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Chapter 285 Taking Over Samsung

Lee Kun-hee had long anticipated that the other side would not easily let go of this opportunity to restart negotiations and would definitely intensify its efforts by throwing out even more demanding conditions.

In the capital market, greed is never concealed, especially when the other party is American-style greed.

With Samsung in dire straits, how could Ernst Asset Management possibly miss this golden opportunity to rip them off?

Even though he was mentally prepared, when faced with those outrageous demands, Lee Kun-hee almost lost control of himself and had the urge to storm off.

These Wall Street wolves had a bigger appetite than he had imagined.

December 14th was destined to be an eventful day for Samsung.

When Perrin Houston and his team reappeared at Samsung headquarters, his face no longer displayed the insincere politeness of the previous visit; instead, it was filled with an arrogant confidence that seemed determined to succeed.

As soon as he entered the conference room, he threw a revised investment plan onto the table, showing absolutely no respect.

Lee Kun-hee suppressed his anger and gestured to his assistant to hand over the proposal.

After watching it, I almost blurted out "Shiba".

Firstly, regarding the price, the acquisition price remains unchanged at 100 won per share, along with two board seats.

This price is already very low; there's not much point in trying to lower it further, as you won't save much money.

Moreover, what Samsung needs most right now is funding, and making moves regarding funding would be too easy to trigger Samsung's sensitive nerves.

But this time, Ernst Asset Management added two harsh conditions, which instantly darkened his expression. If the previous price and board seat requirements were still within an acceptable range, these two additional conditions were nothing short of blatant extortion and a trampling on Samsung's dignity.

The first condition directly targets Samsung's core strength: its semiconductor business and related technology patents.

The proposal requires Samsung to share its semiconductor technology patents with a company designated by Ernst Asset Management.

The semiconductor business is Samsung's core business and the key to its global technological standing. These technological patents are the result of countless efforts and investments by Samsung's researchers, and they represent the hope for Samsung's future development.

Now Ernst Asset Management is demanding that these patents be shared. What's the difference between that and killing Samsung?

The second condition involves the issue of stock type.

Ernst Asset Management required that all Samsung shares they acquired must be preferred stock with voting rights.

Stocks are generally divided into two main types: common stock and preferred stock.

What are preferred shares? They are shares with special privileges.

Its privileges are mainly concentrated in two parts: the right to receive dividends and the right to claim the remaining property.

Dividends are simple: when a company is consistently profitable, it pays a portion of the earnings to preferred shareholders, which is delivered upon maturity, just like bonds.

Common stock is different. Whether it can receive dividends depends on whether the company has a balance to pay dividends to common stockholders after the preferred stock has paid out its dividends.

As for claiming remaining assets, this refers to situations where the company goes bankrupt.

After the company goes bankrupt and the remaining assets are sold, the money will first be used to repay the principal and due returns to the preferred shareholders. Only after the rights of the preferred shareholders have been satisfied can the remaining money be distributed to the common shareholders.

If a company goes bankrupt and its assets are limited, common shareholders may end up with nothing.

However, every gain has its loss. Preferred shareholders enjoy these privileges but are also subject to certain restrictions, the most critical of which is the lack of voting rights.

Even if a common shareholder holds only one share, they have voting rights at the company's shareholders' meeting and can express their opinions on the company's major decisions.

However, preferred shareholders do not have this right; they can only passively enjoy their share of the profits and cannot participate in the company's operation, management, and decision-making.

However, there are exceptions. In some special circumstances, such as when a company fails to distribute dividends to preferred shareholders according to the pre-agreed ratio or violates certain special agreements signed by both parties, preferred shareholders may obtain certain voting rights.

Just like now, Ernst Asset Management wants both the stable returns and priority protection brought by preferred stock, and the voting rights like common stock shareholders. This is a typical case of wanting both, trying to have all the benefits.

However, Samsung can accept this, as it is an inevitable outcome.

However, the first condition regarding the sharing of technology patents was like a thorn, deeply embedded in Lee Kun-hee's heart, and also made the Samsung executives present furious.

After reading it, General Counsel Kim Min-cheol could no longer hold back. He slammed his hand on the conference table, making the water glasses on the table shake slightly.

His face flushed red, he angrily said to Perkin Houston, "The semiconductor business is the lifeblood of Samsung. Sharing these patents is tantamount to cutting off Samsung's future lifeline. If you take our shared patents to support a new semiconductor company, what does that make Samsung? Are all our years of hard work just to benefit others, to be fools who work for free and make others' success?"

As if he hadn't heard Kim Min-cheol's angry accusations, Parker Houston casually glanced at the Samsung executives glaring at him in the conference room, and finally fixed his gaze on Lee Kun-hee, who had remained silent, which gave him a boost of confidence.

The fact that Lee Kun-hee didn't directly reject such stringent conditions shows that Samsung values ​​this financing very much and desperately needs the funds; otherwise, they would have already slammed their fist on the table and turned against it.

His team did their homework these past few days; on the contrary, they conducted a comprehensive investigation into Samsung's situation.

Through their investigation, they learned that Samsung's current situation is far more difficult than they had imagined.

In particular, the supplier has stopped supplying goods, and a demand letter has been sent to Samsung headquarters.

Parker Houston cleared his throat and slowly began, "Everyone knows that not only Samsung, but many companies in South Korea are not doing well right now. Under these circumstances, the fact that Ernst Asset Management is willing to invest in Samsung shows our great sincerity."

"We're proposing these conditions simply to provide some security for our investment. After all, all investments carry risk, and it's perfectly reasonable for us to ensure the safety of our funds, isn't it?"

He spoke in a grand and righteous manner, as if he were truly thinking of Samsung's best interests, rather than taking advantage of its misfortune.

When Li Hezhu heard Bai Wen Houston's distorted and untrue words, she was amused, but her smile was full of sarcasm.

He looked at Pervin Houston and retorted without any politeness, "Who doesn't know that your Ernst Asset Management is just taking advantage of the situation? Given Samsung's current size and strength, if it were an American company, its market value would be at least five times or even ten times what it is now."

Facing Lee Hak-joo's questioning, Parker Houston showed no sign of panic. He even raised an eyebrow and retorted, "And then what? The reason American companies have such high market capitalizations is because they never needlessly double their debt. But what about Samsung? And where will the Korean won fall next? To 1800 won to 1 won?"

Will the US dollar fall below the 1900 won mark?

"Under these circumstances, isn't it reasonable for us to propose some safeguards?"

Lee Hak-joo immediately retorted angrily, "The current depreciation of the Korean won is only temporary! No one knows better than you on Wall Street what the underlying reasons are for this significant depreciation of the won."

"Moreover, currency depreciation is beneficial to the exports of our South Korean companies, which is an undeniable fact. Once the global economic situation improves, Samsung's export business will recover quickly, and Samsung's value will naturally rebound."

Perkin Houston rolled his eyes dismissively, his expression saying, "Are you kidding me?"

He scoffed, "Aren't you being too optimistic? It's true that currency depreciation is good for exports, but there has to be a market for it."

"The current situation is that not only in Asia, but the global economy has been impacted to varying degrees by this financial crisis, and the entire market is in a slump—this is a fact that everyone can see. As for when the market will recover, no one can say for sure—two years, three years, or even longer? Can Samsung hold out until then?"

"Moreover, what you are facing now is not only Samsung's debt and funding problems, but also a more serious issue of employee welfare."

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Modern South Korean companies have adopted Japan's lifetime employment system. Although there is no explicit legal provision, in practice, employees are generally employed for life.

This is why the International Monetary Fund requires companies to lay off employees when providing aid to South Korea.

Because of this lifetime employment system, it is difficult to guarantee that all employees will be fully committed to their work, which inevitably leads to inefficiency.

If Samsung were to halt production due to funding issues, the consequences would be severe.

Not only will it let down the long-time employees who have worked diligently for Samsung their whole lives, but it will also give those who usually slack off a chance to cause trouble.

This could very likely trigger large-scale riots, with unimaginable consequences for Samsung and even for the whole of South Korea.

This is also the biggest difficulty the South Korean government is facing now, which is why they compromised with the IMF.

Similarly, this is the biggest problem for South Korean companies right now. If companies cannot solve and properly handle employee issues, the government may have to step in and take over.

In negotiations, it's definitely more effective to give the other party a slap followed by a sweet treat to force them to compromise.

So, Perkin Houston played his biggest card, slowly saying, "As long as our Ernst Asset Management can successfully take over Samsung, we can immediately bring Samsung a substantial order. This order will be worth no less than two hundred million US dollars, and if the cooperation goes smoothly, there may be even larger orders in the future."

Lee Kun-hee, who had remained silent until then, finally reacted when he heard about the $200 million order.

He slowly raised his head, and a complex emotion flashed in his deep eyes—a struggle, a sense of resentment, but more so, a helplessness born of being driven to the brink.

After a long silence, Lee Kun-hee finally spoke slowly. His voice sounded weak from the prolonged silence, but every word was exceptionally clear: "I can sign."

As soon as he finished speaking, everyone in the conference room focused their attention on Lee Kun-hee. Samsung executives showed expressions of shock and resentment, while the team members from Ernst Asset Management wore smug smiles.

But then Lee Kun-hee added, "However, I have two additional conditions. If you cannot agree to them, then this negotiation will have to end here."

Parker Houston raised his hand, gesturing for him to speak.

Lee Kun-hee looked firmly at Parker Houston and said, word by word, "First, regarding the sharing of technology patents, it is limited to non-core technologies, and the validity period is only 5 years. This is our bottom line."

Before Perkin Houston could even speak, Lee Kun-hee continued, "Secondly, while Ernst Asset Management may obtain preferred shares and voting rights, it absolutely cannot interfere with Samsung's R&D direction."

Looking into Lee Kun-hee's determined eyes, Perrin Houston knew that this was the biggest concession Samsung could make.

He thought for a moment, then nodded. "Okay, Ernst Asset Management Company agrees to these two conditions."

(I'm going out to visit relatives and won't have time to write. Only two chapters today.)