Standard Oil of New Jersey values ​​a well producing ten million tons of oil per year at twelve times the profitability, and they're giving us a ten million dollar premium? We're getting a good deal?" Coleman's brain hadn't deteriorated yet; he quickly calculated the approximate valuation the other party was talking about and retorted, "Do you think I'm not smart?"

Oil companies in the United States are valued at 10 to 15 times their earnings, but the calculations are based on the lowest possible valuation.

Faced with Holt's vehement denial, Coleman didn't try to argue, but instead used market capitalization as an example: "Your parent company, Standard Oil of New Jersey, has a net profit of $123 million. Each share fluctuates around $70, resulting in a total market capitalization of $3.3 billion. The price-to-earnings ratio is over 25."

"Now you want to take a stake in a newly discovered offshore oil well with an estimated annual production of over ten million tons, which would be a significant boost for Standard Oil of New Jersey. There's a reasonable suspicion that this would lead to a further increase in Standard Oil's market capitalization, and then you're here telling me to raise the premium by ten million dollars, huh?"

Koeman speculated that Standard Oil of New Jersey came to Saigon to tell a story on the US stock market in order to increase its company's market value.

He also asserted that Standard Oil of New Jersey's stock would definitely rise, because the $120-130 million in net profit was from the previous year, which was 1945, and most of the year was still during the World War.

In response to the World War, during President Roosevelt's administration, the tax rate for large corporations was adjusted several times, with the highest rate being approximately 66% including both regular and surcharges.

And the excess profit tax: This tax was levied on the portion of a company's profits that exceeded the pre-war average profit level, at a rate as high as 95 percent.

This is the origin of the 95% tax on the wealthy during Roosevelt's era. Now that the war is over, the excess profit tax will be abolished, and the normal tax plus surtax will be readjusted to around 50%.

For a listed company, tax adjustments alone can increase Standard Oil New Jersey's price-to-earnings ratio by one unit out of thin air.

If New Jersey oil companies could get involved in offshore exploration in French Indochina, regardless of their stake, the prospect of a new oil-producing region would greatly boost investor confidence.

So an 18 percent premium could result in a market capitalization increase of hundreds of millions for Standard Oil of New Jersey, while Holt seems to have suffered a huge loss. How can Corman accept this?

Koeman was not one to keep quiet, and he would never accept being kept in the dark. He retorted bluntly to Holt, "These are French oil wells. You take the lion's share. You're just trying to shut me up with an 18% premium. Do you expect me to thank you?"

At this point, the representatives of Standard Oil of New Jersey were completely at a disadvantage. The Kerr-Mage representative, who had remained silent until now, had initially thought that Standard Oil of New Jersey, an oil giant, would have no problem handling the negotiations, but now it was clear that they were no match for them at all.

Unlike this oil giant, Kerr-McGee wanted to continue negotiations.

“Our company has some involvement in the petrochemical field, and there is great potential for cooperation between the two countries in the chemical industry. We believe France is also very interested in the production of hydrogen peroxide and perchlorate,” said Remy, representative of Kerr-Mage. “Therefore, our stance is to hold equity in the technology; offshore oil drilling platform technology is the foundation of our cooperation.”

"This gentleman is more reasonable. Show some attitude sooner rather than later, and I won't have to yell at you." Koeman nodded indifferently. While carrying the weight of French Indochina and French Africa on his shoulders was certainly satisfying, it was also exhausting for Koeman. Greed wasn't a reason for Koeman's bad attitude; he simply looked down on Americans for being both greedy and stupid. Playing chess with lousy players only makes you worse.

He wouldn't dare say he's a tech expert, but he definitely respects technology. As for France's understanding of the chemical industry, it doesn't need to be particularly profound; it's certain they can't compete with Germany.

The world war has only ended a year ago, and France is unlikely to undergo any dramatic changes in such a short period of time.

Therefore, Koeman did not directly reject Kerr-Mage's technology investment; he said, "We can talk about it, there's nothing we can't talk about."

The tense atmosphere eased, and under the insistence of the two American company representatives, Coman agreed to the following terms: "Subscription Price" is the total amount paid by the investors for subscribing to the newly issued shares.

“Closing” means the closing described in Article 2 of this Agreement. “Issued Shares” means the new ordinary shares issued by the Company to the Investor pursuant to this Agreement, representing the Company’s shareholding on a fully diluted basis after the investment.

As for the investment funds, Koeman insisted on a one-time payment, because France is indeed poor right now; its foreign exchange reserves can only last for five months.

“We will absolutely not accept any legal constraints other than those based on French law.” Koeman added another clause to the contractual intent, which was perhaps the most crucial point.

If a French company strongly insists on the application of French law, while an American company insists on the application of New York State or British law, this directly affects the interpretation of contract terms and the level of protection for both parties.

The agreement ultimately stipulated an acquisition amount of $206 million for Standard Oil of New Jersey, with Kerr-Mage Corporation contributing its chemical technology as its technology stake, and the two American companies holding a 30% stake.

“This is just a preliminary intention; now we need to submit it to Paris for review,” Coleman said with a smile, looking at Holt and Remy, the representative from Kerr-Mage.

There's no need to even think about it; it definitely requires approval from the French Ministry of Economy and Finance, especially since it involves sensitive industries.

Given that France has virtually nothing to offer besides agriculture, energy is definitely a sensitive sector. Therefore, he is not worried about messing things up, because professionals will naturally step in to analyze the draft contract letter of intent clause by clause to prevent France from suffering losses in this area.

Perhaps dissatisfied with Coman or with France, the representatives of the two companies left immediately after confirming the intention to enter into a contract. Only after they left did Holt express his dissatisfaction: "We are two companies with huge influence in the world's energy and chemical industry, and we have only managed to get 30% of the shares by working together."

"Thirty percent of the economy depends on the French, which is clearly an area that the French military and even the government will absolutely not budge on. France has a very serious energy problem, and its influence in the Middle East is not great; the colonial power in the Middle East is mainly the British."

Remy sighed and muttered, "But the French are really lucky. Our company has only just started to get involved in this marine exploration, and the French have been so lucky as to find an oil well with an annual production capacity of ten million tons. It's unbelievable."

Now, Rémy can only marvel at the French people's luck; he can't find any other explanation for this situation besides luck.

"I just can't stand the French people's unfounded arrogance." Holt was now displaying the arrogance of a city on a hill. He would never have dared to do that before, but now he was just venting his anger.

Koeman's guess was correct. Standard Oil of New Jersey was so proactive this time for two reasons: one was to use this news to boost its market value, and the other was to conduct exploration in the waters surrounding the well, so it took the initiative to speak out.

In fact, Remy was no different, which is why two treacherous officials stepped forward: one was Standard Oil of New Jersey, and the other was Kerr McGee.

“We’ll deal with the French sooner or later,” Remy reassured Holt. “Once the chemical base in East Asia is completed, the French will know how powerful we are.”

Given Chiang Kai-shek's current unstoppable momentum and his dependence on the United States, the US now intends to consolidate its influence through a treaty of friendship and trade. At that time, the US can dominate East Asia and may try to join forces with Chiang Kai-shek to get rid of the French.

The fact that these two companies have grown to such a large scale means they must have representatives from both the House and Senate protecting them. They certainly wouldn't be as ignorant of such secrets as ordinary people.

(End of this chapter)