King of Capital

I couldn't sleep all night. The hotel room was filled with a strong smell of cigarettes, and the ashtray on the coffee table in the living room was full of ashes.

Chen Xi walked closer slowly, but faced with a situation that had never happened before, he didn't know how to start the conversation.

"Is it time? Help me prepare my clothes."

Xie Jing Xing cleared his throat and stood up to wash up. A light green stubble grew on his young face, making him look more mature than yesterday.

It was chilly in spring, the fabric of the suit was thick and crisp, and the shirt collar with gold collar stays was flat and heavy.

Chen Xi thought about it and put the silver Dupont lighter into his shirt pocket.

Due to confidentiality requirements, the temporary shareholders' meeting rented a hotel venue. On the way to the corresponding floor, Xie Jingxing met many participants one after another.

In addition to familiar faces such as Liu Chi-ping, there are also early fast investors led by Matrix Partners China, mid-term top financial investors such as Temasek, and a series of state-owned and strategic shareholders such as China Investment Corporation, Ping An, and BAIC.

Didi Chairman Cheng Wei and President Jean Liu presided over the meeting, and seven senior vice presidents from various business lines attended the meeting.

The entire management team sat horizontally, facing dozens of shareholders in two rows on the left and right.

"Mr. Xie, please." Liu Chih-Ping gestured.

Xie Jingxing said softly, "Thank you." He sat in the first seat on the left, Zhu Xiaohu sat in the first seat on the right, and Alibaba's Peng Lei sat in the second seat. The two looked at each other and nodded slightly.

The nameplates on the seats in the venue were broken by a strange tacit understanding.

The pro-war faction and the pro-peace faction; financial investors and strategic investors; major shareholders and minority shareholders; establishment faction and anti-establishment faction.

Regarding the proposal to acquire Uber China, the resolution itself only has two options: Agree/Disagree, but the voters are by no means binary. Everyone present has complex things to say.

"Due to the force majeure of policy supervision and the ever-changing market competition situation, there is a certain information gap in real-time communication when making strategic decisions within the company."

After Cheng Wei's brief opening remarks, without waiting for shareholders to raise questions, Liu Qing took the lead in speaking to confirm the facts.

She sincerely read the manuscript to explain the problem and proposed a solution: "After a full discussion at an overnight meeting, the management team carefully considered and decided to adjust the offer for the acquisition of Uber China based on possible changes in market supervision in the future."

“We will do our utmost to safeguard the collective interests of shareholders and inject new impetus into Didi’s strategic development.”

The problem lies externally and does not affect the correctness of the acquisition of Uber China. The management will lower the price again.

Liu Qing basically summarized the questions that Xie Jingxing or the tough shareholders might raise, trying to nail the key point on the acquisition plan.

"Boss Liu, do you have anything else to add?"

The representative of CIC shareholders is a typical senior institutional investor, about 50 years old and gentle. After confirming with Liu Qing, he held the microphone and looked around the audience: "First of all, thank you all for giving me the opportunity to speak."

"I want to remind you that this is a shareholders' meeting. Every word spoken here today will be recorded and everyone must be responsible for their speech!"

He leaned forward and leaned on the table: "Before the meeting started, President Cheng personally handed me paper materials related to the topic. It's no exaggeration to say that the materials were still warm from being printed out."

"The board of directors only notified the extraordinary shareholders meeting one day in advance. A few hours later, there was a miscommunication within the management team, and they held a meeting overnight to overturn the proposal that had been voted on by the board of directors."

He shook a thick paper document in his hand and asked seriously, "I can't help but ask, how did the management make a careful deliberation in one night? How do you plan to let all shareholders make a correct judgment and vote on your work in such a short time?"

"I don't have time to read this document in its entirety, and I would rather read the minutes of yesterday's board meeting. From the board to the management, have you fulfilled the most basic professional ethics, and is corporate compliance guaranteed?"

The representative of CIC shareholders put down the documents in their hands and said that the failure of compliant investments was a normal business behavior, while the failure of illegal investments was a loss of state-owned assets.

The entire Didi management decision-making level disregards small and medium shareholders, and changes decisions at will. Who should be held accountable?
He didn't care about the merger plan itself, but he couldn't vote on it so rashly and without any prior knowledge.

"First, Uber took the initiative to express its initial intention to acquire Didi. On February 2, the second day of the Chinese New Year, CEO Xie and CEO Liu went on a business trip to Silicon Valley to meet with Uber director Jim Goetz, and during that time Apple completed its strategic financing of Didi."

Cheng Wei responded calmly: "Second, the company has been facing intense market competition for a long time, and usually we don't have enough time to make decisions."

"The proposals presented to shareholders today reflect the full commitment of management and the board of directors to all correct decisions made in the past."

Didi has been like this for three or four years since its establishment. Why didn't people question it before?
Now, due to the information gap caused by uncontrollable regulatory factors, they have jumped out to take the blame and implicitly accused the management of acting rashly.

I started working overtime on the second day of the Chinese New Year. Three days ago, you were the first fucking one to vote in favor of the shareholder vote on Apple's strategic investment. You were more active than anyone else!
Apple, $300 billion valuation, $15 billion strategic investment.

Cheng Wei brought up the high-quality financing that was currently in the process of executing a transaction, which made it difficult for everyone present to refute, but it was not convincing.

The so-called questioning of compliance is essentially the shareholders' loss of confidence in the management organization, rather than a specific incident.

Everyone knows that the senior vice president who sent out a mass email yesterday to inform of the regulatory changes is a good friend of Xie Jingxing.

Does the occurrence of such a serious and drastic mistake mean that the current power structure of management and the board of directors is on the verge of collapse? Otherwise, shouldn’t the removal of a few people be considered as a priority?

If the trust value is 10 points, shareholders could previously give management and the board of directors nine points, but now the maximum is six points, which has nothing to do with M&A transactions.

“Compliance is only one aspect.”

At the stalemate, Zhu Xiaohu took over the conversation and looked at the documents in his hand: "I read the minutes of yesterday's board meeting and the merger and acquisition plan."

"I read things quickly, and of course I didn't sleep all night, and I could barely keep up with the hard work pace of the company's management."

He joked to ease the atmosphere but no one followed suit and automatically skipped over it without taking it seriously: "I will help those who haven't finished reading this merger proposal. It will be no more than 20% of the shares, plus a strategic investment of up to 2% of Uber Global's shares."

"I'd like to ask how this price is calculated?" Zhu Xiaohu spoke slowly and in a very colloquial tone.

Liu Qing was well prepared: "The share ratio will be converted based on the overall valuation of Didi and Uber China."

"Didi is valued at $300 billion, Uber China at $70 billion. They hold a 20% stake, and cross-hold shares, and get a seat on Uber Global's board of directors."

Zhu Xiaohu concluded seriously and asked: "If Uber holds 20% of the shares and becomes the largest shareholder, how can the company's control be guaranteed?"

"We adopt the AB share structure, giving Uber a voting stake of no more than 5%, and the remaining shares only have the right to income."

As Liu Qing was speaking, he couldn't help but cast his gaze towards Xie Jingxing, only to see that he was listening quietly, like a stone Buddha, without any ripples.

"In other words, Didi is equivalent to acquiring Uber China."

Zhu Xiaohu thought and analyzed: "If we use shares to pay for the transaction, not only will there be no premium, but these shares will not have voting rights."

"Comrades, this proves one thing: peace is won through fighting, not negotiation! With the regulatory changes, we now have more capital to fight for it. So, if it is reflected in the acquisition, can we get a more favorable price?" He asked with emotion. Liu Qing aimed his eyes at Xie Jingxing: "I mentioned in my speech just now that the company has adjusted the M&A plan in a timely manner. Mr. Yan Wenhua, senior vice president of the Strategic Development Department, will serve as the head of the M&A negotiation team to evaluate the value of this M&A based on the regulatory changes."

"This move is reasonable. I have no problem with it for now." Zhu Xiaohu stopped there and restrained his attitude.

The old bastard is a coward. He supports mergers and acquisitions to end competition as soon as possible and wants to gain more advantages. He is acting crazy and stupid here!
In the corner, a middle-aged woman with wine-red short hair and a sturdy figure stood up and said, "Can't 20% of the shares be exchanged for a seat on Uber's board of directors?"

"You're spending over a billion dollars just by talking. How arrogant!"

The woman's voice was full of energy and as loud as a bell: "How can Uber China be worth 20% of the shares when its overall valuation has not increased in the past two or three years? You want to exchange war for peace? Let me see..."

"Excuse me, who are you? Please pay attention to the order of the meeting." Cheng Wei interrupted with a frown.

The woman poked the nameplate in front of her: "Zhengxin Valley Capital!"

"I remember your boss is Lin Lijun?" Cheng Wei asked unceremoniously.

The woman straightened her back and replied confidently: "I am a cornerstone investor of Zhengxin Valley Capital and a representative of the Investment Decision Committee. Do I need to show you my shareholder power of attorney for the meeting?!"

"Ma'am, please don't get excited. If you have something to say, please speak slowly." Liu Qing was afraid that Cheng Wei would be impulsive, so she tried to persuade him with kind words.

"Then tell me, the management team colluded with the major shareholders and ignored the interests of the minority shareholders!"

The woman glanced around the room and raised her voice: "If you can win through market competition, why spend 70 billion US dollars to buy more than % of Uber China's market share? You don't even care about your dignity!"

"You keep saying mergers and acquisitions, but is it mergers and acquisitions? You just casually overvalue the price by tens or even hundreds of billions of dollars. How can we, the small shareholders, protect our interests?"

The woman's fighting power was so strong that she was spitting everywhere. Cheng Wei and Liu Qing's faces turned pale.

The secretary in the corner who was typing away on the keyboard to take notes of the meeting had a thousand horses running through his mind. This is enough to explain why major shareholders often like to communicate in private.

The domestic economy is developing too fast. Perhaps the shareholder sitting in the front row voting for a cross-border merger had just had an argument with a few old women at the entrance of the vegetable market before attending the meeting, and won the battle against all the opponents.

"Everyone is discussing this, and you have the right to vote." Peng Lei's ears hurt from being yelled at, so she rolled her eyes in disdain.

The woman got more and more angry as she cursed: "You bitch, why are you pretending to be a cultured person? I have a husband, do you have one?"

"How can you talk like that, you shrew!" Peng Lei almost jumped up.

"Anyway, I'm not like you guys who eat people's food but don't take shit from them. If you have something to say, just put it out in the open!"

The woman grabbed the document and waved it, "The minutes of yesterday's board meeting clearly stated that Apple's strategic investment of $15 billion was brought in by CEO Xie in order to supplement cash flow and compete with Uber! And then you turned around and donated the $300 billion valuation to buy out Uber."

"Mr. Xie, please tell me the truth. Should Didi acquire Uber China? How much should it cost?"

As she spoke, she walked out of her seat and stood in the central area, looking straight at Xie Jingxing.

The scene was completely silent. Cheng Wei wanted to stop it, but seeing all the shareholders watching coldly, he remained calm and let this fierce woman do what she wanted.

In fact, for a startup, the number of shares and voting rights is not important at all.

Whoever can create value for the company will have control.

When Didi was banned by Alibaba, Xie Jingxing took a strong stake and started a money-burning war; at the last moment of this fierce battle with Uber, he asked Apple to raise Didi's valuation to 300 billion US dollars.

——This is control.

The fierce woman's language was illogical and unclear, but the shareholders understood what she meant. The representative of the CIC shareholder questioned Zhu Xiaohu's attempt to smooth things over, and they all wanted Xie Jingxing to express his opinion.

“As financial investors, we naturally pursue the absolute return on investment of the invested projects.”

Xie Jingxing spoke calmly, looking across the space at Cheng Wei and Liu Qing: "If the price of acquiring Uber China is right, why not do it?"

"On the basis that Mr. Yan Wenhua has joined the M&A negotiation team, I recommend him to serve as a director."

The whole audience was suddenly in an uproar and whispers were heard. Xie Jingxing continued, "In addition, I would like to take this opportunity today to submit my resignation application to the shareholders' meeting."

“I will be relieved of my personal directorship, Taihe Capital’s board seat will be revoked, and strategic investor Apple will be recommended to join the board.”

He pressed his hands down to signal the female shareholder representative from Loyal Valley to stay calm: "Didi is the first project I invested in when I founded Grapefruit Capital."

"The two parties have been together for three years, during which time Didi has grown into a unicorn giant with a valuation of US$300 billion. I believe that after the acquisition of Uber China, Didi will enter a new strategic development cycle and continue to create value for society and shareholders."

Xie Jingxing stood up and said, "As a financial investor, there is nothing more I can do for Didi. It is an honor to work with you all."

"I hope the next time we meet will be at the bell ringing ceremony on the day of Didi's IPO."

He bowed sincerely and frankly. Liu Chih-Ping, who was sitting beside him, took off his glasses and turned his head away, his helplessness turning into a sigh.

It is difficult to evaluate the success or failure of a strategic investment that a fledgling company has invested a lot of effort and high hopes in, which has now transformed into a purely financial investment project.

"..."

Xie Jingxing agreed to the merger and acquisition. He actually agreed so easily and took the initiative to give up the right to speak.

Liu Qing was at a loss when he heard applause in his ears. Cheng Wei clapped his hands vigorously with a look of respect on his face. The applause went from sporadic to frequent, and then became louder and louder, drowning out the noisy whispers.

Her throat suddenly tightened and she opened her mouth mechanically, but no sound came out.

Zhu Xiaohu supported the merger but hoped to keep the price to the lowest. Liu Qing handed over power to Yan Wenhua to be responsible for the specific negotiations, and he was satisfied.

Alibaba's AutoNavi Map's aggregated online car-hailing business is gradually picking up, and regulatory policy adjustments to limit vicious money-burning competition are even more beneficial. Peng Lei doesn't care whether Didi acquires it or not.

Tencent continues its symbiotic strategic investment philosophy and unconditionally supports the management duo of Cheng Wei and Jean Liu, and Martin Lau has always been dedicated.

Xie Jingxing announced that he would completely withdraw from Didi's control structure and would only exercise shareholder rights without interfering in specific management, thus clearing up internal conflicts.

Then the management only needs to obtain a two-thirds vote in the shareholders' meeting, and Cheng Wei and Liu Qing will get what they want.

However, all shareholders have their own opinion on how much Uber China is worth.

The merger proposal with a total value of more than 80 billion US dollars failed to pass the test, and the absolute return on investment meant that the strategic support came to an abrupt end. (End of this chapter)