Chapter 590: General

[Chapter 590: General]

While the Forbes billionaire list sparked controversy, Chris successfully acquired LTD for a final price of $2.4 billion after more than two months of heated negotiations. The original major shareholder, Leslie Wexner, stepped aside, and on the day the contract was signed, LTD announced its merger with Brighton Apparel.

Through a series of complex financial maneuvers, Chris used less than $1 billion of his own funds throughout the entire process. Apart from the $600 million from Firefly Investment, another $400 million was financed through debt from Brighton Apparel. After completing the acquisition and the subsequent merger, Firefly Investment and Brighton Apparel held a combined 62% stake in LTD, achieving full control.

"If we follow Wall Street's rules, this is just the beginning," Chris said on the phone after detailing the entire acquisition process to Eric. "As long as we streamline and reorganize the company's departments next, significantly improve performance, and drive up the stock price, we can then split off and sell off LTD's subsidiaries. That way, we will have generated enough capital to pay off the debts. That's the essence of an investment company's acquisition cycle. Too bad..."

Before Chris could finish his sigh, Emily's voice faintly came through the phone, "Chris, what are you regretting? We bought LTD to manage it, not to turn it into your personal toy like those greedy and evil Wall Street kinds."

"Emily, I've worked over twelve hours a day for two months straight, just secured LTD for you, and that's how you see me?"

Amidst the soft laughter of others, Emily's voice echoed again, growing louder, "But that's the truth." After that, the receiver was probably snatched by Emily, excitement apparent in her tone, "Hi, Eric."

Although it wasn't quitting time in Los Angeles yet, night must have already fallen in New York. Eric, holding a mobile phone, crossed the cement path of the Firefly Films post-production center, pushed open the door into the administrative building, and exchanged glances with an executive on his way, before continuing into the phone, "Hi, Emily, are you guys having a party?"

"Yeah, Miss Roberts is here too, and Emma! The little one is so adorable, heard she calls you 'Daddy'?"

Hearing Emily's gossipy tone, Eric indulged her curiosity, "Yeah, I think that's a good way to teach Elia and Kevin to call me 'Daddy' early on."

Emily seemed a bit deflated at Eric's lack of denial but quickly perked up, saying, "By the way, I haven't congratulated you yet, Mr. World's Richest Man."

"Thanks, but it's more accurate to say I'm the richest man in America."

"American riches are world riches, of course," Emily said with the unmistakable confidence typical of Americans. "But didn't you say that after securing LTD, you would design a marketing plan for the company yourself? Can't we start that now?"

"You know, I've been super busy lately. While you guys are celebrating, I've got to go into a conference call, no telling when I can get off work."

Yet Emily wasn't swayed by Eric's comment, probing further, "Then tell me how you plan to do it, so I can prepare in advance."

Eric stepped into the conference room, greeted Michael Lynn and others who were waiting inside, sat down, and then hurriedly said to Emily, "Start contacting models. Don't limit it to just American models; we want top models from Latin America, Europe, and Asia as well. Oh, and absolutely no skinny, bland-faced fashion models -- firstly, they have to have curves; flat-chested ones are an absolute no. I plan to personally plan a lingerie show for Victoria's Secret."

...

Just as Emily was about to ask more, Eric quickly said goodbye and hung up the line, turning off the mobile phone in order to avoid any disruptions during the meeting.

Setting down the Motorola, Eric glanced at the conference phone and asked Allen, who was sitting next to him, "Is Jeffrey on the line?"

As Allen was about to respond, Jeffrey's voice came through the conference phone, "Eric, I'm here."

"Good," Eric said, gently clapping his hands as a habit. "Let's get started. Jeffrey, can you please update everyone on what happened this afternoon?"

Katzenberg paused for a moment on the line, seemingly organizing his thoughts, before quickly outlining the latest developments during the negotiations that afternoon.

During the negotiations, the representatives from ABC had surprisingly stopped using the long-drawn-out tactics they typically favored and had adopted a firmer stance. For the first time, they clearly laid out a proposal that ABC would find acceptable.

"The ABC management offered a price of $71.4 per share, of which $23.8 would be exchanged for roughly 30% of Firefly Films' total shares, while the other $47.6 would be paid in cash. Additionally, ABC management insisted that the 14.7 million shares of ABC stock we already hold could only be exchanged for non-voting preferred stock. After making this demand, the ABC representatives stated they wouldn't resume negotiations until we responded. I think the ABC management is under shareholder pressure and wants to complete this acquisition soon; this situation might relate to recent media trends. It's clear our public relations strategy has had an effect."

As Katzenberg finished speaking, Allen handed Eric a draft filled with calculations.

ABC had about 210 million shares outstanding, and based on the price per share that ABC proposed, the total transaction amounted to $15 billion. The $23.8 represented 30% of the share price, which meant that ABC wanted to exchange 30% of its shares for an equal share of Firefly's, along with $10 billion in cash.

Before making the public acquisition offer, Firefly had already obtained a 7% stake in ABC, which amounted to the 14.7 million shares Katzenberg referred to. This stock definitely couldn't be overlooked in the merger process. Although even if this deal went through, ABC shareholders would never gain enough authority over Firefly, the strategy of converting this stock into non-voting preferred shares was clearly aimed at diluting Eric's control.

Eric quickly read through the data Allen handed him and then passed the draft to Jeffrey on his right. The others in the conference room quickly reviewed it as well.

After examining the analysis, Michael Lynn remarked, "This proposal should still have been drafted by Warren Buffett. Though ABC made considerable concessions in the share exchange, they balanced the estimates between ABC and Firefly, both pegged at $15 billion. This aligns perfectly with Buffett's recent media statements."

Frank Wells added, "If it's confirmed that ABC management is indeed under pressure from shareholders other than Buffett, we might be able to gain enough leverage."

Strange noises emerged from the conference phone; Katzenberg seemed to be muted, whispering to someone. After a moment, he remarked, "This seems to be confirmed. David West, president of State Street Global Advisors, just called to invite me to dinner. State Street owns 3.9% of ABC."

The three others in the conference room turned to look at Eric, their expressions eager.

Clearly, even though the debates regarding Eric's personal wealth hadn't ceased, the undeniable fact that he had built Firefly Films into a phenomenon in just six years couldn't be overlooked. As the media delved deeper into Firefly's capabilities and scale, other ABC shareholders had grown restless, eager to join the Firefly camp. West's dinner invitation was nothing short of a clear signal. They could all imagine that when Katzenberg shows up for dinner, he wouldn't just be meeting with West but possibly other ABC shareholders too.

Looking at Eric deep in thought, Jeffrey finally couldn't contain himself and said, "Eric, if we can sidestep Warren Buffett and Tom Murphy, acquire shares from other shareholders, or even gain controlling interest, we could have enough power to advance ABC's collaboration with Firefly independently."

Eric shook his head, stating, "It's impossible to circumvent Buffett. If he realizes he's been betrayed by the other ABC shareholders, things will get a lot worse. And remember, Tom Murphy isn't just a major ABC shareholder; he's the current head of ABC. He has enough power to really jeopardize the situation at ABC. Moreover, they hold nearly 40% of the shares; if a stalemate arises in the future, ABC will certainly become the battleground for both of us. What I want is a strong national television network, not a 'wreckage'."

Frank Wells interjected, "So what's our next move? Honestly, I want to wrap this up soon and then take a vacation."

Eric paused for a moment, and hearing the word 'vacation' from Frank, information flashed in his mind. He suddenly looked up and asked, "Frank, where are you planning to vacation?"

In his memory, Frank Wells had tragically perished in a helicopter accident during his vacation in 1994.

"The Alps," Frank replied with a smile, but soon added, "Of course, if the work here demands it, I can always postpone until next year."

"Then it's next year," Eric recognized his overreaction and pretended to be casual, saying, "You can take a prolonged break next year, but this year probably won't work. Even if we complete the acquisition, there are still many things to sort out. You're Jeffrey's right-hand man; you can't just leave now."

Frank Wells had already been significantly affected by the butterfly effect. Even if he went on vacation this year, it likely wouldn't guarantee that he'd encounter misfortune again. Given Eric's decision to postpone a year, if misfortune were to strike again, it could only be considered fateful.

"Alright, no problem," Frank agreed with a laugh. "Eric, let's talk business."

"Yeah," Eric nodded. "I think since some ABC shareholders are leaning our way and have applied more pressure on ABC management, we can add some leverage from our side to intensify that pressure. Ultimately, if we can convene a shareholders' meeting to vote -- bypassing management to finalize this deal -- that would be ideal."

"That route seems feasible," Katzenberg remarked over the conference phone. "If we release news next year that negotiations for the ABC-Firefly acquisition are deteriorating, the initiative will surely return to our side. Also, I'll be dining with David West later, and I could invite them to publicly endorse this deal in the media."

Michael Lynn added, "We hold 14.7 million shares of ABC stock. If we sell some of those in the coming days and push down ABC's stock price, it'll make this situation even more credible."

The group quickly devised a specific plan, and since Katzenberg had a dinner invitation, Eric kept the meeting brief. After finalizing the plan, Eric declared, "Since this matter has reached its final stage, we should prepare accordingly. I hope we can finalize the trading agreement before the Oscars, making it clear this isn't just a show. Our timeline is tight, and after the deal is done, we need to lay out plans for ABC ahead of the fall season. All of this takes time. If we can't complete the acquisition beforehand, we have to decisively shift our focus. Just a few days ago, Jack Welch, the CEO of General Electric, emailed me. GE holds complete control over NBC, making negotiations much easier than with ABC. If we can secure GE, we can take NBC. Of course, that's just a fallback; we've invested so much in ABC -- Firefly will never give up until the very last moment."

NBC had recently lacked the original Friends, and with NBC's management in conflict with GE's upper management over the last few years, the network had become quite chaotic. Thus, pursuing a merger with NBC would be significantly less challenging than with ABC.

*****

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