Chapter 763: Investing in IBM

That night, Arthur Blank met with Bernie Marcus and told him what had happened in the morning. The two men had an in-depth conversation.

It didn't matter what was discussed.

What matters is that two days later, Xia Yu received a phone call from Arthur Blank, asking him to go to Home Depot again.

Xia Yu immediately took someone with him and met with Arthur Blank and Bernie Marcus at Home Depot.

'Mr. Blank, Mr. Marcus, hello!'

'Mr Xia, welcome!'

After a brief exchange of pleasantries, everyone took their seats in a small meeting room, facing each other across the table in a manner that suggested they were about to enter into negotiations.

Arthur Blank and Bernie Marcus exchanged a glance, and the former said to Xia Yu, 'Mr Xia, I asked you to come this time because I have discussed the matter with Bernie since the day before yesterday. We have tentatively decided to accept the investment from Polaris Capital.'

'The specific outcome will need to be decided after negotiations.'

Xia Yu nodded slightly and said, 'Of course, the cooperation can only be carried out if both parties are satisfied.'

'So, shall we begin formally?'

'Okay, let's get started!'

Arthur Blank nodded with a smile.

The two parties then began the negotiation process.

Unlisted private companies are good in that they have very few steps and are highly efficient when making any decision.

Two days ago, Xia Yu had already given a preliminary proposal, and Arthur Blank and the two of them had specifically considered it, so the negotiations were very quick.

The whole negotiation was intermittent and lasted until noon the next day, when the contract was officially signed.

First, Arthur Blank and Bernie Marcus supported Polaris Capital's acquisition of the shares held by the other 100-plus minority shareholders.

Second, Home Depot accepted Polaris Capital's financing of US$10 million at a price of US$18 million.

Third, Polaris Capital loaned Home Depot US$25 million.

Home Depot had already mortgaged a cumulative US$5 million at this point, so its net assets were only US$13 million.

Even after receiving the ten million dollar financing from Polaris Capital, the net assets were only 23 million dollars.

The 25 million dollar loan exceeded the assets of Home Depot, and if it were placed with any financial institution in the world, it would not be approved.

However, Xia Yu knew the future of Home Depot, so reluctantly agreed to Arthur Blank's condition, which won the latter's favour.

The last condition was proposed by Arthur Blank after Xia Yu refused to agree to the AB share reform.

It was that as long as Home Depot did not lose money for three consecutive years, and Arthur Blank and Bernie Marcus did not violate the law or deliberately damage the interests of the company, Polaris Capital would not force the two of them to resign, unless they voluntarily left.

This condition is a self-insurance clause specially set up. Arthur Blank simply could not feel at ease without it.

After all, their combined shareholding was only 52% at present, and if a financing of 10 million US dollars was raised, their combined shareholding would only be 33.43%, which was very dangerous.

If Polaris Capital acquires the stakes held by all other shareholders of The Home Depot, together with the stakes obtained through financing, the shareholding ratio will reach 66.57%, just 0.1% short of absolute control, and Arthur Blank will be unable to dictate anything at The Home Depot, including even the removal of Arthur Blank from the CEO position.

After the contract was signed, Xia Yu directly transferred ten million US dollars into the account of The Home Depot, and the remaining 25 million US dollars in loans will be transferred to the company in two months.

The two months would be the time for Polaris Capital to acquire the equity of the other shareholders.

If the acquisition could be completed earlier, then the funds would be transferred earlier. Arthur Blank knew this as well, and Xia Yu was urging them to help.

The decision to raise funds was entirely made by Arthur Blank and Bernie Marcus directly, and no board meeting was held.

Although there were 144 shareholders in Home Depot, each of them held less than 0.5% of the shares, so they had no chance of sitting on the board of directors or interfering in the management of Home Depot. This was the advantage of having a fragmented shareholding.

After obtaining the financing, Xia Yu did not have time to personally oversee the remaining share acquisition process, so he gave Peter Lynch a call and asked him to arrange for an acquisition team to come over and take charge of the share acquisition.

After the Home Depot deal was complete, Xia Yu invited Ted Turner to dinner, where he gave him some advice on Turner Broadcasting and the upcoming lawsuit, before catching a flight to New York the next day.

Once in New York, Xia Yu first settled in, then went to Bridgewater Associates and found Ray Dalio.

'Ray, have you already started?'

As soon as he sat down in Ray Dalio's office, Xia Yu asked straight to the point.

Before flying from San Francisco to Atlanta, Xia Yu suddenly thought of something and called Rey Dario to acquire IBM's equity on his behalf.

Today, IBM is indeed worthy of the media's title of the blue giant, but it is the company with the highest market value in the United States, with a market value of 36.8 billion US dollars.

If IBM could be acquired, Xia Yu would have the strength to take control of it.

But this is just a pipe dream.

Each of the top ten American consortia has the strength to take over IBM. If there is a chance, I believe that none of the top ten consortia will not be tempted, so Xia Yu will not get the chance.

But even if there is no way to take over IBM, getting a shareholding would be fine. It is very difficult to acquire shares, but you don't need a lot. A few percent would be enough to enter the ranks of the top ten shareholders. After all, IBM's shares are too widely spread.

Xia Yu wanted to get involved in the high-tech industry. If he could obtain IBM's equity and become a major shareholder, it would add an efficient growth buffer to his actions in the semiconductor and software industries, and even play a decisive role.

Nowadays, IBM is that powerful!

Almost all semiconductor companies and software in the United States have to depend on it and look to its face. If any company can get on board with IBM, the future will be unlimited.

But if you are blocked by IBM, then the future will be bleak.

Rey Dario said to Xia Yu with a serious expression, 'Boss, I have collected all the information and have prepared a preliminary plan for the acquisition of equity. Now, all that is missing is the funding.'

Based on IBM's current market value, even acquiring one percent of the equity would cost 368 million US dollars. If you want to acquire three percent, it would cost more than 1 billion US dollars, which is far more than Bridgewater Fund's strength.

When Bridgewater was established last year, Xia Yu only gave it an initial capital of $100 million, which has been used until now. Although the Bridgewater Foundation has cooperated with banks to use leverage, it has not been used all the time.

Fortunately, Xia Yu had already told him before that he would provide funding and let Bridgewater Fund Company act on his behalf to make the acquisition.

After all, Polaris Capital is far away in San Francisco on the West Coast, and the New York branch is still under construction and cannot operate for the time being.

Now there is a tight schedule and a heavy task, so we can only trouble Bridgewater to step in.