Eric ignored the people with different expressions on the other side of the screen, looking a little casual, and said: "So, Steve, you have won. I officially announce that starting today, Firefly Investment will no longer interfere in any internal affairs of AOL. , you can manage this company according to your own ideas."
In the conference room in New York, everyone breathed a sigh of relief when they heard Eric's words.
However, listening to Eric's indifferent tone from the loudspeaker, although Steve Case was also relieved, he was immediately panicked.
No one knows better than he, the CEO, that the importance of the Firefly system to AOL is definitely not just as simple as the status of the largest shareholder.
In recent years, in addition to financial support, the Firefly system has spared no effort in tilting AOL's resources in media and technology.
AOL's portal website not only has the same treatment as Yahoo in terms of the Internet news release rights of Firefly Group and News Corporation's media, but also, AOL has obtained Yahoo's e-mail, instant messaging and even browser software technology. On the one hand, more than 2,000 various patents have been authorized, and the cooperation between the two parties on specific projects such as built-in search engines and online payment platforms is even more complicated.
For most of the cooperation, the resources obtained by AOL far exceed the price paid. On the surface, AOL has taken advantage of it, but it has also unknowingly deepened AOL's dependence on the Firefly system.
It is not difficult to imagine that after parting ways, once the Firefly system cuts off the various cooperations established between the two parties, AOL will lag far behind Yahoo's Internet media business, and may even collapse directly.
What's more, this situation is definitely not the most serious situation. After all, Firefly System is the largest shareholder of America Online, and this is the deep-rooted source of pressure for everyone at the scene.
A series of possibilities flashed through his mind, and Steve Case's fear even turned into fear. He couldn't help but said, "Eric, I think I need to explain."
"I just said, I said, listen," before Steve Case could finish speaking, Eric interrupted the other party's words mercilessly, and when Steve Case closed his eyes in embarrassment, After talking, Eric continued: "Secondly, I promise here that within two years, there will be no change in all aspects of cooperation between several companies in the Firefly system and AOL. Moreover, in order to eliminate a few days Due to the impact of the incident just now, Chris Hansen, Ian Grenier and Robert Iger will announce their resignation from the board of directors of AOL at tomorrow's press conference. Therefore, Steve Guys, you win again, and I'm definitely not going to wrest control of AOL in a way that might damage the company."
During the initial capital injection, Eric promised to stay out of AOL's management for three years. The three-year deadline expired in 1995, and AOL reorganized its board of directors in order to go public.
Firefly won three of AOL's 11 board seats.
Chris got a board seat as a shareholder representative, and Yahoo CEO Ian Grenier and ABC Group CEO Robert Iger got the other two board seats as independent directors.
Eric originally wanted Katzenberg to join the AOL board of directors, but Katzenberg was based in Los Angeles. AOL moved its headquarters from Virginia to New York on the eve of its listing, so the independent director seat reserved for Firefly Group was handed over to Robert Iger.
The directors of the board of directors of a large company claim that their role is to provide constructive advice for the development of the company, but in fact, they are basically the spokespersons for the interests of major shareholders or management. Even if it is an independent director, it is absolutely impossible to remain independent.
Oftentimes, the board of directors of a publicly held company is the de facto powerhouse of a company, wielding the power to appoint and remove company management. Therefore, every seat on the board of directors is full of games between various forces, and which party controls the seat on the board of directors means which party actually controls the control of the company.
Hearing that Eric would give up the three director seats of the Firefly system on the AOL board of directors, it was difficult for everyone in the conference room in New York to calm down. For everyone present, this news surprised and disturbed everyone present more than hearing Eric promise not to change the status of cooperation with AOL within two years.
Even if Firefly Investment relinquishes its seat on AOL's board of directors, it is impossible for anyone to really ignore the influence of the largest shareholder.
However, giving up these seats means that Firefly Investment has given up the power to directly exert influence on the decision-making level of America Online, and it will be difficult for the rights and interests of Firefly Investment, the major shareholder, to be adequately protected.
As long as they are willing, other shareholders and management of AOL can easily unite and adopt methods such as mergers and acquisitions, additional issuance, and the introduction of other investors to gradually dilute the shareholding of Firefly Investment, the largest shareholder, and gradually marginalize Firefly Investment. , and may even adopt some edge-cutting methods, which directly damage the interests of Firefly's investment.
But now the fact is that Firefly Investment really intends to do so.
Well, no one will think that Eric Williams made this crazy decision because of his own stupidity, there is only one possibility, Firefly intends to withdraw from AOL, and it will be in a very short period of time Exit quickly.
From Eric's words just now, it is not difficult for everyone to speculate that the time limit for Firefly Investment to sell its stocks and withdraw from AOL is about two years.
For AOL, a listed company with a market capitalization of US$40 billion, it took two years for the largest shareholder holding more than 30% of its shares to cash out all of its holdings, which was definitely very short-lived.
At least, it can be predicted that if Firefly Investment continues to sell a large amount of stocks to the public market in the next two years, even if the market is optimistic about this company again, the stock price of AOL will definitely not expect any improvement.
Considering this, the faces of AOL shareholders and executives who were still excitedly thinking about how to seize the three board seats after Firefly Investment withdrew, all became extremely exciting.
"Then, the above is my guarantee. Next, what you have to do," Eric looked down at the document in his hand, then looked up, noticing the faces of everyone on the screen, and said: "I think you must have guessed some Yes. The current situation is that Firefly Investment holds 32.6% of AOL’s shares, totaling 53.79 million shares. Since 1992, in order to show support for AOL, Firefly has never reduced its holdings even when the company went public three years ago However, since everyone can’t reach an agreement on the company’s development direction, Firefly will no longer insist on its status as the largest shareholder.”
In fact, Firefly System holds a total of 58.9 million AOL shares, accounting for 35.7% of AOL's 165 million total share capital.
However, another 3.1% of the stock is in the hands of Clover Fund, a subsidiary of Firefly Group.
The shareholding is less than 5%. According to the federal securities exchange law, Firefly does not need to report to the Federal Securities and Exchange Commission (SEC). In unnecessary cases, it also does not need to inform other shareholders and management of AOL.
Although there were many people on the scene who knew that Firefly System also held a large part of AOL's stock, since Eric ignored this part of the stock, no one would take the initiative to mention it.
However, even so, everyone is still a little scared to imagine that they may face a flood of stocks that may account for one-third of AOL's total share capital.
Historically, the stock market crash that caused the Great Depression in the entire United States in 1929 was caused by the crazy reduction of holdings by major shareholders. After the stock market crash that year, in order to maintain market stability and protect the interests of small and medium shareholders, the SEC imposed very strict restrictions on the reduction of major shareholders of North American listed companies.
If the largest shareholder of AOL, such as Firefly Investment, wants to reduce its holdings in the secondary circulation market, it must first submit a shareholding reduction report to the SEC, and disclose information such as the shareholding reduction and the reasons for the reduction to the market. Secondly, Firefly Investment must also disclose the operating conditions and financial data of America Online in the most recent period to prove that the major shareholders did not get inside information in advance to reduce their holdings.
However, these restrictions, in the final analysis, are only to prevent major shareholders from deliberately infringing on the interests of other shareholders and investors.
But stocks are private property after all. As long as major shareholders reduce their holdings legally, even if it may cause the company’s stock price to plummet or even collapse, no one else has any power to stop it.
All AOL stocks held by Firefly Investments are common stocks that can be traded freely. At the same time, AOL went public three years ago, and the shares held by Firefly Investments have already passed the six-month lock-up period, and they can completely decrease their own shares. Hold sell.
Imagining the various situations that might be faced, someone in the meeting room soon took the initiative to say: "Eric, you want to sell all the stocks in your hand in a short time, which is simply unrealistic. Have you considered the consequences?"
Eric listened to the voice coming from the stereo here, and glanced at the monitor. The person speaking was a bald middle-aged man. Eric vaguely remembered meeting him during the listing process of America Online three years ago. It seemed that He is the president of First Boston Investment Bank.
Ai Rui didn't mean to ask the other party's name, but said: "Of course I have thought about it. Everything I said today has been carefully considered."
His thoughts were interrupted, Eric looked down at the document in front of him again, and then continued: "My decision now is that Firefly Investment will reduce its holdings of 16.5 million shares in the first batch. I want you to follow this part of the stock. As for How much each of you intends to undertake is your business, I will give you a month, and after one month, if you do not get an affirmative answer, Firefly will choose to sell it on the open market.”
16.5 million shares, exactly equivalent to 10% of AOL's total share capital.
According to the current share price of AOL, the value of this batch of shares is about 4 billion US dollars.
For the major investment banks and funds that hold AOL stocks, it is absolutely impossible for them to get 4 billion US dollars in the short term. However, if it is apportioned, although it is still a big deal, they can still bear it.
However, this is not what everyone considers.
With a reduction of 16.5 million shares, there are still more than 37 million shares left in the hands of Firefly Investment. How does Eric Williams plan to manage this part of the stock? Do they need to continue to take over the next two years
The Nasdaq index is now close to 2000 points, and everyone understands the serious bubble cost.
Don't talk about anything else, just talk about America Online.
According to the recent market value and earnings forecast of AOL, the company's price-earnings ratio has reached 131 times, which was absolutely unimaginable a few years ago.
In the past years, even for companies with very good development prospects, the price-earnings ratio often did not exceed 30 times. For many investors, a company's price-earnings ratio exceeds 30 times, and the investment risk becomes very high. Now, America Online's price-earnings ratio has exceeded 131 times, and the risk is self-evident.
Although countless media and investors are advocating that investing in technology stocks is investing in the future, the current profitability of these high-tech companies cannot be used to judge the prospects of this industry. But in fact, everyone knows the frightening bubble elements behind the high stock prices of these companies.
Based on a price-to-earnings ratio of 30 times, the market value of AOL should be only US$9 billion. Even so, it is considered an overestimate, but the current market value of AOL is about US$40 billion, more than four times higher than the normal state.
In this serious bubble background, no one knows how long AOL's current high stock price can last.
Therefore, although all the shareholders in the meeting room of AOL headquarters in New York have obtained substantial book benefits from the continuous rise in AOL stock price in recent years, at this time, let them spend 4 billion US dollars to buy the stock that Eric threw out. 16.5 million shares, most people are still very resistant.
In the eyes of many people, this amount of money is actually enough to buy half of America Online.
However, if they are unwilling to take over, they will face a public sell-off of Firefly Investment.
They also know that Firefly Investment will not recklessly sell all the stocks at once, but the long-term continuous selling is more painful. It is simply impossible to think about any improvement.
Everyone was silent for a moment, and John Mark, the president of Morgan Stanley, who was still familiar with Eric, asked, "Eric, at what price do you plan to sell these stocks?"
"If you agree now, it will be $4 billion." Eric looked over and said, "If you plan to consider it for one month, then settle the price based on the stock price after one month."
John Mark shook his head immediately and said: "Eric, this is too expensive. Everyone knows the actual situation of America Online, let alone such a large stock transaction, if you are willing to give a discount, I can represent it now Morgan Stanley subscribed for 3 million shares. Therefore, I think the 30% discount is a price that everyone can afford.”
After John Mark finished speaking, everyone in the conference room nodded in agreement.
They also know that if they want to avoid the long-term slump in AOL's stock price caused by Firefly Investment's continuous reduction of holdings, it is inevitable to undertake the part of Firefly Investment's sell-off. But if Eric is willing to sell the stocks in his hand at 70% of the current price, they are still very willing to take over, even if Eric sells more stocks.
Based on the US$180 billion market value of AOL at its peak in memory, the total value of AOL stocks held by Firefly System will exceed US$60 billion.
However, even if Firefly Investment puts 1% of AOL stock in the market in one day, it may crush the stock price of AOL, let alone sell all 35.7% of the stock at the highest point of the stock price, that is simply a fantasy .
Eric has never been a greedy person. For the AOL stock in his hand, as long as he can cash out 10 to 20 billion US dollars in the next year or so, he will be satisfied. After all, the actual value of America Online, in Eric's opinion, is not even worth 10 billion U.S. dollars.
If you don't know the growth potential of AOL's stock price in the next two years, Eric is indeed willing to sell the stock in his hand at a lower discount price. Of course, he will definitely not accept such a diving price of 30%.
But at this time, Eric did not intend to make any concessions, but shook his head resolutely and said: "In this case, you can think about it for a month, and come here today, and you can talk to Chris about the rest. .”
Just about to hang up the video, Steve Case, who had been sitting silently across the conference table, finally spoke again: "Eric, what are you going to do with the rest of the 16.5 million shares?"
Eric glanced at Steve Case, then glanced at the people in the opposite conference room, and said: "The rest will be discussed next year, and it will be set in half a year. It is still 16.5 million shares. You choose to accept it." Still not answering. As I said just now, I will not take too aggressive actions, but you must also pay the due price for maintaining the current state."
Leaving these words behind, Eric ignored the people in front of him and turned off the video call.