King of Capital

Kalanick's strength cannot scare anyone. As he himself said, since both parties are sitting here at this moment, all words and actions are negotiation skills.

Rushing from Silicon Valley to Beijing overnight must have been a huge pressure.

Liu Qing adjusted his mentality and remained silent. Cheng Wei took over the leadership tacitly and spoke concisely in a Chinese English accent: "No more than 20% of the shares of the new company after the merger. This is the upper limit."

"My expectation was 40 percent, and Jim Goetz's expectation at the San Jose airport the other day was 35 percent, and now I'm here with a formal offer of 25 percent."

Kalanick seemed to have not just talked trash. He quickly regained his composure and seriously emphasized that the bottom price he offered was based on the consensus of Uber's board of directors.

For the first time in history, we established a physical branch, introduced local strategic financing, and spent one-third of the year traveling back and forth to mainland China.

He frequently and publicly courted this market, and even when the authorities required him to build domestic servers, he expressed several times that he was considering becoming a Chinese citizen.

The result was that Uber acquired a 16.8% market share at a cost of more than one billion US dollars, a situation that it had never encountered before in its global expansion since its founding several years ago.

To this day, despite the pressure from the board of directors, Didi's overseas development has been disrupted. Kalanick has considered voluntarily withdrawing from this market and leaving with 40% of the shares.

But when Uber China announced the completion of a new round of financing, it received a strategic investment counterattack from Apple just 72 hours later, which broke through the psychological price of him and the entire board of directors.

40% or 35%, such glorious surrender will not work, compete to the end.

That's why Jim Goetz took such drastic action. As a pure financial investor and one of the best venture capital institutions in the world, Sequoia could not afford to accept a star project that would make it difficult to exit and reap a return on investment.

The same is true for SoftBank's Masayoshi Son.

If the board of directors originally believed that Uber China was a high-quality asset that needed to be proactively disposed of, then after the interview between Jim Goetz and Xie Jingxing, this asset became a business segment that needed to be terminated in a timely manner.

Uber does not enjoy any premium rights, it is an arm's length transaction.

"Based on market share, Uber China holds 18% and you should be around 75%. After the merger, the two parties will hold 93% of the market share."

Kalanick frowned, paused, shook his head and added: "Doing a set of simple addition and division, Uber's 25% stake in the merged new company is an offer with objective fundamental support."

"The 5% difference is not reasonable," he pointed out the problem.

Cheng Wei was prepared to explain: "We have a disagreement on the market share of both parties."

"So from the perspective of the valuation of each company, with Didi as the acquirer and Uber China as the acquired, the market valuation of the new company after the merger should be around US$370 billion."

He also gave a calculation formula: "Our current valuation is $300 billion, and we need to bear a lot of costs during the merger process, including the management and operation responsibilities of the new company. A shareholding of more than 80% is a necessary condition."

Market share and valuation, the former tends to be the independent brand value of Uber China before the merger, while the latter focuses on the overall dominance of Didi as the acquirer after the merger.

There is no right or wrong in the two approaches, it’s just that both parties assume that after the merger, one plus one equals three for the new company.

The extra 5% share price difference is unclear and difficult to quantify, so the natural selection is based on the bidding logic that is beneficial to itself.

“After the merger, Uber Global will be able to provide strong support for Didi’s expansion into overseas markets and even its future listing in the United States. The significance of being a strategic shareholder far exceeds that of a financial investment.”

Kalanick explained: "To put it bluntly, the smaller Uber's global holdings, the lower the motivation for strategic cooperation with Didi."

"Didi's business boundaries have expanded to smart car manufacturing, and its first new energy vehicle is already under development."

Cheng Wei disagreed and said calmly: "After the merger, we will have a 93% market share. Such a stable market allows us to quickly create value-added services. The expected ultra-high growth curve in the future needs to be considered."

The two of them are talking to each other like a cow. You talk about the city gate tower and I talk about the hip axis. Either way, I don't respond to the other person's words and only talk about my own advantages.

After communicating for a long time, Kalanick took a deep breath and looked to one side: "I tried my best, but the differences between us are huge and it seems difficult to resolve."

"20% is the upper limit, and this will not change."

Liu Qing remained silent throughout the meeting, but now he spoke softly but firmly: "You came to China with a 25% offer, which is an important contribution to our meeting."

"In fact, I don't mean to emphasize anything, but I have to tell you that Didi has signed a strategic financing agreement with Apple yesterday and is ready for a long-term battle."

She said slowly with complicated meaning: "I think there must be room for us to bring them together so that the interests of both parties can be guaranteed. Let's do our best."

"..."

Kalanick shrugged, speechless: "What else can I say?"

Liu Qing lowered her head silently. She and Cheng Wei were more willing to acquire the company than the investors; with Uber, it was just the opposite, as the investors were more willing to merge.

When they met by chance in the elevator of San Jose Airport, Jim Goetz keenly saw the difference and arranged for Kalanick, the strong party, to negotiate with the weak party - giving an offer between the critical values.

The game between the two parties is full of uncontrollability, but she herself is relatively the most controllable one among them. Stability means losing bargaining power.

No matter how loudly you shout or how sincere your feelings are, not only will you be ignored, you will also be treated as an attack point and repeatedly ravaged and tested.

In short, Jim Goetz bets that Liu Qing would find it difficult to raise his middle finger to Kalanick and say, "See you funcking!" when faced with a fruit that he can pick by standing on tiptoe and stretching his arms as high as possible.

Therefore, she was a useless person as soon as she appeared on the scene in this confrontation, and could do nothing except meaninglessly repeating how fanatical Didi's shareholders were.

“25%. I can’t give up.”

Kalanick felt painful. This critical offer was the result of multiple rounds of bargaining between him and the board of directors. Even if he wanted to ruin the cooperation with his personal will, it would not be possible to deviate too far from this line.

The most important thing is to stand by the window of the hotel suite and look at the endless flow of cars on the road outside.

Didi and Uber China are burning money every minute and every second. The $5 million financing will be exhausted in more than a month. Uber's global board of directors will never agree to a transfusion easily, and results must be obtained before that.

“Can we find a balance through M&A transactions, such as Didi and Uber Global through cross-holdings?”

Amid the stalemate, Cheng Wei took a step back and compromised, proposing a solution to the problem.

Uber Global holds a 20% stake in Didi. Didi paid cash for its stake in Uber Global, shifting the negotiation on whether Uber China is worth 5% to how much Uber Global is worth.

"...a groundbreaking proposal." Kalanick was speechless for a moment, then thought for a moment and commented.

Cheng Wei asked expressionlessly: "What's your offer?"

"You tell me how much you want to invest, and then I decide how much share to give you." Kalanick was reluctant to reveal the price.

Cheng Wei looked at Liu Qing, they stared at each other in silence and both stood up. He shook his head: "You are not sincere."

Kalanick did not comment and gestured for invitation.

Cheng Wei strode away without hesitation, and Liu Qing followed silently behind him, suppressing his confused mood and closing the door.

"Click."

In the fire escape at the end of the hotel corridor, a lighter lit up, and the cigarette butt flickered and emitted light blue smoke. Cheng Wei held the cigarette between his fingertips, leaned against the wall, thought for a while and said, "Not bad. The Uber board of directors is very determined. Kalanick's insistence on 25% is meaningless."

As long as there is a reserve price, there will be a substantive negotiation range, and the subsequent fighting or negotiation will be more purposeful.

Kalanick brought the price offered by Didi back to Silicon Valley, and Uber's board of directors naturally responded. The M&A opportunities became more consistent in rounds of price exchanges.

Today's negotiations can be summarized in one sentence: the Americans are bending over and sincerely want to acquire the company, rather than robbing and playing the role of robbers.

"I'm really threatened by Xie Jingxing." Cheng Wei joked with a positive attitude.

Liu Qing bent her knees and hugged her legs as she sat on the stairs, her eyes slightly red as she buried her head in her arms: "I feel so sorry for you guys."

"Don't say that. Everyone wants to integrate the market." Cheng Wei comforted him while puffing on a cigarette.

In 2013, before Xie Jingxing bought shares, Zhu Xiaohu pushed him to sweep the Beijing market with the money-burning strategy.

After three years of burning money and raising nearly 10 billion US dollars in financing, the company seemed to be enjoying unlimited glory. However, from the moment of its merger with Kuaidi, Tencent and Alibaba understood the situation and gradually transformed from strategic investors to financial investors.

DST, Temasek, Sequoia China, Hillhouse Capital... The list of shareholders is so long that it cannot even be printed on an A4 paper. It includes many top financial institutions. Needless to say, they are always passionate about making money.

Fighting to the end is for making money, and merging is also for making money.

Now stuck at this point, the investors turned a deaf ear and watched Xie Jingxing's performance coldly in the hope of gaining the maximum benefit, and all the pressure was directed to him, Liu Qing and the entire management.

It is an indisputable fact that from their perspective, they would rather pay more costs and end the competition as soon as possible.

Didi's acquisition of Uber China will relieve financial pressure and allow it to focus on new businesses such as overseas markets, while also increasing the company's revenue and profits.

After receiving hundreds of billions of dollars in capital, what's wrong with wanting to make money for the capital as soon as possible?

Didi is worthy of everyone. After taking the last puff of cigarette into his lungs, Cheng Wei twisted his toes to crush the cigarette butt, thinking calmly in his heart.

"I just feel that Xie Jingxing helped Didi gain negotiation space, but I didn't make good use of it." Liu Qing's tears flowed and her voice was sour.

Cheng Wei said indifferently: "I'll find a chance to explain it to him later. He will understand."

"I feel really bad." Liu Qing was immersed in expressing his feelings.

Cheng Wei opened his mouth but no sound came out. It felt like whatever he said would be futile.

He didn't know how much personal feelings Liu Qing had, and how much of his emotions were due to pressure. If the merger was realized in the future, how should he show his cards to Xie Jingxing about the initial negotiation contact that was conducted secretly today?

By then, Young Master Xie will probably be furious...

Cheng Wei pulled the corners of his mouth to force a helpless self-deprecating face. If it rains, it will rain. If my mother wants to get married, let her do it.

"I'm fine. Let's go back to the company. I might be a little tired recently."

Liu Qing cried for a few minutes and then recovered and wiped the corners of her eyes with her hands.

Cheng Wei opened the fire escape door and said, "Take a few days off to make up for your annual leave."

"Do you have enough cash to invest in Uber?" Kalanick asked, standing in the corridor like a ghost.

Cheng Wei was slightly stunned, and Liu Qing turned her head away awkwardly, looking really embarrassed as she cried and put on makeup.

Kalanick, without caring about his reputation, explained as a matter of course: "Leaving the negotiation in the middle is a good technique. I think you really showed your utmost sincerity."

"In fact, at the end of the negotiation, when the price difference is within a reasonable range, the direction is often determined by attitude."

He stretched out his arms to the two competitors in front of him: "US$700 billion valuation, 14 billion, 2% stake."

"US$650 billion, 10 billion, 1.53% of the shares, and a seat on the board of directors."

"Why should we fuss over such a small difference? Leave everything to the negotiation team. There should be no other changes. Come on!" Kalanick rubbed his face with boredom.

Liu Qing's eyes lit up again, not caring about his image and said, "In an AB equity structure, Uber can only get a small portion of shares with 1:1 voting rights!"

"Damn, are you guys pushing it further?" Kalanick frowned.

Cheng Wei was firm and straightforward: "Didi's equity structure is dispersed. We are merging, not introducing a major shareholder. The price we offer for a 20% equity share already includes the AB equity structure."

"make a deal."

Kalanick didn't bother to argue and went back to his hotel room.

After the merger, Uber will become Didi's largest shareholder with a 20% stake. Obviously, it is impossible to give corresponding voting rights, but he has expected this.

Three years ago, Uber China’s Series A financing valuation was US$70 billion, and its Series B financing valuation was still US$70 billion. The Series C financing valuation a few days ago was US$70 billion.

Chinese shareholders are no longer keen on this overseas giant and no longer believe it can defeat Didi, so let them all hold voting rights and dilute the preferred shares.

Unable to conceal their excitement, Liu Qing and Cheng Wei walked out of the hotel side by side, got in the car and looked at each other. Inexplicably, their excitement gradually faded away, and a feeling of loss enveloped their hearts.

Next, it’s time to notify shareholders of the meeting.

…………

"Boom."

As the afternoon wore on and the sky grew darker, the door of the chairman's office at Didi headquarters slammed open, and Yan Wenhua walked in expressionlessly, accompanied by his secretary's repeated dissuasion.

"Mr. Cheng, is there anything wrong with my work?" he asked while standing in front of his desk.

Cheng Wei forced a smile and said, "You're overthinking it. Is it because of the board meeting just now?"

"I didn't know the company held a board meeting today."

Yan Wenhua turned around and looked at the employees who were crowded at the door, looking around and wondering what was going on. "You're not busy, are you?!"

"As the head of government public relations and general manager of the strategic development department, my people were temporarily transferred to the legal department to participate in the negotiation team. I was completely unaware of this. Isn't it right for me to ask where my work is not up to standard?" He was extremely angry with his eyes wide open.

Cheng Wei calmly explained, "We just had a board meeting and didn't have time to inform you. There's no need to be so anxious."

"What exactly is going on? Can you notify me now?" Yan Wenhua asked repeatedly.

Cheng Wei nodded and said, "We are going to acquire Uber China. Formal negotiations will begin tomorrow. For confidentiality reasons, we will not inform all management for the time being."

Yan Wenhua had nothing to say. (End of this chapter)