Investor That Can See The Future

Chapter 159

When I woke up, Chairman Im Jin-yong was looking at me with strange eyes.

“Why?”

“Oh, nothing. Come in.”

Ellie asked me in a low voice.

“Are you really okay?”

“of course.”

“You know what’s been weird since yesterday?”

I just wandered around

“Sometimes I just get dazed.”

What does it mean that Suseong Electronics is the second largest shareholder of Karos?

Currently, the largest shareholder of Karos is OTK Company, which owns 96% of the shares. Daryl then holds a 1.5 percent stake, with the remaining 2.5 percent shared by management.

In order for Seosung Electronics to become the second largest shareholder, it would have to allocate and issue new shares in front of Seosung Electronics or purchase the shares owned by OTK Company… … .

After seeing Yeji, I used to consult with Taekkyu, but now he is playing across the Pacific Ocean. Shall I make a phone call?

While thinking about various things, Chairman Im Jin-yong and Eli exchanged greetings.

“Nice to meet you. This is Im Jin-yong, Chairman of Suh Sung Electronics.”

“nice to meet you. This is Eli Kim, a lawyer from the legal team of the Golden Gate Korean branch.”

It’s the first time the two have met in person.

Of course, Eli knows Chairman Im Jin-yong. And it was the same with Chairman Im Jin-yong.

“I heard a lot about it. She said that she was from the Asian branch and came to the Korean branch with Hyun-Joo Oh, the branch manager. I know that you are playing a big role in OTK Company’s various investments.”

She knows quite a bit.

Ellie smiled and said.

“Thank you for saying that.”

Chairman Im Jin-yong led us inside.

“Come on, let’s go inside.”

Hank McDonnell, director of the Seosung Electronics Research Center, greeted us and showed us around the lab.

Everyone wore comfortable clothes and walked around freely. There were also several Koreans among the staff.

We toured the lab and received reports from the researchers.

All tests, including experimental driving, have already been completed, and only mass production remains. The problem is that there are several obstacles to this mass production.

“The technology announcement is in three days. We will also announce specific plans for the new car on the spot.”

As I listened, I thought about the wisdom I just saw.

Of course, that is why Chairman Im Jin-yong appeared here, right? If so, what are your suggestions?

Issuance of new shares allocated by a third party? Or a request to buy shares?

Despite spending so much money on the Herman acquisition and treasury stock buyback, Seosung Electronics still has close to 50 trillion won in cash. This is enough money to take over an entire automobile company.

Of course, I’m not going to sell Karos just because I give him that money.

Thinking to myself, I quickly got up from my seat.

“I’m going to the bathroom.”

I went to the bathroom, made sure there was no one inside, and then called Taek-gyu. It must be night in Korea, but he answered the phone right away.

[What’s up?]

“I’m in the lab right now… … .”

I told him that I met Chairman Im Jin-yong and about Yeji.

Taehyung said in surprise.

[Five! Is Seosung Electronics the 2nd largest shareholder? So they’re buying our shares?]

“It will be so. But money is not urgent right now, so there is no reason for me to sell my stake at this point. I would rather have issued bonds.”

[Then why don’t you make a proposal that will benefit us as well? Think back to Seoseong SB.]

“When it comes to Seoseong SB… … .”

At that moment, something popped into my mind.

“I think I have a rough idea of ​​what kind of offer you will make.”

[What?]

“I’ll tell you later.”

* * *

We sat in the meeting room and had coffee. Chairman Im Jin-yong looked out the window. As yesterday, the weather was sunny.

“Coming here after staying in Seoul, the air is definitely nice.”

“Is there a lot of fine dust these days?”

At my question, Chairman Im Jin-yong shook his head.

“of course. I don’t know when it started to become difficult to see the clear sky in Seoul. On severe days, it’s hard to tell if it’s Seoul or Beijing.”

I guess I didn’t come to America to catch the wind.

He is the chairman of Suseong Group. Not only Seosung Electronics, but also affiliates to take care of.

You must be busy with important schedules, but the fact that you are here means that you have a good reason.

Chairman Im Jin-yong took a sneak peek.

“I have something to tell you. I wish we could talk separately… … .”

“I’m going out.”

I grabbed Ellie as she was about to get up. And he said to Chairman Im Jin-yong.

“It’s okay, you can just tell me.”

Chairman Im Jin-yong looked at Ellie with a slightly startled expression. Then he looked surprised, as if he had noticed something.

“Maybe two minutes… … ?”

“You are probably right.”

Chairman Im Jin-yong burst into laughter at my words.

“Haha, this is amazing. I thought you were only working, but in the meantime, you must have been dating.”

“I ask you to keep it a secret.”

I’m not a celebrity, and I don’t want my private life to go up and down in the media. It must be a hindrance to Ellie’s work.

“of course. Anyway, congratulations.”

Chairman Im Jin-yong is one of the youngest among the chaebol presidents, but he must have been thoroughly educated to inherit the group from an early age. On the other hand, I studied business administration for a year and a half.

Of course, my overall management and negotiation skills are not comparable to mine. Appearing here without prior notice is probably one of the strategies to lead the negotiations to an advantage.

However, if you know in advance what your opponent will offer, you can come up with a countermeasure.

Chairman Im Jin-yong brought out his words.

“The biggest problem in mass production of autonomous driving hardware is the price. We tried to lower the unit price through modularization, but at the moment, it is unreasonable to go below $30,000.”

Compared to the cost of more than 100,000 dollars for the equipment installed in the experimental vehicle, it is less than a third of the price… … .

“It’s literally the price of a car.”

“The price of various sensors such as 3D cameras, lidar, radar, and ultrasound is high, and the price of AP and semiconductors is not cheap.”

Everyone knows that autonomous driving is a good technology. But in order to sell a product, you have to offer a realistic price.

“Is there any way to lower the price further?”

“There are two ways. The first is to establish a mass production system through large-scale facility investment, and the second is for Suseong Electronics to give up some of its margins. Then we could go down to $15,000. But to do that, we need to be convinced that the two companies will continue to work together.”

I know what you’re trying to say, but I pretended I didn’t understand.

“Do you want a long-term contract or an exclusive contract?”

“I am thinking more than that.”

“What is it?”

Chairman Im Jin-yong looked at me and said.

“I would like to propose an exchange of shares between Suseong Electronics and Carlos.”

“… … .”

Also!

* * *

Seosung Electronics made more than 40 trillion won in operating profit last year alone. This is a level within a few fingers among all companies in the world.

As a result of the large-scale buyback of treasury stocks on several occasions for shareholder return, the company now owns a whopping 13 percent of its common stock as treasury stock.

At first, the prevailing opinion was that the treasury stock would be used for conversion to a holding company. However, there was no need to do so with the group already in full control.

Chairman Im Jin-yong also announced several times that he would not split the business division or switch to a holding company.

Therefore, internal opinions were divided over how to utilize treasury stock.

What shareholders want the most is incineration. This is because if you cancel your treasury shares, you can increase the value per share without paying a penny in taxes.

But are you going to use the treasury stock to buy a stake in Karos now?

In this case, Chairman Im Jin-yong has two advantages. The first is that you can get a stake in Karos without spending money right away, and the second is that you can secure a friendly stake equal to the amount of treasury stock you hand over.

It’s not a bad thing for us either. If it’s Seosung Electronics’ stock, it’s well worth it.

What matters is the exchange rate. The value of Seosung Electronics has already been set by the market. The stock price of Seosung Electronics fell after hitting an all-time high of 2.61 million won and is now around 2.3 million won. In terms of market capitalization, about 300 trillion won. (Based on common stock, it increases to 330 trillion won if preferred stock is included)

So, how much is Karos worth?

“Good suggestion, but what do you think of the ratio?”

Chairman Im Jin-yong said as if he had been waiting.

“I would like to secure a 30% stake in Karos with a treasury share of 7.5% in Seosung Electronics with a 1 to 4 share exchange ratio.”

This meant that the value of Carlos was judged at a quarter of that of Seosung Electronics, that is, 75 trillion won. This is a scale that exceeds GM’s market cap as well as Nikola’s.

Considering that I have invested about 30 trillion won so far, it is a premium of 45 trillion won.

This is a more generous offer than expected. Ellie looked a little surprised.

I pretended to think, then she said.

“I agree with your suggestion, but I think we need to think about the proportions a bit.”

Chairman Im Jin-yong said as he tapped the table with his finger.

“is that so? In fact, the ratio of 1 to 4 is too much from my point of view. It is doubtful whether shareholders will agree.”(Read more @ wuxiax.com)

Is that true?

Of course, Chairman Im Jin-yong would not have made such a proposal considering me. It must be because he decided that it would be beneficial to himself and Suh Seong-e.

Decision-making is made in a top-down manner in the chaebol management system. Therefore, the will of the president is the most important.

If so, to what extent is Chairman Im Jin-yong’s will?

I remembered Yeji I saw earlier.

If you know the outcome in advance, you can lead the negotiation in a more favorable way.

“How about 1v2?”

At my words, Chairman Im Jin-yong made an absurd expression on his face.

“Are you serious?”

“of course.”

“If the ratio is 1 to 2, Karos is 150 trillion, do you really think it’s worth it?”

“Not now, but the future will be different. Nikola, who can’t sell 100,000 cars a year, is similar to GM and market cap that sells 10 million cars a year. Isn’t this because Nikola’s future value is highly valued? The same goes for Carlos.”

Even if an internal combustion locomotive is changed to an electric vehicle, it is difficult for drivers to find anything other than reduced fuel costs and a change in charging method.

But once the car you’ve been driving yourself starts to move on its own, a lot will change.

I added a word.

“Besides, unlike Nikola, we have enough production capacity.”

Currently, Nikola is unable to get out of production hell. No matter how well a product sells, it is of no use if it cannot be produced.

Chairman Im Jin-yong said confidently.

“For the commercialization of autonomous driving, hardware performance must be supported. Seosung Electronics will be the only company in the world with cutting-edge technology and a vertically integrated mass production system.”

Realistically, it is difficult to find a better partner than Seosung Electronics. So even the competitor, NPL, must be relying on Suseong Electronics for parts.

Although Suseong Electronics is the world’s largest IT manufacturer, it does not have its own software. So, it’s not the first time I’ve been dragged by a software company.

Right now, Suseong Electronics is making and marketing products with only smartphones, but it is Gubble that makes money from various app fees.

That is why they are trying to take some ownership of the software that Karos owns through a share exchange.

In any case, exchanging shares is a way to build a solid trust relationship. However, I do not intend to be dragged into negotiations.

I leaned back and said.

“NPL makes its own PCs and smartphones with its own OS. But Gubble and Microsoft are taking a strategy to sell the OS to hardware vendors or consumers.”

There is no right answer as to which one is correct.

I said with a smile.

“If we say that we will supply autonomous driving software, there will not be one or two companies who will make their own cars.”

It was said that there was no need to insist on cooperation with Suseong Electronics.

Chairman Im Jin-yong smiled, but he had eyes that seemed to have been stabbed.