Chapter 181: Preparation for Acquisition

While Xiao Ran and Lin Qingxia were on their honeymoon, Shadow and its subsidiaries were extremely busy. Wei Dongling was swamped with work—first acquiring Dolby Laboratories for 20 million dollars, and then turning his attention to Lucas’s Light Magic and Skywalker.

The negotiations with Old Lu didn’t go smoothly. The only fortunate aspect was that Lucas Corporation was at its lowest ebb, with other major shareholders highly dissatisfied with its performance, despite Skywalker still having a solid market presence. Most shareholders, after negotiating with Wei Dongling, were persuaded to sell their shares for 200 million dollars, giving him 42% control.

The only one left to deal with was Old Lu. Yet this stubborn man refused to sell under any circumstances. Wei Dongling understood—no one would be happy to hand over something they had built from scratch. But understanding didn’t mean the deal couldn’t still be closed. By the time Xiao Ran returned, however, the deal still hadn’t been finalized.

In fact, Wei Dongling couldn’t understand Xiao Ran’s determination to fully acquire Light Magic and Skywalker. He understood the idea of full acquisition itself—Xiao Ran had an indescribable desire for control, unwilling to let it fall into others’ hands. But everyone who achieved great things had such a desire for control.

This might explain why Xiao Ran preferred to take out mortgages rather than seek financing from large conglomerates. A typical example was Yin Du, which tried to secure financing, but Xiao Ran rejected it outright, even declining offers from Changshi.

What Wei Dongling couldn’t understand was how Xiao Ran could be so confident that computers would mature rapidly within three years and become one of the main tools in film production. Though he didn’t understand it, he still trusted Xiao Ran’s decisions, as Xiao Ran seemed to have no record of failed decisions.

Take karaoke, for example. It had existed for a long time before it became popular, yet no one could have imagined it would be so profitable. Within just three months, the sales report submitted by Dongli shocked Wei Dongling—sales had reached 1 billion dollars, with profits as high as 400 million dollars, not including the profits of manufacturers.

But thinking about it, it made sense—after all, Dongli held the patent, which was an undeniable fact. The funds from acquiring Dolby and Old Lu’s shares were used for this. What Wei Dongling didn’t expect even more was that, just two years later, global karaoke sales in 1991 reached 18 billion dollars, with Dongli earning 3 billion dollars in profits that year.

This fully aligned with market trends—new innovations always brought huge profits at first, followed by gradually declining profits. As the year neared its end, Dell’s stock soared, earning Shadow at least 3.5 billion Hong Kong dollars so far.

It was 1988. After hearing from Fang Xiaoqiang that Berkshire Hathaway had gone public in New York, Xiao Ran spent a long time pondering before realizing it was the company of Warren Buffett, the “Oracle of Omaha.” He immediately invested about 80 million dollars and managed to secure a roughly 10% controlling stake before the IPO. The company lived up to Xiao Ran’s expectations, increasing in value by about three times within a year. Aside from Cisco, which remained stagnant, the stocks of these two companies alone added about 5 billion Hong Kong dollars to Phantom’s wealth. With this precedent, Wei Dongling felt no reason to doubt Xiao Ran’s judgment. Though everything seemed incredible, he still worked hard on it. It was a pity that Classmate Lu was so stubborn—there was nothing to do about it. In the second half of the year, Phantom slowed down its aggressive expansion and focused on stabilizing its interests. The subsidiaries were performing well, especially ATV, which was now being prepared for an IPO under Wei Dongling and Xiao Ran’s guidance. The only thing that annoyed Wei Dongling was the computer department, which seemed to be burning money at an alarming rate. This year, another 1.8 billion dollars was invested in purchasing all necessary equipment, such as super graphic production stations, and even top American experts were hired, yet no results were achieved. Wei Dongling believed this was Xiao Ran’s biggest mistake so far—creating such a huge expense without a clear purpose, as no amount of money could cover it. Still, sometimes he thought that with Xiao Ran’s judgment, it was unlikely he would waste money here. Of course, he didn’t understand that Xiao Ran wanted completely proprietary technology. Just as he was investing heavily in post-production, he wanted them to develop their own technology no matter what, even if it meant spending a lot of money. In the future, mastering technology meant mastering the world. Of course, patents would be applied for globally, and Xiao Ran would definitely not repeat the mistakes made in the mainland. The key was to be cautious with spending, waiting until the stocks of Dell, Cisco, Microsoft, or Berkshire Hathaway rose, after which he wouldn’t mind them spending as much as they wanted. However, it couldn’t be said that this spending was completely worthless—at least in terms of special effects, they could now compete with Hollywood. Otherwise, how could the wall-penetrating scenes in “Ghost” have been created? It was just that further development had hit a bottleneck; in fact, computer effects worldwide were at an unprecedented low at that time. On November 1st, the couple on their month-long honeymoon finally returned to Hong Kong. They had enjoyed their time together, but were immediately caught by Wei Dongling, who extorted a Ferrari from them. Wei Dongling really loved cars—this might have been one of his more passionate interests.

After adjusting to the time difference, Xiao Ran went to see Rong Xiaoyi and Lin Yongqiang on the third day. Lin Yongqiang was now quite skilled at business intelligence. The Tianxia Fund was doing well, with assets already reaching 1.4 billion. Although he needed money for aggressive acquisitions, he hadn’t used any of the funds there yet.

Upon arriving at the office of the Shadow Board’s chairman, Xiao Ran felt quite confident for a while. But when he remembered that the damned board consisted only of Wei Dongling and Fang Xiaoqiang, he found it uninteresting. After summoning Tang Yan and Wei Dongling and asking about the situation, his fingers began tapping rapidly, as if little people were dancing on his legs.

“Since Lucas doesn’t want to sell, then we’ll make him sell!” Xiao Ran smiled eerily. Business was like that—to grow, one had to harm others’ interests. After thinking for a moment, he asked, “How much liquid capital does Dongli and Shadow have right now?”

“Since President Xiao gave us advance notice, I started preparing half a year ago,” Tang Yan replied casually, showing good memory. “We’ve made about 430 million dollars from karaoke, and after selling off other stocks and unnecessary real estate, we have another 100 million dollars. Last time, President Wei took 200 million from me, so now we have 330 million left!”

“Shadow also has 3.2 billion Hong Kong dollars. After deducting necessary liquid capital, 2.4 billion can be used!” Wei Dongling, clearly guessing what Xiao Ran wanted to do, answered with a chuckle.

“Dongli can keep 80 million dollars. That adds up to just over 500 million in total.” Xiao Ran found it amusing. He still wanted to acquire a film company, yet he couldn’t even handle Old Lu, and all he could raise was 500 million dollars!

Xiao Ran hadn’t thought carefully—Shadow’s market value last year was only about 1 billion dollars. The fact that they could have 500 million dollars in liquid capital without borrowing was already extremely rare, especially since they hadn’t used the funds of their subsidiaries and some of their assets were tied up in stocks like Microsoft’s.

“However…” Tang Yan grinned, thinking that although the sales profits from karaoke over the past half year had been limited, there were also agency fees from other companies, which were quite substantial. “However, we still have 200 million dollars from the karaoke production patents!”

Xiao Ran was stunned. He hadn’t expected to be tricked by this foreigner. He couldn’t help but laugh with Wei Dongling. In fact, Xiao Ran could have used loans for the acquisition. Just Dell alone might have approved a loan of 1 or 2 billion dollars. But since Dell’s value was rising, he decided to use the loan at a critical moment.

Three days later, accompanied by his entourage, Xiao Ran went to California. He had visited many countries in Europe but had never been to the United States before. This time, he didn’t contact anyone and arrived quietly, accompanied only by Yang Guanghe, Monkey, An Yuxuan, and others.

California was the most famous state in the U.S., probably even more famous than New York, thanks to Hollywood. However, Industrial Light & Magic’s address wasn’t in Hollywood but at the famous Skywalker Ranch in San Francisco.

Although Phantom had a branch in California, it was located in Los Angeles, so no one there was informed about this trip. It wasn’t easy to arrange a meeting with Mr. Lu, but he clearly was very interested in this mysterious guest from the distant East. After some secret efforts, Xiao Ran managed to meet this top-notch expert obsessed with technology without much trouble.

Lucas was still quite young—well, compared to more than a decade later, at least. But in Xiao Ran’s eyes, foreigners always seemed a bit older. In Lucas’s office, the two of them sized each other up.

A myriad of thoughts flashed through Xiao Ran’s mind. If he could get Lucas to join the Hong Kong film industry, it would be a devastating blow to American films. Unfortunately, such an idea was clearly unrealistic. First of all, the pay was an issue—currently, Hong Kong films offered far less than Hollywood, not even as much as European films. How could that attract anyone? Of course, equally important were the opportunities for growth and the overall quality of Hong Kong’s film industry.

Thinking about these things now seemed somewhat untimely, so Xiao Ran quickly focused his attention. He spoke to this old man who had made a living through Star Wars in already fluent English, “Mr. Lucas, hello! It’s great to meet you!”

Lucas found it very strange. Why were the Orientals so interested in his company? And why did it seem that Orientals liked to make acquisitions in the U.S. lately? Didn’t this man know that Sony’s purchase of Columbia almost caused riots in the U.S. in the first half of the year?

Xiao Ran, of course, knew. But Lucasfilm and Skywalker weren’t Columbia—he only wanted to acquire those two, not Lucas himself. So he said politely, “May I call you George? Well, George, you know I already control 40% of your company’s shares. You should also realize how serious things would be if I decided to go against you from this position!”

Xiao Ran wasn’t worried. With his current 40% stake, even a split with Mr. Lu would yield him significant benefits. Of course, his goal wasn’t to split from Lucas but to acquire both Lucasfilm and Skywalker outright.

Lucas’s expression changed slightly. He currently held only 51% of the shares, which gave him decisive power in company decisions. But he knew well that if Xiao Ran was determined to lose that money, it could still put him in crisis.

Don’t assume that just because Lucas created Lucasfilm and Skywalker that they were his wholly owned companies. Americans tend to use financing to avoid risks. Unless it’s a very certain deal, they usually need financing. Mr. Lu had also used financing to start his company, which allowed Xiao Ran to acquire 40% of the shares. This clearly troubled Lucas greatly. He felt that this man, with his straightforward yet vicious tactics, had pushed him into a corner.

“Mr. Xiao…” It was probably the second time in Lucas’s life he had pronounced those characters this way, and it felt awkward. There was a determined look on his face, which made Xiao Ran immediately realize things were bad: “You don’t need to threaten me. I don’t understand why you’re trying to acquire it outright. But I’m telling you clearly—Guangmo will definitely make you a fortune in the future!”
Really? Xiao Ran widened his eyes, his disbelief evident. From the tone, it seemed Lucas intended to persuade Xiao Ran instead, to keep investing so that Guangmo could get through the current difficulties.
Lucas indeed planned to persuade Xiao Ran to secure more investment. He suddenly thought that Orientals might be very wealthy, and failing to take advantage of that would be a waste of his parents’ efforts. “You know, Guangmo is indeed in a very awkward position right now. But I believe just one more investment will be enough to help Guangmo break through this situation and earn a lot of money for all of us! Please trust me.”
Xiao Ran admired Americans greatly. This man had come to discuss an acquisition, yet Lucas still wanted to get investment from him. He couldn’t help but admire the Americans’ entrepreneurial spirit—despite knowing it might not work, they still couldn’t resist trying.
Thinking of this, he couldn’t help but laugh, so heartily that even Lucas, sitting behind the table, was stunned…