Simon was chatting in a low voice with Bryce Levison when a slightly hoarse and old voice came to his ears: "Hey, Simon."
I turned around and saw that it was Warren Buffett.
Being both in the top circle of this social pyramid, this is not the first time that Simon has come into contact with Buffett. He has met him in some social situations before, but he is not familiar with him.
Tonight's meeting was not deliberately arranged.
Simon knew that Buffett would attend and planned to have a chance encounter. In fact, both parties knew each other's purpose. Otherwise, Buffett, a 65-year-old man, would not have used his connections to ask for an invitation to attend such a fashionable party.
In the past, the reason why Buffett agreed to sell Metropolitan ABC Group to Disney in 1995 was because he saw the increasingly obvious impact of cable TV and the Internet on the traditional public television network, so he chose to cash out at a high price. Facts have basically proven the correctness of Buffett's decision.
After the new century, including FOX, the four major public television networks in the United States have basically been in decline. In the early days of the television networks, television programs with an audience of 20 to 30 million viewers have become increasingly rare after the millennium. Although some It has always made money, but overall it is far inferior to the increasingly prosperous cable TV and Internet, and can only become a vassal of major media groups.
Buffett's cash-out time may seem a little early, but it is in line with this veteran investor's investment criteria of not pursuing the pursuit of earning the last dollar. It was this sound investment strategy that allowed Buffett to clear out his money early before the subprime mortgage crisis. The shares of Fannie and Freddie were purchased to avoid the impact of Berkshire Hathaway.
He stood up with a smile, shook hands with Buffett, and casually introduced Bryce next to him. After greeting him, Simon whispered in the woman's ear. After Bryce turned around and left with some reluctance, he joined Buffett. sit down.
Buffett watched Bryce go away as charming as a mermaid, and joked with Simon: "I really envy you young people."
Simon also smiled and said: "Warren, you are not old at all."
Speaking of which, Buffett is actually in a state of 'two wives in one house'.
The investment tycoon separated from his original wife in the 1970s, but the two have never divorced. Over the years, they have been attending various public events together as husband and wife. At the same time, Buffett was already living with another partner, and they were considered a couple.
It is rumored that the relationship between the trio is very good, and Buffett now sends holiday greeting cards to relatives and friends, even signed by all three. In recent years, many media have ridiculed Warren Buffett for having two wives out of various motives.
In fact, Buffett's two wives are not worth mentioning in the circle of wealthy people.
When a person can come into contact with the scenery at the top of the pyramid, he will inevitably find that many things far exceed the most daring fantasies.
In addition to being stingy in spending money, Buffett is no different from ordinary super-rich people in other aspects. One of them is that he often attends various top social gatherings.
Except, of course, for charity parties where donations are required.
After politely complimenting the party, Buffett turned to Ygritte, asking Simon endless questions about the company's various problems. Although the billionaire is 65 years old, he still has a lot of memories and problems. His thinking is still quite sharp and agile, and a lot of information related to Ygritte seems to be imprinted in his mind.
Moreover, it is clear that Buffett is confused and skeptical about Ygritte's rapid rise in financial data.
In the past, no matter how turbulent the Internet wave was, Buffett was determined not to get involved in new technology industries with which he was unfamiliar. This even led to Buffett being thrown an egg on the spot by shareholders at the Berkshire Hathaway annual meeting, accusing him of missing out. Best investment opportunity.
Now, the old-school conservative Buffett obviously still doesn't understand the Internet: "So, Amazon's online mall is indeed the most loss-making part of the business. Simon, have you ever thought about spinning off this part of the business, or reducing investment in this area? , it can definitely develop more steadily, so that the stock price growth potential of Yigret after its listing will definitely be greater."
Simon realized that Buffett had become interested in Ygritte's IPO.
This is not surprising at all.
Buffett's favorite thing is a company with a "moat". Now, whether it is advertising or software and other businesses, Igret can be said to be a "city high and the moat is deep". No other company in the same industry can compete.
However, for this investor who pays great attention to profit margins, Yigret's shortcomings are also obvious. The most important point is that the investment was too aggressive, thus causing huge losses that he considered completely unnecessary. If these burdens are reduced or eliminated, Ygritte will immediately become Buffett's most ideal investment target, with high growth rates, high profit margins, and a corporate moat that is difficult for peer companies to overcome.
Of course, Simon would not do this to cater to Buffett's investment wishes. He shook his head and said: "Warren, e-commerce is an indispensable part of Yigret's business system. This business seems to be losing money, but it can grow in a big way." To a certain extent, increase the types of services in the Internet industry, thereby increasing users’ stickiness to the Internet. In short, this is a kind of market cultivation. This is true for all the businesses that Yigrit is doing now. As long as the public is aware of the With enough rich services, they will gradually consume directly or indirectly in this field."
Buffett nodded, shook his head, and said: "But, Simon, there is no shortage of capital to develop any business in the Internet field. I think Yigrit can be more focused. You have to know that a company pays too much attention to diversity. ization, the results are often not very good.”
Simon said: "Of course I understand that Yigrit is actually already making relevant arrangements. I will also streamline this company at the right opportunity, but not now."
The right opportunity Simon mentioned was right after the dot-com bubble burst.
The Westeros system's early exploration of new technological fields cannot stop the normal economic laws of capital society, and sooner or later the bubble will burst.
At that time, Simon will not only streamline the business, but also streamline Ygritte's rapidly bloated staff team. In recent years, in order to pursue rapid expansion, Yigrit has actually accumulated various problems internally. Simon will solve them as much as possible through drastic streamlining after the Internet bubble burst, and realize the nirvana of this company.
Buffett obviously couldn't understand Simon's thoughts, and thought that this was an excuse for the young man in front of him. He could only shake his head slightly, changed the subject and said: "Simon, I found that you are planning to acquire ABC, right?"
In this matter, Simon has actually exposed a lot of flaws.
For example, the ESPN shares obtained from the Hearst family.
For example, last year’s massive IPO financing.
In the past few years, Simon has deliberately handed over several popular TV shows such as "Friends" and "ER" to two other TV networks. Simon's arrangement is similar to the foreign cooperation projects in Hollywood, which is parasitic penetration. However, in Buffett's view, this clearly has the purpose of deliberately suppressing the development of ABC in order to lower the price when launching an acquisition. This is actually another part of the truth.
In this case, Simon simply did not beat around the bush and nodded: "Yes, after the ban on media integration is lifted, further integration in this field to adapt to global competition is an inevitable trend. Metropolitan ABC is my top priority, of course. , is not the only option. Warren, if you want, we can talk about an offer now."
Berkshire Hathaway holds 25% of the shares of Metropolitan ABC Group. Buffett actually has a greater say in this company than Chairman and CEO Tom Murphy. As long as he agrees, the matter can basically be finalized. .
Buffett did not respond immediately, but complained with some complaints: "Simon, Daenerys' current stock price is too high."
Simon just smiled and shrugged.
The memory of Disney's acquisition of Metropolis ABC comes to mind. It was a mixed deal of half equity and half cash. Obviously, this time, Buffett has the same thoughts, but the current stock price of Daenerys Entertainment is very high. The investment tycoon neither wants to obtain an all-cash acquisition, but is also worried about Metropolis ABC after a share exchange or partial share exchange. You will suffer from it.
Because he has been paying attention silently, Simon knows that the current market value of Metropolis ABC Group is about 16 billion US dollars. Since the Westeros system has led to the recovery of the entire North American stock market in advance, the current market value of Metropolis ABC will definitely exceed the original timeline. Including the company's debt of about US$3 billion, and before the acquisition has begun, the overall US$19 billion is exactly the same as the total transaction amount of Disney's acquisition of Metropolis ABC in the original time and space.
This time, Daenerys wants to acquire the company. Adding assets and liabilities, the total transaction must be more than 20 billion US dollars.
Simon doesn't feel disadvantaged or pressured by this, because Daenerys' market value is actually higher, currently exceeding US$130 billion. According to Daenerys Entertainment's financial report for the first fiscal quarter of fiscal year 1995 released in February, The price-to-earnings ratio has reached more than 120 times, which is absolutely unacceptable to Buffett.
In comparison, Metropolitan ABC Group's price-to-earnings ratio is only 37 times.
Seeing Simon smiling and not answering, Buffett frowned slightly in distress, and then asked: "Simon, do you think there is still room for Daenerys' stock price to rise?"
Simon shook his head: "Warren, who can say for sure about this kind of thing. However, I have enough confidence in Daenerys. Many people say that the company's growth has hit the ceiling. However, as long as they pay a little attention Looking at the financial report, it is not difficult to find that Daenerys’ quarterly financial report released in February still showed a year-on-year growth rate of 39%, and I believe this growth can continue for a long time.”
Buffett frowned and thought for a moment, then seemed to make up his mind and said: "Simon, I can sell Metropolis ABC to you, but I think my shareholders also need to have sufficient interest protection, so I hope to get a cash plus The payment method for the convertible bonds is half cash and half convertible bonds based on the current stock price, with a term of 10 years and an annual interest rate of 8%.”
Every investor has his own specific investment style.
Cash plus stock or bond transactions are a common method used by Buffett in acquisition transactions. Cash can ensure safe pockets, stocks or bonds, which can not only save a capital gains tax in the short term, but also maximize benefits in the future. Moreover, what Buffett often asks for is risk-free maximization of benefits.
Simon refused without hesitation: "Warren, if you insist on this, there is no need for us to continue talking."
Daenerys Entertainment’s IPO last year was to prepare for the acquisition of the public television network. Counting the financing during the IPO and some of Daenerys’ subsequent profits, the entire Daenerys Entertainment Group’s current cash reserves exceed US$7 billion. . As long as cash is not spent, it will inevitably suffer from inflation. The larger the cash, the more so.
Therefore, for Daenerys Entertainment, even if its stock price is very high, an all-cash acquisition is the highest priority.
Buffett now wants both cash and a stable high-interest bond. He also requires that this part of the bond can be converted into future shares of Daenerys Entertainment at any time according to the agreed share price at the appropriate time in the future. This is a good thing. , this investor has enjoyed it many times, but he only agreed when some companies were in trouble and had no choice but to do so.
The situation of Daenerys Entertainment is improving. If Simon agrees to such obviously unequal transaction terms, it would be strange not to be pointed at and scolded by other shareholders.
Even so, Simon didn't want the deal to go south, so he softened his tone and said, "Warren, I will definitely not accept this kind of transaction model with unequal additional terms. You have to be responsible for your shareholders. I Same thing. So, it's either all cash or all stock, or cash and stock, without any extra terms. Otherwise, I can only try to cooperate with two other TV networks. And, frankly, Hollywood now has Daenerys Entertainment is the only company with sufficient strength to acquire the three major television networks. With the development of cable TV and the Internet, the decline of public television networks is very obvious. The later you choose to sell it, or sell it to other companies in the future, it will be impossible. Get a price that's too high and if you keep it, unfortunately, the value of the network will diminish much faster, just like the print media industry is doing now."
When Buffett heard Simon's words, his expression remained unchanged and said: "Simon, if you think so, why do you want to acquire a TV network?"
Simon said: "It is difficult for a single TV network to develop, however, it is an essential part of a large media group, which can provide marketing and sales channels for Daenerys' other businesses. This I don’t think you don’t understand.”
Buffett shook his head slightly again. He did not refute Simon's argument, but muttered again: "Daenerys' stock price is really too high."
The old man still wanted the stock, but he obviously couldn't accept Daenerys' ultra-high price-to-earnings ratio of 120 times.
Simon smiled: "Then choose all cash. Warren, you should have heard the news. The capital gains tax will be adjusted soon. At that time, the 15% capital gains tax rate will be a great benefit to your investment in Metropolis ABC over the years." The income is nothing at all.”
Even if a deal is negotiated now, involving a huge merger and acquisition of US$20 billion, it will take at least three to five months until the transaction is completed.
According to the information Simon received, it is no surprise that the capital gains tax reform bill will be passed in May. By then, Berkshire Hathaway, which has held shares of Metropolitan ABC Group for many years, will be able to enjoy the most favorable conditions. Capital gains tax rates.