Seoul, Korea.
On the morning of Monday, December 29, the last investment agreement for Samsung Electronics among the three major consortiums in South Korea was signed in a conference room at the Samsung Group headquarters in Taepyeong-ro, Jung-gu, Seoul.
One side of the agreement is the Western consortium led by the Westeros system, and the other side is a group of shareholder representatives of Samsung Electronics.
There were no reporters at the scene.
This can be regarded as a tacit understanding reached by both parties, because if the scenes of the signing scene are exposed, it will easily remind people of the scenes when Western powers ravaged Asia at the beginning of the century and forced various countries to sign various unequal treaties.
The South Korean people are still in a restless mood recently, and no one wants to cause any trouble.
The main terms of this investment agreement involve an investment totaling US$3.975 billion.
Using the average stock price of Samsung Electronics over the past 30 days as a benchmark and calculated at the current exchange rate, this is equivalent to a valuation of approximately US$4.7 billion for Samsung Electronics.
Of the US$3.975 billion investment, US$1.175 billion was used to purchase approximately 25% of Samsung Electronics shares from the original shareholders of Samsung Electronics, and the other US$2.8 billion was used as an investment to obtain another additional amount of new shares issued by Samsung Electronics.
After the transaction is completed, five investment entities including Apollo Management Company controlled by the Westeros System will hold a total of 53% of Samsung Electronics, achieving absolute control.
However, in the specific agreement, the five investment entities controlled by the Westeros system cannot hold more than 15% of the shares individually. Samsung Group holds a total of 21% of Samsung Electronics through various subsidiaries, which is still on the surface. The largest shareholder.
After the signing ceremony ended at ten o'clock in the morning, the Westeros System team led by Chen Qing decisively began to take over Samsung Electronics.
Even though on the surface, control of Samsung Electronics will still belong to the Samsung Lee family, which was also a promise made by Simon himself, in fact, of course, the Westeros system must ensure its influence and control over this company.
Because this is not a world where good things will be rewarded if you are kind to others. Especially in the business world, weak investors who delegate power will usually not end well.
The rest of the day saw a series of announcements from the Westeros Systems team as the latest absolute controlling shareholder of Samsung Electronics as the agreement was signed.
The first is the dissolution and reorganization of the Samsung Electronics board of directors.
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Immediately, the list of the new board of directors of the Westeros system, which had been prepared for a long time, was directly announced, with a total of nine people.
Kang Jin-gu, the former chairman of Samsung Electronics, was promoted to chairman of the board of directors during this reorganization and continues to serve as chairman of Samsung. In fact, it is equivalent to the chairman meeting the CEO.
This arrangement is mainly to reassure people.
Another strategy to calm people's hearts is to introduce Lee Kun-hee's 29-year-old only son Lee Jae-yong to the Samsung Electronics board of directors.
Two people can calm people's hearts, one can calm the hearts of Samsung Electronics employees, and the other can calm the hearts of Samsung's Lee family.
The remaining seven people are all from the Westeros system.
One of Simon's key chess players is Zheng Mudong, a Korean-American lawyer who specializes in corporate mergers and acquisitions and reorganizations. Zheng Mudong also serves as a director of Bank of New York Mellon.
Zheng Shoudong joined Samsung's board of directors this time and will be responsible for supervising the subsequent business restructuring of Samsung Electronics.
Another local chess piece, Zong Zhenghao, an executive from the financial department of Hanbao Steel, which went bankrupt at the beginning of the year, will join the board of directors of Samsung Electronics this time. At the same time, he will also serve as the financial director of Samsung Electronics, responsible for sorting out the financial situation of the entire Samsung Electronics and Subsequent supervision.
The remaining five people, according to the original strategy, all have Korean faces.
But compared to Zheng Shoudong and Zong Zhenghao, these are either former government officials or new members of Korean university professors. They are more of just decorations, receiving a generous salary, and then acting as voting machines.
After the board of directors was reorganized, the second measure was to seal Samsung Electronics’ accounts and begin an in-depth financial review.
This is mainly to clarify and control the financial rights of Samsung Electronics.
Then, the third measure.
All domestic and foreign senior executives at or above the deputy director level of Samsung Electronics will report their work in writing to the new board of directors within one week. Within one month, the new board of directors will conduct random inspections and report their work in person.
This measure, to put it bluntly, requires a statement.
Things have changed.
The master has changed.
To Be or Not To Be.
Choose yourself.
It just so happens that Samsung Electronics is carrying out all-round layoffs again. The new board of directors will not interfere too much in the layoffs of the lowest-level employees. As for the management, of course they must choose to understand the current situation and be loyal to the Samsung Electronics board of directors instead of being senior executives of the Samsung Lee family. Tube.
This measure will ensure that the Westeros system has control over Samsung Electronics’ personnel rights.
Once you master the financial and human resources aspects, you have basically completed the control of a company.
Of course, in practice, things are not that simple. But as the saying goes, as time goes by, a trickle of water flows.
Simon was very patient about it.
Li Jianxi, who has confirmed that he can win Kia Motors, expressed silence regarding the Westeros system's vigorous declaration of control.
If any enterprise has two owners at the same time, it will often end in internal strife and internal strife.
Simon knows this very well, and Li Jianxi, who was born in a chaebol and has been in the business world for many years, also knows this. Giving up Samsung Electronics and developing Samsung Motors was Lee Kun-hee's choice and a tacit understanding between the two parties.
In addition to the measures related to the agreement, in the afternoon of the same day, Westeros system electronic giants such as Tinker Bayer and Nokia began urgent negotiations with the Samsung Electronics team on component procurement in the first quarter of next year.
Not only that, most of the US$2.8 billion that the Westeros System has injected into Samsung Electronics this time will also be invested in Samsung Electronics’ semiconductor business for technology research and development and investment in the construction of semiconductor factories.
The semiconductor industry has not yet gotten out of the trough of the 1996 plunge, and it seems unwise to do so now. However, the key to why Samsung's semiconductor business was so strong later was this counter-cyclical operating method. Through investment at any cost and fierce price wars during the industry's trough period, competitors in the industry were constantly driven out.
The last one is the only one.
Once you have the pricing power, you can make up for any early losses through price increases and achieve huge profits.
As for the other LCD screen business that Simon is also interested in, it has been put on hold for the time being. When LG completely surrenders, it will be divested from Samsung and integrated into LG.
This is also a strategy that was finalized very early.
Even if he had absolute control over Samsung, Simon would not allow this electronics company rooted in South Korea to become too large and must have restrictions.
The day after Samsung Group and Westeros System signed an investment agreement for Samsung Electronics, on December 30, with the intervention of the South Korean government, Samsung Motors and Kia Motors, which was under government takeover, signed a merger memorandum. The agreement was signed Representatives from a consortium controlled by Westeros Systems also appeared at the scene and announced that they would provide financial support for Samsung Motors' merger with Kia Motors.
When the news was announced, Hyundai Group, which had reached a tacit agreement in private, responded with silence, while Daewoo Group reacted strongly.
Daewoo Group Chairman Kim Woo-jung even held a press conference that afternoon, publicly accusing the authorities of handing over Kia Motors to Samsung, which has no experience in car manufacturing, as an irresponsible act. This approach may lead to the complete collapse of Kia Motors. More people lost their jobs.
Samsung responded quickly, tit for tat, criticizing Daewoo Group for preventing Samsung from accepting Kia purely for its own interests, to hinder industry competition and pursue monopoly.
There is a war of words in the media, and the two parties are also taking frequent actions off the stage.
After all, what Samsung signed with Kia is only a memorandum of intent, and the specific details are still being negotiated, which means that Daewoo still has a chance to snatch Kia over.
Hyundai, Daewoo and Kia previously occupied about a 42-2 share in the Korean automobile industry, totaling more than 80%.
Therefore, it is not difficult to imagine why Daewoo had such a violent reaction.
For Daewoo, if it can win over Kia and merge the two companies, it will be able to officially stand shoulder to shoulder with the previous largest automobile giant in South Korea, each accounting for 40% of the market. On the contrary, if it loses Kia, or even in the worst case scenario, is taken over by Hyundai, Daewoo will completely lose the qualification to compete with Hyundai.
However, the reality is that Daewoo’s Kim Woo-jung is obviously still unclear about the current situation in South Korea.
On the political level, South Korea’s general election has passed.
In the South Korean general election on December 18, after experiencing the devastation of the Asian financial crisis and the ruling party losing public support, Kim Dae-jung won the throne of the new president without any suspense.
Without electoral constraints, the Kim Young-sam administration, which has only two months left in power, no longer needs to worry too much. To put it bluntly, how to deal with Kia is more beneficial to Kim Young-sam’s party and even Kim Young-sam’s family, so Cheong Wa Dae will choose.
Compared with Daewoo, Samsung Group is currently backed by the Westeros system and even more American political and economic forces.
There is almost no need to hesitate when choosing.
Even if the Korean people don't know much about it, these people at the top of the Korean pyramid do know very well how strong the actual control the United States has over South Korea. Although Kim Young-sam's party lost this time, if it wants to regain power in the next term, in the final analysis, it still cannot do without the support of the United States, or even if it does not have support, it cannot be targeted.
Besides, what can Daewoo give them
Money
In addition, at the economic level, whether it is Daewoo's internal financial situation, which is full of problems, or some of the arrangements that Chen Qing has already hinted to Kim Young-sam, it has been confirmed that the authorities now have no need to worry about Daewoo's ideas.
For politicians, these plutocrats who are becoming increasingly arrogant and unscrupulous in the country should indeed be wiped out to serve as a warning to the monkeys.
Therefore, the day after Kim Woo-jung held a press conference to criticize the authorities' decision to target Kia, South Korea's Chosun Ilbo suddenly exposed Daewoo Group's huge debt of up to 70 billion US dollars in detail in a special issue on December 31, pointing out Daewoo's management The situation is actually already precarious, and it may collapse at any time like consortiums such as Kia and Hanbao.
Other media quickly followed suit, immediately plunging Daewoo into a storm of public opinion.
You know, even though the media has frequently exposed the poor financial conditions of bankrupt consortiums such as Kia and Hanbao over the past year, such a huge debt scale of US$70 billion is still unprecedented. In fact, if someone hadn't deliberately collected and provided very detailed evidence, the public might not believe that Daewoo Group's debts were so huge.
The biggest characteristic of Korean consortiums is their intricate connections.
Even some insiders may not be able to figure out the complicated debt disputes among the large number of subsidiaries of the consortium.
For the South Korean people, the country's current bad situation and the power-loss agreement it was forced to sign with the IMF are all the consequences of these chaebols' wanton lending.
When the news came to light, Daewoo, who was already simmering with anger, quickly fell into the crosshairs.
In response to the media public opinion surrounding Daewoo, the IMF team in South Korea, which has been relatively silent during this period, also unexpectedly made a public statement, claiming that considering the serious financial risks of Daewoo Group, the IMF and related rescue capital will carefully consider the transfer of funds to Daewoo.
This is the real killer move.
Under the attack of the IMF's stance and public opinion, on the last trading day of 1997, the stock prices of Daewoo Group-related companies plummeted across the board, and even dragged down South Korea's KOSPI market again. After the IMF bailout agreement, the stock price dropped by 3.8%, the highest in a single day.
The crisis in South Korea, or the crisis in Asia as a whole, was largely due to the domino effect caused by panic, which led to one-sided short selling and flight of capital, just like a bank run.
Now, this panic effect has hit the latest target of Daewoo Group.
The long-term wanton expansion has convinced Korean conglomerates to believe in the principle of 'too big to fail'.
Probably because they have been riding the wave of success for too long, the chaebol families behind these consortiums have gradually ignored one point. Too big to fail does not mean that the companies themselves will not collapse, but that in order to avoid huge negative social impacts, the government will often try its best Bail out these large companies to prevent them from collapsing.
Simpler.
It’s not that you can’t fail on your own, it’s that the government is behind the scenes to prevent you from failing.
However, when the government is unable or unwilling to do so, and large chaebols are in trouble, the consequences can be imagined.
For South Korea, the first half of 1997 was a troubled year. Hanbao, Kia and other giants went bankrupt one after another. The reason was that the South Korean government at the time was limited by public opinion and financial pressure and was unwilling to take the full risk. After the financial crisis swept South Korea, the current South Korean government was unable to do anything to save the situation.
This time it’s Daewoo Group’s turn.
The government is unable to cover up, but the IMF and related international capital, which have the ability to cover up Daewoo, not only have no intention of covering up, but also stabbed it with a knife.
The fate of Daewoo Group is already doomed.
Time quickly came to January 1, 1998.
new year.
Inside a mansion in Itaewon.
Chen Qing did not return again until about one o'clock in the morning, slightly drunk.
Tonight, I attended the New Year's Eve reception hosted by President-elect Kim Dae-jung. Although Kim Yong-san also extended an invitation to her, Chen Qing ignored it. She only stood on the side of the winner.
Moreover, Kim Dae-jung has also been very enthusiastic about the Westeros system recently, much more enthusiastic than the ruling party.
The reason is also very simple. Kim Dae Jung needs a backer.
This is a very real problem.
Even though Kim Young-sam seized power from the military government and established the first civilian government since the founding of South Korea, it still inherited the mantle of the military government and has a deep foundation in South Korea.
In comparison, Kim Dae-jung, who is 73 years old this year, has been in opposition most of the time. Later, people called Kim Dae-jung the 'Mandela of South Korea', which is very appropriate.
However, compared to Mandela's idealism, Kim Dae-jung is much more practical. He knows very well that the presidential position he obtained by uniting a bunch of small parties is not stable this time. If he is not careful, he may be ousted by the forces of the former ruling party that are still deeply rooted in the government system.
As for wooing the forces of the former ruling party to join him, it is certainly feasible if Kim Dae-jung has enough time.
Too bad he didn't.
The president of South Korea can only serve one term.
In this case, it is crucial to find an immediate backer.
Therefore, it is not difficult to imagine why the former Kim Dae-jung was later called "America's lackey" by the Korean media.
On the other hand, Kim Dae Jung is also smart.
The overall backer of the United States is too big and too close, and it is likely to become a puppet. If there is no other choice, being a puppet is just being a puppet. Now, another option appears, the Westeros system, which seems just right.
At least Kim Dae-jung probably thinks it’s just right.
Therefore, during the period after being elected, Kim Dae-jung has quietly reached some tacit understanding with this party, and plans to place some people recommended by Chen Qing in the next Cheong Wa Dae cabinet.
Senior officials at the top of the cabinet level are not pursued by the Westeros system. They are too conspicuous and too easy to become targets, and may even embarrass Kim Dae Jung.
What we want here are just a few key positions in key positions.
For example, a deputy minister of the Ministry of Information and Communications, which manages South Korea's telecommunications industry, or one of the five permanent members with voting rights of the Broadcasting Commission, which is responsible for formulating and supervising South Korea's radio and television industry, and so on.