Chapter 427 You Can't Escape from Our Grasp
Acquire Hong Kong Telephone Company?
After hearing Lin Haoran's words, Ma Shimin suddenly understood—it turned out the boss had his sights set on this all along.
He paused for a moment and then nodded in agreement. "Regarding the proposal to acquire Hong Kong Telephone Company, I fully support your plan.
Although Hong Kong Telephone Company is not classified as a public utility listed company, it might as well be. Like China Light and Power, Hongkong Electric Holdings, and Hong Kong and China Gas Company, it is a premium asset with stable cash flow. Especially in the telecommunications market of Hong Kong, it holds a de facto monopoly, with very steady annual profit margins and revenue growth."
After a brief pause, Ma Shimin added, "Actually, when I first took over Jardines Matheson, I had already set up a team to conduct in-depth due diligence on Hong Kong Telephone Company to consider whether we should proceed with the acquisition.
However, because I had to focus on managing the sale of real estate projects at that time, the acquisition plan was temporarily shelved.
Now that the group's cash reserves are abundant, and since you've brought it up again, I can immediately restart the acquisition process. Within this week, I'll have the investment banking team update the valuation models and initiate the acquisition."
Over the past two years, many industries in Hong Kong were affected by the oil crisis, but there were exceptions.
Apart from real estate companies that were relatively unaffected, there were four companies that, no matter how the market fluctuated over the decades, stood strong and virtually untouched by crises. These were China Light and Power, Hongkong Electric Holdings, Hong Kong and China Gas Company, and Hong Kong Telephone Company. During the oil crisis, they were like invincible fortresses—immune to risks.
This was because these companies were deeply intertwined with the city's daily operations, ensuring the smooth functioning of Hong Kong around the clock. Like essential goods, they were indispensable to the citizens' lives.
Thus, even during market turmoil, their earnings remained stable and unaffected.
Among these four, Lin Haoran had already acquired Hongkong Electric Holdings and Hong Kong and China Gas Company, becoming their actual controller.
Only China Light and Power and Hong Kong Telephone Company remained.
He had no plans to acquire China Light and Power because he already controlled Hongkong Electric Holdings; pursuing China Light would lead to an electricity industry monopoly, something the Hong Kong government would not allow.
As for Hong Kong Telephone Company, Lin Haoran hadn't been interested before because his priority was acquiring Hongkong Electric Holdings and Hong Kong and China Gas. He had even encouraged Jardines Matheson to shift their focus to Hong Kong Telephone Company to divert their attention.
But now, after reaching a preliminary cooperation with Motorola, his interest had grown significantly.
Founded in 1925, Hong Kong Telephone Company had focused on building and operating Hong Kong's fixed-line telephone network and had become the primary monopoly in the local fixed-line service sector.
Earlier this year, Cable & Wireless PLC had attempted to acquire Hong Kong Telephone Company. However, during the competition to acquire Hongkong Electric Holdings, Jardines Matheson lost to Lin Haoran.
At that point, Lin Haoran encouraged Jardines Matheson to go after Hong Kong Telephone Company.
Ultimately, Jardines Matheson directed Jardine Land to attempt the acquisition, forcing Cable & Wireless to fail in their bid.
Later, during the competition for Hong Kong and China Gas Company, Jardine Land failed again.
Thus, the acquisition of Hong Kong Telephone Company was paused and left as it was.
While the situation seemed complicated, it was actually quite straightforward: Jardines Matheson, following Lin Haoran's earlier suggestion, had acquired ten million shares. Now that Lin Haoran controlled Jardines Matheson, he became the ultimate beneficiary.
"What's the current market capitalization of Hong Kong Telephone Company? And what's their shareholder structure like?" Lin Haoran asked after thinking for a moment.
Without needing much thought, Ma Shimin replied, "Boss, Hong Kong Telephone Company used to be ranked among the top 30 listed companies in Hong Kong.
However, due to the recent surge in real estate companies' market caps, its ranking has dropped slightly. It's now ranked 38th among listed companies in Hong Kong, with a market capitalization of about HK$2.4 billion. The stock price hovers between HK$26 and HK$26.5 per share.
Its internal management structure is similar to that of Hongkong Electric Holdings—professional managers run the company, and shareholders do not exert much direct control.
Currently, Jardines Matheson holds ten million shares, accounting for approximately 10.95% of the company, making us the second-largest shareholder.
The largest shareholder holds about 15.34 million shares, approximately 16.8%, and is a British national residing in Hong Kong.
If we aim to become the largest shareholder, it won't be difficult. However, if we want to gain control, we'll need to hold at least 30% of the shares.
Moreover, under the new merger and acquisition regulations implemented by the Hong Kong Securities and Futures Commission, once a shareholding exceeds 35%, a mandatory takeover bid is triggered."
Lin Haoran nodded, satisfied with Ma Shimin's thorough report.
"In that case, you'll aim to acquire up to 34.9% of the shares.
Jardines Matheson is known for swift acquisitions—you've worked there for years, and I trust you're skilled in this approach.
I want you to complete the acquisition of Hong Kong Telephone Company as quickly as possible. Afterward, you will manage the company and oversee the joint venture project with Motorola," Lin Haoran instructed after a brief pause.
As the boss, there was no need for him to handle everything personally. Negotiated tasks were best delegated to capable subordinates.
"Rest assured, Boss, leave it to me.
With the current state of Hong Kong Telephone Company's shares, once we launch a swift and decisive acquisition, it won't escape our grasp!" Ma Shimin said with full confidence.
Indeed, that was the reality.
With Jardines Matheson already holding 10.95% of Hong Kong Telephone Company, it only needed an additional 24% to reach 34.9%.
Given the company's current market cap of about HK$2.4 billion, it meant that acquiring another 24% would require about HK$600 million—a completely manageable amount.
Once achieved, Jardines Matheson's controlling stake would leave the board with no choice but to listen to Lin Haoran's directives.
Thus, Hong Kong Telephone Company would be firmly under Jardines Matheson's control.
After discussing for nearly half an hour, Lin Haoran finally hung up the phone.
He had been in the U.S. for more than two weeks, and with most matters at Global Investment Company already sorted, it was time for him to return to Hong Kong.
Life in America had been quite boring for him. Worse still, with so many people legally carrying guns and his personal security team unable to guarantee 100% safety as they could back in Hong Kong, he had spent most of his time confined to his hotel.
That only made his time in the U.S. feel even duller.
Thus, after wrapping up his conversation with Ma Shimin, he decided he would return to Hong Kong in a couple of days.
Meanwhile, back in Hong Kong, under Lin Haoran's orders, Ma Shimin quickly mobilized.
He knew very well that this acquisition wasn't just a major shift for Hong Kong Telephone Company but a key step in expanding Jardines Matheson's business and strengthening its corporate power.
After separating from Jardines Matheson, diversifying operations was an inevitable path for the group.
Acquiring Hong Kong Telephone Company would significantly strengthen the group's portfolio.
More importantly, Hong Kong Telephone Company was a safe investment—it was a consistently profitable business.
Thus, Ma Shimin convened an urgent meeting with Jardines Matheson's financial, legal, and investment banking teams.
During the meeting, he laid out the acquisition plan in detail and assigned tasks:
The finance team was tasked with ensuring sufficient funding for the acquisition;The legal team was responsible for reviewing all legal documentation to guarantee compliance;The investment banking team was responsible for updating valuation models, devising acquisition strategies, and identifying the perfect moment for a decisive strike.
The next day, on December 26, Ma Shimin sat in his office.
With preparations complete, the secret acquisition began that day.
Under Lin Haoran's instructions, a team from Global Investment Company's Hong Kong branch was urgently dispatched to assist Jardines Matheson with the acquisition.
With this team's involvement, Jardines Matheson's efforts gained a powerful boost.
The team brought rich market experience and precise data analysis, providing strong support for the acquisition's execution.
According to their research, on the previous trading day, the closing price was HK$26.21 per share.
Before the market opened, the operations team found that there were about 14.38 million shares available for sale below HK$30 per share.
Their target was to acquire an additional 21.87 million shares. Combined with their existing 10 million shares, they would reach the 34.9% ownership threshold and complete the acquisition of Hong Kong Telephone Company.
In other words, if they launched a swift and overwhelming attack at the market's opening, and if successful, they would only need to gradually absorb another 7 million shares to meet their goal.
The task was challenging, but with Jardines Matheson's current financial strength, it was entirely feasible.
As long as their strategy was sharp and execution precise, success was nearly guaranteed.
Even if they didn't hit 100% of the target on the first day, they would be extremely close.
Once achieved, with their dominant shareholding, no other shareholder would be able to challenge Jardines Matheson's control over Hong Kong Telephone Company.
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