UGB #472 - bargain
#472 - bargain
The negotiations dragged on amidst the smoke of battle.
"Mr. Elch, you know that our sincerity in seeking cooperation is overflowing, but we cannot accept completely unfair terms," Qi Tongsheng said, patting the draft of the first round of consultations between the two parties.
"Our valuation of Rolls-Royce's automotive business already exceeds the consideration of its peers, exceeding the valuation of well-known automotive companies such as General Motors and Ford by more than 25%. I think this is our sincerity in cooperation."
"A valuation of 400 million pounds, I believe that apart from us, there should be no investment institutions that can pay such a high valuation consideration now."
What Qi Tongsheng said was the truth, so he was confident and justified.
Making Rolls-Royce's CEO, Elch, unable to find any place to refute.
Rolls-Royce itself is now a private enterprise, and the sources of shareholders are already relatively complex, including the Capel family with complex relations with the royal family, and the Swire family and other consortium families with broad industry coverage, all have shares.
But in this era when the international reserves of the British Empire were only over 2 billion US dollars, 400 million pounds was already a very large number. Frankly speaking, if it weren't for the huge financial backing of the Dawn Research Institute, Dongda's PASSAT Automotive Industry would not be able to come up with so much funds to invest in Rolls-Royce.
This is an era when one million pounds is a very large sum, because one million pounds can still be exchanged for more than 1.3 tons of gold at the current time point in the world of "Bright Sword"!
Converted into the gold price of the main world in 2024, it is almost 800 million Dongda's local currency, which is more than 100 million US dollars!
Ren Zhong's offer to Rolls-Royce was actually an irresistible high price.
Of course, it may seem like a loss in the short term, but Rolls-Royce's Rolls-Royce is a golden goose that lays eggs!
"Mr. Qi, we do have our own special domestic circumstances and hope to retain absolute control and control of the company, so a 33.3% stake is a suitable price. If we talk on this equity basis, the internal resistance will be much smaller," Elch said, biting the bullet.
"Mr. Elch, we are open to the final number of shares. Frankly speaking, we can accept even 25%, but the corresponding consideration we give is 100 million pounds. This is a very clear correspondence. Mr. Elch, we will not seek control of Rolls-Royce now, nor will we in the future. Even with 50% of the shares, we can sign a long-term valid statement that we will give the voting rights of this part of the shares in our hands to the current Rolls-Royce board of directors for collective decision-making. I think Mr. Elch can understand the significance to your board of directors," Qi Tongsheng said with a smile, taking out Ren Zhong's final trump card.
This stunned Elch, who had always had some doubts about Dongda's equity.
Originally, Ren Zhong thought that giving up voting rights was also possible, which would mean that the original power structure of Rolls-Royce would remain unchanged, but if this were the case, the incentive effect for the current board of directors of Rolls-Royce would not be great.
So before leaving, Ren Zhong gave Qi Tongsheng instructions, suggesting that at the appropriate time, he could consider giving Dongda's equity voting rights to the Rolls-Royce board of directors for collective action. For the Rolls-Royce board of directors, this was of course a great opportunity to enhance their power, almost meaning that they had obtained the unanimous support of the major shareholder!
Elch pondered for a long time, then raised his head and said to Qi Tongsheng, "Regarding this new situation, I would like to suspend our negotiations. I need to report to the company's board of directors."
"No problem, Mr. Elch. Our cooperation with Rolls-Royce is undoubtedly very sincere. We will not interfere with your decision-making in production and operation, and we will especially not affect your company's board of directors' personnel arrangements in this regard," Qi Tongsheng gave Elch a reassurance.
Elch was relieved. In that case, it would be much easier to talk next.
"Prime Minister, regarding this cooperation with Dongda in the automotive business, Dongda has given up the voting rights on the shares. I think this is an opportunity for us," Robert hurriedly met with Harold after receiving Elch's report.
As a key enterprise of concern to the British Empire, any external cooperation of Rolls-Royce needs the approval of the authorities.
"It seems that Dongda does not have too many calculations in cooperating with us, Mr. Robert. According to your assessment, after this capital injection, can Rolls-Royce get rid of the constraints of orders from the rogue eagle aviation giants? Will our aviation business suffer a heavy blow as a result?" Harold asked, staring at Robert.
"Prime Minister, I can only say that if we accept the top-level investment of 200 million pounds now, the aviation business can survive even if it is idle for 3 years," Robert said cautiously, "According to our research arrangements, the A300 airliner, which has been improved according to the Continental standards, will have its first flight at the end of 1958 at the latest. If our airworthiness certification can be successfully passed, it can be sold on a small scale in 1959. Now we are optimizing and improving the project while compiling the airworthiness application materials. After the first flight, we will submit the application materials. If there is no problem with the test flight of this airliner, then at least there will be no problem with our John Bull's airworthiness certification. Next, the application to Gaul, Prussia, Portugal, Spain, and Italy will not be much difficult after we have our domestic airworthiness certificate. At the latest, we can get the airworthiness in the Continental in about three years. In this way, the only obstacle to our sales to the Continental will be whether the product competitiveness is very strong."
What Robert stated was their internal plan. In terms of the possibility of realization, given Rolls-Royce's position in the Continental aviation industry, there should be no major problems.
Of course, regarding the progress assessment of the CAC-120 airliner, Rolls-Royce has sent experts to conduct a comprehensive assessment after signing the cooperation agreement. They expressed high satisfaction with the progress of Dongda Yandu Aviation Industry. Dongda is very strong in terms of production line preparation and the design maturity of the airliner itself, as if this airliner has a prototype for reference, and all aspects of the design are very thoughtful.
This makes Rolls-Royce full of confidence in this cooperation. Even if it has suffered such a heavy blow as the cancellation of orders from several major aviation giants of the rogue eagle, the board of directors has not lost confidence. They are just trying to raise funds to overcome the current difficulties.
The automotive business cooperation that Dongda came to is not to say that it hit it off immediately, but it has a feeling of sending charcoal in the snow!
"Since that's the case, I principally agree to your cooperation. Regarding this cooperation, we need a written commitment from Dongda. Rather than explicitly writing the terms into the equity agreement, Rolls-Royce is the hope of our John Bull family in the automotive industry. We cannot risk losing control in any way." Harold nodded after listening and said, "If the aviation business can truly be implemented smoothly, Rolls-Royce will rise again and will no longer depend on handouts from the rogue eagle's aviation industry orders. This is an important project for us, the 'sun never sets,' to maintain our international position. I hope you can handle this matter well and let the things lost by the 'sun never sets' aviation industry be regained by Rolls-Royce!"
In recent years, Harold has been played several times by the rogue eagle. Although he is considered one of the beneficiaries, if the rogue eagle hadn't stabbed John Bull in the back during the Suez Crisis, the previous Prime Minister wouldn't have stepped down so quickly.
However, as an old-school politician of the 'sun never sets' with pride in his bones, Harold has absolutely no sense of identity with the current shift in status where the 'sun never sets' has become someone else's sidekick!
They are not many years away from the glorious era of the 'sun never sets,' and the past glory is always calling to them.
Therefore, if there is an opportunity to enhance the strength and influence of the 'sun never sets,' Harold and the others will not refuse, even if it is a straw to clutch at.
The 'sun never sets' desperately needs an opportunity to rise again.
The rapidly rising Dongda is, to the 'sun never sets,' no less than the discovery of Little Japan in World War I.
Dongda, with its independent development thinking in the Bright Sword world, is not only developing fiercely in cutting-edge science but also making remarkable progress in people's livelihood. In just over a decade, it has not only solved the domestic food problem but has also begun to solve the world's food security problem without additional conditions.
By utilizing the abandoned land of the 'sun never sets,' they have truly and earnestly established a large-scale grain-growing group, something that no one has ever done before.
Thanks to the efforts of Dongda EIC in recent years, the 'sun never sets' has greatly enhanced its say in food, and it can even be said that it has completely broken free from the constraints of North America in terms of food. In the colonies of Black Africa, the 'sun never sets' has begun to achieve food self-sufficiency, which has laid a new foundation for the development of Black Africa.
Coincidentally, Dongda's demand for ore is also very strong, giving the 'sun never sets' a stable sales channel for its efforts in mining colonial minerals.
The originally shaky colonial system now feels much more stable due to the improved economy.
Although Harold and the others know that the ultimate result is inevitably the loss of these colonies, if they can extract a few more years of economic benefits from these colonies, it will be a very meaningful thing for the recovery of the 'sun never sets' economy.
It can be said that the cooperation with Dongda now has too many benefits for the 'sun never sets.'
Even in terms of the market, due to the other party's tilt, the 'sun never sets''s largest export partner has begun to shift from North America to the Asia-Pacific region.
Harold and the others were originally insensitive and had little concept of these changes.
But with the launch of several major cooperation projects, they have already felt the important impact of the eastward shift of the economic center of gravity.
Of course, if possible, Harold and the others want everything!
"Prime Minister, we will strictly maintain the interests of the 'sun never sets' in the cooperation agreement. We are very confident that Rolls-Royce's aviation business will grow stronger in cooperation with Dongda. Currently, the A300 we are cooperating with Dongda, according to Dongda's production accounting standards, has a per-seat cost that is more than 15% lower than Boeing and Douglas. The 'sun never sets''s aviation industry also needs such a powerful airliner to seize the aviation market from competitors," Mr. Robert said with confidence.
In the main world, the 'sun never sets' also gave birth to the BAC airliner to compete for the market. Unfortunately, their strength was too weak, and the investment in research and development and the small domestic market led to the fact that the originally strong BAC1-11 did not grow with the development of the market. From the perspective of the airliner field, this is a field with high investment and high output. Even the 'sun never sets,' a former world hegemon, cannot support it alone without a strong domestic market.
The European continent in the main world eventually had to form an Airbus alliance to compete with North American aviation giants.
Now Dongda's aviation development is comparable to the European aviation market in the main world. Now, jointly developing with the 'sun never sets' is just to make up for the two major shortcomings of the 'sun never sets''s aviation rise.
The huge market amortizes the huge research and development costs, and the strong cash flow supports the continuous iterative development of the product. Robert and the others don't know that there are such good conditions, plus Dongda's natural low-cost environment, how can they lose?
This is also one of the reasons why Rolls-Royce doesn't need to pull a few small European brothers to play together. For this big cake, it is enough for Rolls-Royce to take the lead in integrating the aviation power of the 'sun never sets.' The current aviation companies of the 'sun never sets' are strong but not large. There are more than a dozen companies in the country that can produce various types of fighter jets, and the leading ones are British Aircraft Corporation, Hawker Siddeley, and Blackburn Aircraft.
Hawker Siddeley, in the main world timeline, is the company that produced the Trident airliner, and also produced famous fighter jets such as the Vulcan strategic bomber, Harrier fighter, and Hawker Hunter fighter. It can be said that it is also a pioneer in aviation with a great background.
Taking advantage of the opportunity to cooperate with Dongda, Rolls-Royce certainly hopes to wipe out these competitors in one fell swoop.
"It's a bit difficult, but we can do some work to try to facilitate the integration." Harold frowned and then relaxed. He understood that in the current state, the integration of domestic aviation is inevitable. Under the current general climate, the scattered domestic aviation industry is no longer able to compete with the powerful North American aviation giants.
"Then I will trouble the Prime Minister. We will fully consider the interests of the shareholders of these existing companies in the integration. According to our plan, we will use a share swap method to complete this integration as soon as possible, that is to say, the shareholders of Rolls-Royce hope to share the future development of the aviation industry with the shareholders of these companies," Robert said with a smile.
If you don't have money in your pocket, use equity swaps to achieve integration. (End of this chapter)