Chapter 368 Hitting a wall

Chapter 368 Hitting a wall

Chapter 368 Hitting a wall
Silicon Carbon Group and Proton Group have been discussing the acquisition of Lotus Engineering for nearly half a month.

At the beginning, Yu Xing communicated through the middleman Ma Manfan. Later, when both parties confirmed that they had real interest in buying and selling, they changed to contact and negotiation between the groups.

Lotus Engineering is an independent business under Proton and is a positive asset compared to the Lotus sports car which continues to suffer losses.

Naturally, the Proton Group is unwilling to sell its positive assets easily and only keep the non-performing assets.

Therefore, the two sides contacted each other on various plans. Finally, Proton cautiously proposed a possible transaction centered on Lotus Group, not selling 100% of the shares, but selling part of the shares of Lotus Group.

During this nearly half a month, the Proton Group was both twisted and reserved, but in the end it actually proposed the sale of the Lotus Group. This greatly surprised the person in charge of the matter, who reported it to Yu Xing immediately.

Yu Xing was not surprised by this. Apart from the overall losses of the Lotus Group, the long period of 16 years since the acquisition was undoubtedly a kind of mental wear and tear.

Proton must have been extremely ambitious when it acquired Lotus, but the losses have lasted not for one, two or three years, but for a full 16 years up to now!
During this long period of time, the core management has undergone at least four changes. The group itself has gradually become privately owned from state-owned assets. This year, the group's CEO was just replaced due to performance issues. The new president, Camille, is facing considerable pressure. It is understandable why he is willing to take action against the financial black hole of Lotus Group.

Yu Xing’s response to Proton Group was simple and direct – not enough money to buy it.

The other party sounded like he had only one reason, but he actually had two reasons. He really did not have enough money, and at this juncture he really could not take over the Lotus Group.

Because Carbon Silicon Group could not afford the funds for the acquisition, Yu Xing pledged half of his shares in Bai Xiaosheng and received US$40 million from HSBC at a pledge rate of 4800%.

All this money is not enough to acquire the Lotus Group. What's more, some funds must be reserved for other purposes. Moreover, at this moment, the most important thing for the Carbon Silicon Group is to succeed in making its own models first and it cannot be distracted by the Lotus sports car.

Yu Xing wanted to use the Lotus project to add icing on the cake for himself, not to take over the Lotus sports car to help the other party in time of need.

Based on this back-and-forth contact, the Vice President of Proton Group led a team to come to Shanghai in a low-key manner for the first formal contact.

According to Yu Xing's understanding, the theme of the other party's trip was probably - buy less and discuss it later.

Sure enough, the situation during this meeting was not beyond expectations.

According to Harrit, the vice president in charge, Silicon Carbon Group can reduce the acquisition ratio and only hold 40% to actually own the control of the internationally renowned Lotus sports car brand. At the same time, it is willing to bundle the sale of 10% of Lotus Engineering's shares.

40% Lotus Group + 10% Lotus Engineering, with a total bid of US$8000 million.

Yu Xing thought that this was an exorbitant demand and he also expressed his own idea. He wanted to buy 51% of Lotus Engineering. If the Proton Group really insisted, he could also get another 10% of the Lotus Group.

"Mr. Yu, we can't give up the control of Lotus Engineering. This is the technical core of our group, and this is a limit that cannot be crossed." Harriet gave a very serious and formal answer. "This 10% equity is the highest share we can give. If you really trust and need the experience of Lotus Engineering, we can sign a long-term cooperation agreement."

Proton Group wholly owns 100% of Lotus Engineering through its subsidiary, and has separated its equity from Lotus Group, which only holds 80%. The remaining 20% ​​of Lotus Group can be traced back to the acquisition in 1996. At that time, Italian Romano indirectly controlled Lotus Group by acquiring Bugatti, but was eventually forced to sell most of his shares due to financial pressure.

Romano's remaining 20% ​​stake has remained unchanged over the years.

Proton Group also attaches great importance to Lotus Engineering, otherwise it would not have made such a shareholding arrangement.

"Proton has acquired Lotus for so many years. If Lotus Engineering's technology could play such a big role, Proton Group would not have fallen into its current decline. Since you think the long-term cooperation agreement can take effect, you can sell me 51% of Lotus Engineering's shares, and then I will let Lotus Engineering sign a long-term cooperation agreement with you." Yu Xing insisted, "As for the so-called internationally renowned sports car brand, its market sales have proven its value."

"I can't say I have no interest in Lotus sports cars, but I'm not very interested now."

"If Lotus Engineering can provide good support to Silicon Carbon Group, we can cooperate on Lotus sports cars in the future. If Proton Group strongly requests, I can also buy 5% symbolically."

Yu Xing initially learned about Lotus Engineering from Hu Zhengnan, but Hu Zhengnan only vaguely knew that Lotus Engineering and Lotus Sports Cars belonged to the Proton Group. The specific equity structure of Proton's different companies was not fully understood until the Silicon Carbon Group had contact with the other party.

According to current estimates, Lotus Engineering's revenue last year was roughly US$900 million, and its gross profit margin would not exceed 30% compared with companies in the same industry. However, the significance of this technology cannot be measured solely by revenue.

Harriet shook her head repeatedly at the proposal of 51% Lotus Engineering + 5% Lotus Group and would never agree to such a design.

The 40%+10% and 51%+5% plans on both sides are very different.

Yu Xing insisted on the core of his plan. After chatting for a few sentences, he simply called it a day and no longer discussed the cooperation between the two parties. Instead, he invited the other party to have a good look around Shanghai.

He wasn't sure whether the other party would make concessions, but he was not in a hurry anyway.

Long-term cooperation agreements are not useless, but in addition to Lotus Engineering, there are other equally excellent companies in the industry.

Harriet was very calm and did not panic because of Yu Xing's handling of the matter. Instead, she carefully investigated the situation of the Carbon Silicon Group in Lingang.

Then... he saw Bangor, Thomas...

Ok……

Harriet was able to remain calm now, and firmly believed that Yu Xing was not short of money. Since Carbon Silicon Group could hire such top talents, it must have a lot of money.

He took people there for three days.

By the fourth day, Harriet felt that some communication was still needed to clarify her position, so she arranged a separate meeting through her secretary.

This time he took the initiative to show goodwill and reduced the sales ratio of Lotus Group to 35%, while the 10% of Lotus Engineering remained unchanged.

"Harriet, we have a conflict in strategic considerations. I still say that if Lotus Engineering was as important as you said, it would have helped Proton Group build a mid-to-high-end brand long ago. But now even Lotus sports cars have been made like that by you, Proton Group doesn't need Lotus Engineering any more." Yu Xing said, "As for the future, even the past and the present are not optimistic, so the future will be even more difficult."

When Harit heard Yu Xing's criticism of Proton Group, he couldn't help but said angrily: "Mr. Yu, shouldn't your words about Proton Group be more focused on your own company? Why did Carbon Silicon Group position itself as a mid-to-high-end car model from the beginning?"

"Because China's market is big enough, and because we have incubated a lot of technologies in the past few years, the industry chain has gradually matured." Yu Xing's emotions did not fluctuate. "I know that Proton and Mitsubishi have had a deep cooperation. I think compared with Lotus Engineering's technology, Mitsubishi may be a more suitable technical target for your cooperation."

Mitsubishi once held a 16% stake in Proton and provided important technical support, but terminated the cooperation after selling its shares due to its own financial crisis. Proton was forced to switch to independent research and development, which was not smooth.

"Lotus Engineering still has certain competitive advantages in the industry, but it is not essential to you. If you need it, it can still act as a technology provider."

Harriet was very unhappy after hearing what Yu Xing said.

He did not give in any more, ended the exchange early, and led the team back to Malaysia.

Yu Xing only had a little regret about this. This kind of cross-border acquisition and exchange is definitely not so easy to reach an agreement. Although the Proton Group is under great performance pressure, it is not impossible to maintain it. If...

A feeling of malice flashed through his mind, thinking that it would be great if he could create some extra pressure.

However, even if Guo Shanfeng was conscientious, this time it would not work, as the Proton Group had already been privatized and delisted. "Mr. Yu, wouldn't it be of great help to the Carbon Silicon Group to operate a well-known brand? If you really need money, you can always go to the bank to get it together." Zhang Suyang of IDG only found out that the two sides had not reached any agreement after the Proton group returned.

"What Carbon Silicon Group wants is the Lotus Project, the technology, not the burden. They insist on giving the burden. If they want to pay a premium for the technology alone, it may be too much." Yu Xing replied, "This is not so urgent. Mr. Zhang, is IDG willing to pay?"

Zhang Suyang smiled and said, "Whether IDG is willing to pay or not depends on what you, Mr. Yu, decide. We are getting more and more confused now. It all depends on what you, Mr. Yu, think. If you think it is really necessary, then we can pay some, and then we can work together to find a solution."

He is a spectator of F1 events and is very familiar with the Lotus brand. He was surprised and excited to see that Silicon Carbon Group actually had the opportunity to control Lotus.

"Okay, Mr. Zhang, if you say so, that's perfect..." Yu Xing stretched out his words a little, and then said, "There will be entrepreneurs coming from Silicon Valley in a few days. I'd like you to meet them and see if you can invest in them."

Zhang Suyang frowned and asked, "What do you do?"

Yu Xing said seriously: "I want to make laser radar."

Zhang Suyang subconsciously wanted to refuse when he heard this, but then he thought about Mr. Yu's formal recommendation and gave him some face: "What time is it? Is this Sunday okay?"

"Okay, Mr. Zhang, see you on Sunday." Yu Xing confirmed the time.

However, the "Hesai" trio who intended to start a business arrived in Shanghai on Friday night and were quite excited to meet Yu Xing in Lingang who was willing to help introduce investors.

Seeing that they didn't even have the time difference, Yu Xing, thinking that everyone's time was precious, took them directly to find Xu Xin of Today Capital.

Xu Xin had something to do, but when she saw Mr. Yu coming in person, she patiently gave him fifteen minutes of meeting time.

During this meeting, Li Yifan, who is more sociable, described the prospects and feasibility of the project.

However, Xu Xin listened to his description of lidar and easily crushed the rough entrepreneur with just a few sharp questions, making Li Yifan dejected before even fifteen minutes were up.

"Two minutes left." Xu Xin looked at his watch deliberately, then looked at Yu Xing with a half-smile, "Mr. Yu, do you have anything else to add?"

Yu Xing was silent for a few seconds, and could only say: "Mr. Xu, I think you have no patience."

He said to the bewildered trio, "Come on, I'll take you to Qiming Venture Partners."

Xu Xin said with a smile: "Hey, Mr. Yu, you even have to go to Qiming Venture Partners?"

Yu Xing ignored her and took the trio to find Hu Xubo of Qiming Venture Partners.

The relationship between Hu Xubo and Yu Xing had eased somewhat in the last M&A case, but it was still quite surprising that he brought people in to introduce financing in this way.

He has a lot of time, but...

Firstly, Hu Xubo was unfamiliar with lidar, secondly, he was wary of Yu Xing, and thirdly, he could not see anything special about the Hesai trio, so he ultimately gave a tactful negative opinion.

"Mr. Hu, do you really think that lidar has no future?" Yu Xing asked before leaving.

Hu Xubo said cautiously: "Maybe, but definitely not now, and the investment in research and development funds will also be huge."

Yu Xing and his team hit a wall twice in a row, and seeing the frustration of the trio, he could only comfort them: "Starting a business is like this. It is definitely not going to be favored by the majority of people, but as long as there are one or two people who are optimistic, that is enough. Have a good rest tonight. The day after tomorrow I will meet with Mr. Zhang from IDG. Mr. Zhang is a man of great courage and vision."

The Hesai trio accepted Mr. Yu’s experience sharing.

The next day, they had no special plans, so they just visited the Carbon Silicon Group in Lingang.

"What do you think of Carbon Silicon Group?" Li Yifan asked the calm and rational Sun Kai during dinner.

"It seems that Carbon Silicon Group will also face great pressure on R&D funding." Sun Kai said seriously, "I listened to their introduction of integrated die-casting technology. They even have to develop aluminum alloy materials themselves."

"They have to do their own research and development. This kind of integrated die-casting requires aluminum alloy to be heat-free. Otherwise, the deformation rate of the die-casting will definitely be high, and the scrap rate will also increase a lot. This will inevitably require innovation in materials." Xiang Shaoqing has engineering experience and gave his own evaluation, "It's quite bold."

Li Yifan nodded: "More courageous than I thought."

The three discussed their observations of the Carbon Silicon Group.

On Sunday, Zhang Suyang arrived in Lingang.

This was the third time that Yu Xing introduced a well-known investor to the Hesai trio.

Unfortunately, Zhang Suyang’s opinion is consistent with the previous two.

"Mr. Yu, the R&D pressure is huge, and I'm afraid it won't be profitable in a short time." Zhang Suyang had to refuse, "This doesn't fit our investment philosophy."

Yu Xing couldn't force IDG to invest, but he didn't expect to run into such a series of setbacks.

He looked at the disappointed trio, thought for a moment and said, "Well, I'll go to Red Falcon Capital, they'll be willing."

Red Falcon Capital can't fail, right?!

Well, Falcon Capital also...

Liu Wanying gave Boss Yu face. She did not say it directly to his face, but pulled him aside and said: "If you really want to invest, I can invest, but it's just a start-up investment. Hongshun cannot invest in the subsequent research and development. I'll be frank with you."

The Hesai trio didn't know what Mr. Liu and Mr. Yu were talking about, but they could guess the result just by looking at the action of pulling them aside.

That night, Yu Xing drove the three back to the hotel. On the way, he mentioned that Hongshun was willing to provide an angel investment, and then talked about the overtaking opportunities that advanced technology such as LiDAR could bring.

Just like the enhancement that integrated die-casting brings to the car body, once LiDAR is successful, it will inevitably lead to the improvement of automobile product strength. No matter how much each company improves due to its own strength, there will always be an improvement.

The Hesai trio was relatively silent.

Li Yifan saw the hotel and suddenly said, "Mr. Yu, it's too difficult to raise funds. Even if we get the angel round from Red Falcon, it will be difficult to continue raising funds. I wonder if Carbon Silicon Group has any plans for the research and development of LiDAR?"

When Yu Xing heard such obvious words, he couldn't help scratching his head. It's no use, it really is no use. Let Mitsubishi come out.

(End of this chapter)