Chapter 383: Chapter 383: Done!
In the living room downstairs of the villa, Janet and Sophia discussed the recent operational adjustments at Latour Vineyard and casually chatted about other topics. Janet glanced at her watch unintentionally; Simon and Raymond Smith's meeting had already lasted one hour and forty minutes, far exceeding the initial one-hour agreement.
Sophia also looked at her watch and stood up, saying, "It's already noon, I should head back."
Janet walked Sophia to the villa's door, noticing her glance towards the staircase. Smiling, she said, "There's been a lot going on lately. Simon has to fly back to Los Angeles this afternoon, so you probably won't see him this time."
Sophia nonchalantly rolled her eyes at Janet, "Who said I wanted to see him?"
"Exactly, who said?" Janet caught the bug in Sophia's sentence and teased, "I never said you wanted to see him."
Sophia's face turned a bit red.
Although Simon had sternly warned her not to harbor certain thoughts, since their intimate encounter, her attitude towards that man had subtly changed.
The afternoon they spent together was indeed unforgettable.
After settling her children here, she had resolved to visit them on weekends if not too busy. However, when she arrived this morning and heard that Simon was around, she couldn't help but use discussing Latour Vineyard with Janet as an excuse to come over.
Before coming, she couldn't resist changing into a suit that Simon particularly liked and carefully did her makeup.
Then, she didn't get to see Simon, but Janet saw right through her act.
Under Janet's teasing gaze, Sophia almost fled the villa, drove away from the estate, and gently touched her flushed cheek, her mind involuntarily filled with the memory of how roughly Simon had left marks on her body that day.
Oh, she was really beyond help.
After Sophia left, Janet did not go upstairs but called the four ladies, ABCD, to start preparing lunch as Raymond Smith was evidently staying for the meal.
In the villa's study.
Raymond Smith had already instructed his assistant to cancel his trip to Europe temporarily, and he made the call without avoiding Simon.
Initially, when Simon revealed that Westeros Corporation had acquired 4.9% of Bell Atlantic's shares and hoped to buy out the company, Raymond Smith thought the young man was joking.
The news that Daenerys Entertainment was about to compete with Panasonic for MCA was almost common knowledge.
Once he confirmed Simon wasn't joking, Raymond Smith subconsciously asked if he planned to give up on MCA.
The answer surprised Smith even more.
Simon Westeros planned to initiate two acquisitions simultaneously, totaling over $10 billion.
Raymond Smith instinctively took Simon's offer as a typical leveraged buyout and was about to outright refuse; he didn't want Bell Atlantic to fall into a situation like Reynolds Nabisco or Time Warner post-acquisition.
Once Simon explained his intent for the purchase, Raymond Smith shelved the idea of an immediate rejection and started inquiring about more specific acquisition details.
Having prepared extensively beforehand, the discussion between the two deepened unknowingly, covering topics like Bell Atlantic's management strategy post-acquisition, debt repayment models, company expansion plans, and federal telecom policy trends.
As the noon sunlight fell on the coffee table strewn with documents, Raymond Smith realized it was nearly 12 o'clock.
Simon, still oblivious to the time, continued, "Public companies often have to forsake long-term planning for short-term shareholder profits. By privatizing Bell Atlantic, we can avoid these restraints and aggressively invest in promising sectors like mobile communications and the internet. With sufficient groundwork, once the federal restrictions on telecom acquisitions are lifted, Bell Atlantic can expand significantly."
Raymond Smith, drawn back into the discussion by Simon's words, said, "Simon, the prospects for mobile communications are fairly clear, but the internet—how can you be sure you're not betting on the wrong horse? According to your plan, we need to invest up to a billion dollars just in infrastructure upgrades. If the internet industry doesn't meet expectations, the company faces more than just financial losses; it could be a matter of survival."
"Ray, I once compiled a memo on various internet industry scenarios; if you're interested, you can take it and have a look. I believe an industry doesn't just exist; we have to actively create and cultivate it. The global electronic information network has been budding since the 1960s, maturing over more than twenty years in military, commercial, scientific, and governmental fields, which demonstrates the potential of the internet industry. If the internet can be applied in so many specialized fields, there's no reason it can't be promoted in the broader consumer market."
Simon paused briefly, then quickly added, "Imagine, Ray, what if in addition to the current services provided by Igneel Portal like news, forums, personal homepages, and email, people could also access movies, music, games, social networking,
shopping, and countless other online services through the internet—imagine the potential of this industry then?"
Raymond Smith, having tried the online services provided by Igneel Portal, thought for a moment, pointed to the documents on the coffee table, and asked, "Simon, aren't you afraid I might go ahead and do this on my own after you've told me all these ideas? My control over Bell Atlantic isn't as weak as you think."
Simon shook his head and chuckled, "That's because you haven't yet made decisions that seriously go against shareholder wishes. At a company like Bell Atlantic, even with significant power, you can't just do whatever you want. I believe there are definitely several executives within Bell Atlantic who would like to replace you. As a public company, the moment you face setbacks in pushing these strategies, even temporarily, your so-called 'control' over Bell Atlantic would quickly diminish. In contrast, as long as we can agree on the fundamental direction of the company, I can tolerate even a five-year or longer continuous loss in a certain business area."
Raymond Smith fell silent for a moment.
Having discussed for over an hour, Raymond Smith knew that if he hadn't been interested, he wouldn't have talked with Simon for so long or even canceled his own schedule.
Yet, accepting Westeros's acquisition offer was a double-edged sword.
The advantages, as the young man said, included escaping the strict oversight of being a public company, allowing more aggressive management strategies and less quarterly financial headaches.
However, as the Chairman and CEO of Bell Atlantic, Raymond Smith already held significant power, and as long as he didn't pursue overly risky reforms, he could securely stay in his well-compensated position until retirement.
Conversely, if the company were acquired, he would be effectively working under someone else. If the company's future developments met Simon's expectations, all would be well, but if not, he could be ousted at any time. Even if he secured a lucrative severance package through a golden parachute agreement, his career would largely be over.
After weighing his options for a few minutes, Raymond Smith looked up again and said, "Simon, I need you to offer more assurances and guarantees."
"Ray, you surely know about Amy Pascal, CEO of Daenerys Entertainment, who will receive over $100 million in compensation this year, possibly the highest ever for a female executive. Many within the Westeros system will also receive substantial rewards this year, so you don't have to worry about your efforts being unrewarded."
Simon continued, shifting his tone, "However, Ray, I understand what you mean—you need to retain sufficient power after I acquire Bell Atlantic. Frankly, I can't make any promises. I've seen your resume and am confident in your ability to manage the company well, but I will not completely let go. If you've paid attention to Hollywood, you'd know how ridiculous the two executives Sony hired after acquiring Columbia Pictures are—they're utterly squandering that major studio's resources. Before their hiring, both were excellent producers, and their current situation is largely because their power lacks restraint. With such a precedent, I won't make the same mistake."
Raymond Smith still appeared hesitant.
Simon waited a moment, then added, "Ray, there's an anecdote from Silicon Valley about Apple. When Steve Jobs invited John Sculley, who was then working at Coca-Cola, to join Apple, he asked him, 'Do you want to sell sugar water for the rest of your life, or do you want to seize the opportunity to change the world?' I want to ask you, Ray, do you want to comfortably sit at the helm of Bell Atlantic until you retire, only to be quickly forgotten after a lively retirement party, or do you want to create a commercial miracle with Simon Westeros that the world will remember?"
Moved by Simon's words and recalling the young man's dazzling achievements over just a few years, Raymond Smith felt a surge of long-lost passion. After a brief final hesitation, he finally extended his hand: "Simon, I agree."
Simon and Raymond Smith shook hands firmly, Simon finally feeling a sense of relief.
Having secured Raymond Smith, there were no longer any significant obstacles from the Bell Atlantic board.
After lunch, Raymond Smith hurried back to Bell Atlantic's headquarters in Philadelphia, Pennsylvania, just over a hundred miles from New York. He also took with him a draft of Westeros Corporation's intent to acquire Bell Atlantic, which included some informal purchase offers and exit fees.
Simon initially made an informal offer of $6.3 billion, which represented a 10% premium over Bell Atlantic's average stock price over the previous three months.
Regarding exit fees, Simon promised a rate of 2% of the final transaction price.
Although Raymond Smith agreed to Simon's acquisition offer, he made it clear during lunch that Bell Atlantic's recent stock price had been severely undervalued due to market conditions, so Simon would need to make a sufficiently sincere offer to convince the many shareholders of
Bell Atlantic.
However, with Raymond Smith's cooperation, this acquisition was now a friendly one, and with the likelihood of competitors emerging being very low and Bell Atlantic's stock price remaining depressed over recent months, the original budget of $8 billion was more than enough.
Typically, friendly acquisitions involve a stock premium of up to 20%.
Even considering the factor of the market downturn causing Bell Atlantic's stock to be undervalued, based on Simon's initial estimate of a 30% premium, Westeros Corporation's purchase price would not exceed $7.5 billion. In fact, it was more likely to be around $7 billion.
Moreover, Simon also promised in the intent document that not only would he not withdraw cash from Bell Atlantic to repay debts, but he would also continue to inject at least $1 billion of capital for the company's development.
Thus, the overall budget for Bell Atlantic remained at $8 billion.
After seeing off Raymond Smith, Simon hurried back to Los Angeles.
Following final preparations on Sunday and Monday, on October 31, Tuesday, Daenerys Entertainment formally made a public offer to MCA.
$7 billion.
In one fell swoop.
Panasonic had already made a $6.6 billion acquisition offer, and if Daenerys Entertainment increased their bid by only one or two hundred million dollars, it would seem very insincere. Thus, Simon simply made his highest offer directly.
Many had awaited this moment, and as North American media outlets reported on Daenerys Entertainment's move, MCA's stock price surged again. By the close of trading on Tuesday, MCA's market value had nearly reached the $7 billion total offer made by Daenerys Entertainment.
With Panasonic having amassed over $12 billion in cash reserves overseas and Simon Westeros's personal cash assets also totaling $8 billion, both were indeed formidable.
As such, many were already anticipating the arrival of a bidding war.
Meanwhile, after several intense board meetings, Bell Atlantic responded to Simon's acquisition offer on November 1, agreeing to enter formal acquisition talks with Westeros Corporation.
James Rebelde personally led the team to negotiate with Bell Atlantic's management.
Since preliminary preparations had been extensive, Westeros Corporation's acquisition team only needed to reconfirm already known details about Bell Atlantic's operations and financials, then quickly focus the negotiations on specific acquisition details.
The acquisition team also began discreetly lobbying Bell Atlantic shareholders.
As a historically long-established public company before its 1984 breakup, Bell Atlantic still had very dispersed shareholdings post-split, with most shares held by many retirement and insurance funds across North America, and few shareholders holding more than 5%. This significantly increased the difficulty of Westeros Corporation's acquisition of Bell Atlantic.
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