Bab 203: Chapter 203: Formally Joined the California Consortium
"Have you heard the rumors recently?" Hardy asked, inviting John to sit down with a smile.
"I've heard them," John replied. "I've been waiting for the shareholders to call a general meeting, but no one contacted me. I was about to reach out to them myself when you called."
Hardy smiled. "You don't need to contact them. Many shareholders have signed a sale and purchase agreement with Bank of America. They are no longer shareholders. I now hold 46% of Wells Fargo's shares, making me the largest shareholder."
John looked at Hardy in surprise. Although he had suspected something like this, he didn't expect Hardy to acquire so many shares so quickly.
"Then I should be calling you 'boss.' What can I do for you today? Or are you planning to fire me?" John asked.
Hardy shook his head with a smile. "I'm not firing you. We've had good contact before, haven't we? Your philosophy of providing customers with the best service aligns with mine. John, I want you to stay on as CEO and make Wells Fargo the best bank in the United States. What's your current salary?"
"$26,000 a year."
"I'll raise that to $30,000, with a 5% annual increase. Also, you'll receive half a percent of the bank's profits," Hardy said.
John's heart skipped a beat. No one is indifferent to money, and this was a significant raise, with annual increases and a tempting commission. If the bank's profits reached $100 million, his commission alone would be $50,000, more than his current salary. Given Hardy's backing, John knew this was an achievable goal.
"What do you need me to do, Mr. Hardy?" John asked.
"Simple. Before I complete the acquisition, stabilize the bank's internal operations. I want to take over a strong, healthy bank."
"You can count on me, Mr. Hardy," John replied.
The acquisition of Wells Fargo was smoother than Hardy had anticipated. It highlighted the power of a consortium—when facing one, even a bank with assets exceeding $100 million had little room to resist. Stubbornness would only lead to shrinking assets and difficulties in future business operations. Even the Fargo family, who founded the bank, chose to sell their shares. It took Bank of America only a month to complete the acquisition of the remaining shares.
A few days later, the market was hit with shocking news: Wells Fargo was preparing to delist. The bank voluntarily applied for delisting, paying off shareholders at the current stock price. In the future, Wells Fargo would no longer be a public company.
Hardy's decision to delist Wells Fargo was strategic. By taking the bank private, he gained full control and avoided the need to publicly disclose financial reports, allowing him to operate more freely. His focus was on rapid expansion across the country and beyond.
A couple of weeks later, as Christmas approached, another piece of news broke: Bank of America had officially handed over Wells Fargo to Jon Hardy. The bank was now his personal property, though he had borrowed $160 million from Bank of America for the acquisition. This loan, taken in his name, meant that Wells Fargo was entirely Hardy's personal asset, separate from his other businesses.
At the San Francisco headquarters of Wells Fargo, Hardy met with the bank's senior executives. John introduced the vice presidents and department heads, including those from the General Banking Department, Investment Management, Capital Management, Human Resources, Legal Affairs, and Corporate Affairs, as well as the branch presidents.
Hardy gave a brief speech, assuring the management that there would be no personnel changes and encouraging them to continue their work with confidence. He also informed them that Wells Fargo would become the financial core of the Hardy Group, with all funds and investments funneled through the bank.
Wells Fargo was already a comprehensive bank, offering services such as community banking, professional financial services, investments, insurance, and loans. However, Hardy felt that the bank's previous development had been too conservative. Despite its decades-long history, it remained a small regional bank in California.
But this also meant the bank had solid internal strength. Hardy envisioned Wells Fargo entering a period of rapid growth. He set ambitious goals: within three years, every U.S. city should have at least one Wells Fargo branch, and the bank should also prepare to expand internationally. He encouraged mergers and acquisitions as a means to achieve this rapid expansion.
"Customers are resources," Hardy said. "Find ways to increase the number of customers. For example, collaborate with utility companies to collect water and electricity fees through the bank."
He noted that the Hardy Hotel's investment business already had over $50 million deposited in Wells Fargo, involving two to three hundred thousand users. With more casinos and investment companies in the pipeline, the number of customers would multiply.
Hardy had big plans for the future. With Wells Fargo branches in every city and new casinos opening, he envisioned expanding the TV lottery business. Unlike visiting Las Vegas, where people needed to arrange special trips, the TV lottery allowed customers to participate from the comfort of their homes, simply by making a phone call. This would generate significant revenue for the casinos.
That evening, a grand cocktail party was held at Giannini Manor in Hardy's honor. Such receptions were a tradition for new members of the California consortium, where all the member business owners would come to meet and connect with the newcomer.
Hardy arrived at the reception with Andy and John. The hall was filled with over forty men in suits. As Hardy entered, Giannini approached and greeted him warmly before introducing him to the group.
"Everyone, this is our new member, Mr. Jon Hardy of Hardy Group. I'm sure many of you are familiar with HD Security, ABC TV, and Hardy Hotel—these are all Hardy's enterprises. And I'm certain many of you have seen 'Playboy' magazine, which is also one of Hardy's ventures."
The men smiled knowingly, and Giannini continued, "From today, Jon Hardy will be our partner. Let's welcome him with a round of applause!"
The room erupted in applause, officially marking Hardy's entry into the California consortium and the world of capital consortiums.
Giannini then personally introduced Hardy to the attendees, including the owners of Safety Pacific, Kaiser Group, Crocker Agriculture Group, PRC Real Estate Development, California Life Insurance Company, and the Roxbury Company. It took half an hour for Hardy to meet everyone, and with his sharp memory, he managed to remember most of them.
Hardy also introduced Andy and John to the group, noting that they would be his right-hand men in the future.
The dinner that followed resembled a scene from an old European palace, with a long banquet table filled with powerful capitalists. Those with assets under ten million weren't even eligible to sit at the table. There were no women, no music, and no dancing—only discussions about business and making money.
After lunch, during the free exchange period, many approached Hardy. The first was the owner of PRC Real Estate, who expressed interest in collaborating on the construction of Hardy's upcoming casinos, which each had an investment of hundreds of millions of dollars.
"Of course, I'm open to working with PRC," Hardy replied. "I'm in the process of planning the two casinos, and I've already contacted other construction companies. PRC is welcome to join the bidding process, and if the terms are equal, I'll give PRC priority."
The owner of PRC smiled and thanked Hardy, raising his glass in a toast.
Next, the chairman and president of PepsiCo, Walter Mack, approached Hardy. "I heard you acquired PepsiCo shares from Bank of America?"
"Yes, I'm very optimistic about Pepsi's future, so I bought their shares," Hardy said.
Walter Mack was puzzled. Most people favored Coca-Cola, which dominated the market. Pepsi held only 5% of the market share and was largely seen as a low-end product. Some even predicted that Pepsi would either be acquired by Coca-Cola or driven out of the market entirely.
"May I ask why you're optimistic about Pepsi?" Mack inquired.
"I have some ideas for Pepsi's development. It might take some time to explain them all, so why don't we schedule another time to discuss it in detail?" Hardy suggested.
"That sounds good," Mack agreed.
He knew that Hardy was a business genius, with innovative ideas like TV shopping, which had revolutionized telephone shopping and captivated countless women. Another of Hardy's successful ventures was the casino lottery and proxy investment companies, which cleverly bypassed the U.S. ban on lotteries using a legal casino, live TV, and proxy investment companies.
Afterward, Hardy mingled with others, quickly making friends. Among the crowd, he noticed David Mersey, the owner of Mersey Pharmaceuticals, and remembered a recent report from Victor, who had been sent to Hong Kong to establish operations.
Victor had reported that penicillin prices on Hong Kong Island were exorbitantly high, with some people paying as much as $30 for a single bottle. Victor suggested that acquiring a batch of penicillin could be incredibly profitable.
Mersey Pharmaceuticals was one of the few companies that had produced penicillin during World War II, and Hardy saw an opportunity. Perhaps he could buy a batch from Mersey or even set up a penicillin production line in Hong Kong.
"Hello, Mr. Mersey," Hardy said, raising his glass.
"Hello, Mr. Hardy. I've been meaning to talk with you, but you've been surrounded by people all night. When do you think we can discuss the MGM Casino?" Mersey asked, referring to one of Hardy's other ventures.
This man was one of the investors in the new casino, and Hardy knew that purchasing penicillin from him would be a complex process, but it was worth exploring.
Bab 204: Chapter 204: Lockheed: Do You Want a Plane? Hardy: NO
Hardy and David Mersey were discussing the future of their new casino. Mersey's primary concern was the flow of visitors. Hardy reassured him with a confident smile, "It's simple. Make Las Vegas a paradise for men, and guests will naturally flock here."
"A paradise for men?" Mersey echoed.
"Gambling, alcohol, women, and a variety of performances—everything men love will be here. This place will be all about enjoyment, like stepping into a man's paradise," Hardy explained.
"Las Vegas will also host events like the Miss World pageant, the Victoria's Secret Fashion Show, lingerie shows, boxing matches, horse racing, and dog racing. These competitions will draw large crowds of tourists."
Mersey grinned, nodding in agreement. "I want to attend everything."
Suddenly, Hardy remembered something. "David, I have friends in the East who are in dire need of penicillin. Would it be possible to purchase a batch from you?"
"Penicillin is in short supply everywhere," Mersey responded. "There's high demand in China and Europe. We haven't officially supplied it to Eastern countries yet because they can't afford it. But since it's for your friends, I can make an exception."
"How much can you provide?" Hardy inquired.
Mersey thought for a moment. "How about 50,000 bottles a month?"
Hardy did a quick mental calculation. The wholesale price for 200,000 units of dry powder penicillin was $1 per bottle, and it sold for $2 to $3 per bottle in U.S. hospitals. In Hong Kong hospitals, the price was around $10 per bottle, with the black market charging over $30.
Fifty thousand bottles would cost $50,000 to purchase, sell for $500,000 to hospitals in Hong Kong, and potentially fetch $1.5 million on the black market—a lucrative opportunity.
"Fifty thousand bottles isn't enough," Hardy remarked.
Mersey shrugged. "Hardy, you have to understand—I'm only offering this because we're friends and partners. No one else would get this opportunity."
He leaned closer and whispered, "There's another reason we're not exporting large quantities of penicillin to the East—the government has imposed secret restrictions."
Hardy nodded, finally understanding. It wasn't that the capitalists were unaware of the profits to be made in the East, but government restrictions kept them at bay. The U.S. and European markets were profitable enough, and defying the government's export restrictions could lead to severe consequences for large pharmaceutical companies.
"One hundred thousand bottles or it's not worth the effort," Hardy insisted.
Mersey considered the offer before agreeing. "Alright, I can do that."
Hardy smiled, shaking Mersey's hand.
"David, have you ever considered setting up a pharmaceutical factory in the East?" Hardy asked.
Mersey chuckled. "I've thought about it, but it's too far away. The market isn't developed, and it doesn't compare to the profits we make in the U.S. and Europe."
"How about we partner to build a pharmaceutical factory in Hong Kong? You handle the technology, and I'll take care of the construction and sales. Our first product will be penicillin," Hardy proposed.
Mersey regarded Hardy seriously. "Are you really that optimistic about the East?"
"Too many people are focused on the U.S. and European markets. The East is a blank canvas, with a massive population—three times that of Europe and America combined. This is a huge, untapped market," Hardy explained.
After considering the idea, Mersey agreed. "Alright, I'll contribute the technology and take a 30% stake. You handle the rest."
For Mersey, it was a low-risk venture—if the business failed, he could withdraw his technicians and walk away without losing much. Hardy, on the other hand, would bear the financial risk.
"Deal. I'll have my team get in touch with Mersey Pharmaceuticals to work out the details," Hardy said, pleased with the outcome.
With another significant business deal secured, Hardy felt the advantages of joining the consortium. Sharing resources and growing together made them stronger, though he knew he had to stay vigilant—consortiums were filled with powerful entities that could turn against each other at any moment.
The party continued, and the next day, several casino owners gathered again. Meyer had traveled from Los Angeles to attend, though his role had diminished from leader to mere participant. He had heard that Hardy had officially joined the California consortium, and now Hardy's wealth and status far exceeded his own.
Giannini chaired the meeting, smiling at the group. "Let's discuss the issue of casino shares."
He turned to Hardy first. "Hardy, you originally requested a 20% stake, correct?"
Hardy nodded.
Giannini continued, "After negotiation, the remaining shares will be allocated as follows: MGM 10%, Mersey Pharmaceuticals 10%, Crocker Agricultural Company 15%, PepsiCo 7%, Lockheed Aircraft Manufacturing Company 10%, and Bank of America 28%."
Meyer had once aspired to lead the new casino, but with only 10% left, he had been reduced to a follower. Still, he was fortunate not to have been entirely cut out.
Giannini went on, "Regarding management, Hardy will continue to oversee the casino. Is everyone in agreement?"
The group consented, recognizing that Hardy's expertise was vital to the casino's success.
"Hardi has also requested that before the casino faces any major losses, management authority remains with him. Other shareholders will not intervene unless the casino suffers significant losses, at which point the shareholders can reclaim management and appoint a new CEO. Any objections?"
Most agreed, understanding that they were investing to make money. Companies like Lockheed, which specialized in building aircraft, had no desire to manage a casino.
"The final matter is the casino's name. Any ideas, Hardy?" Giannini asked.
After some thought, Hardy suggested, "How about Caesar's Palace?"
The name resonated with the group, and everyone agreed.
With the details finalized, champagne was brought in, and the group toasted to the casino's future success. Lawyers quickly drafted the contracts, and the agreement was signed, officially marking the birth of Caesar's Palace Hotel and Casino.
Later, while toasting with Hardy, David Mersey whispered, "Your actions are swift. I sent someone to the pharmaceutical factory yesterday, and the deal is signed. You can pick up the goods anytime."
"Thanks, David."
"It's nothing. I'm just hoping you'll make a fortune with the casino," Mersey said with a smile.
"Don't worry, casinos are my specialty," Hardy replied confidently.
"They're already negotiating the construction of the penicillin plant in Hong Kong. The estimated investment is $1.2 million. If the construction goes smoothly, it could be operational in six months."
As they chatted, Robert Gross, the head of Lockheed, approached them. Despite being sixty years old, Gross looked energetic, with his blond hair still vibrant. He greeted Hardy with a smile. "What are you two discussing?"
"Just a small business matter—building a penicillin factory," Hardy replied.
Penicillin, once considered a miracle drug, was now mass-produced, and Gross wasn't particularly interested. He had a different agenda.
"Hardi, I have a small business proposal for you," Gross began.
"What kind of business?" Hardy asked, intrigued.
"Your HD airline—do you need passenger and cargo planes? Lockheed produces excellent aircraft, including the L-049 Constellation. Would you be interested?" Gross inquired with a smile.
Hardy smiled and shook his head. "I'm sorry, but I don't need any planes at the moment."
His refusal was straightforward. Hardy's existing planes were purchased from the military at low prices, and buying new Lockheed planes at market prices didn't align with his strategy of maintaining a low-cost airline with standardized parts.
A look of disappointment crossed Robert Gross's face.
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