What's wrong with me being a rich man?

Chapter 700 Indirect
Breyer Capital's sale of its stake to Facebook, aside from the related implications, is not surprising in hindsight.

The initial funding round approached Jim because of his resources at Facebook. As a board member of the giant, he did indeed provide a lot of help to Mus's development, including cooperation on music copyrights and the convenience of traffic on Facebook.

However, as an investor who has gained both fame and fortune from investing in Facebook, he obviously wants to stick closer to the giant, and this time, Facebook is clearly more proactive in selling its Mus shares.

As Facebook prepares to encircle and annihilate Snap, it hasn't forgotten its younger brother in the short video arena. Taking advantage of its own shareholders' investment, it has secured a position on MUS, which will make future acquisitions and business competition much easier.

Of course, it cannot be ruled out that Jim's initiative in reminding him could have played a role.

Regardless, the event has already occurred, and the sequence of events is clear.

When Xiong Xiaoge arrived in Lingang, the relevant situation had been analyzed on his desk. Mus Company always signs priority clauses with institutions when raising funds, precisely to prevent similar situations from happening.

However, Breyer Capital used a shell company to transfer the shares this time, which did not violate the agreement in terms of procedure.

At the end of last year, it established a third-party company GI and injected its MusVid shares into GI as capital contribution. There were notices and changes at that time. This "capital contribution" is not subject to the priority clause when transferring shares, and the priority right signed by Mus becomes a binding on GI.

Now, Facebook is not directly acquiring Mus's shares; it has fully acquired GI, which means it indirectly holds all 10.125% of Mus's shares.

In short, Mus can constrain GI's holdings in Mus, but it cannot constrain changes in GI's own shareholding structure.

Such avoidance is clearly premeditated.

After listening to Liu Chiping's account in the office, Xiong Xiaoge's face darkened: "This really is like inviting a wolf into the house!"

Liu Chiping glanced at the calm President Yu, and in that instant, he thought of the short-selling king's deduction and preparation for Facebook's information gathering.

As Yu Xing raised his cup to drink tea, the image that came to mind was the revelation that he seemed to possess Facebook user data that had been imported into the political arena.

Xiong Xiaoge spun around in place, feeling no remorse for introducing Jim back then. However, she glanced at President Yu out of the corner of her eye and felt that he and Liu Chiping seemed too calm.

He stopped pacing, frowned, and asked, "What exactly is Facebook trying to do? Is there any contact? What do we do now?"

“It’s normal for us to scheme against others and for others to scheme against us,” Yu Xing said slowly. “Facebook hasn’t made a statement, and there’s nothing they can do right now. If they want to access the data, it will definitely be anonymized. They won’t give us board seats either. We’ll deal with whatever comes our way.”

"Yes, we'll deal with whatever comes our way." Xiong Xiaoge repeated, then stopped abruptly, just as she was about to rack her brains, and asked, "Wait, President Yu, how exactly did we outmaneuver them?"

Yu Xing said lightly, "It's just about considering future competition in the short video arena, what else could I be scheming about?"

Xiong Xiaoge couldn't help but scrutinize President Yu with a suspicious gaze, feeling that there was something else going on.

At this point, Liu Chiping sighed: "This is also my fault. Breyer made the change at the end of the year. We knew about it, but we didn't think about it in any other way. Facebook's shareholding is quite complicated. It's just enough to hold an extraordinary shareholders' meeting and propose shareholder proposals."

Facebook's 10.125% stake is just over 10%, which is a fairly common threshold for rights globally. It now has the right to convene an extraordinary general meeting of shareholders on its own, and can legally access company data, including board resolutions and meeting minutes. It can also suddenly convene a meeting to veto important decisions when the company is making big moves, thus disrupting the company's operational rhythm.

If Facebook hadn't invested this time, Breyer Capital's stake would have inevitably been diluted to below 10% as originally planned. However, Facebook has plenty of money and will certainly participate in this round of financing to maintain its share. As for other issues, the potential shareholding of competitors might worry other investors, but that's a minor matter. Neither Peak Capital nor other institutions in the same camp will give up their investments because of this.

“Mr. Liu, you don’t need to blame yourself. This kind of thing isn’t uncommon, and there’s no reason to be overly cautious,” Yu Xing said thoughtfully. “Whether Facebook’s move is to continue its acquisitions or to facilitate future competition, at least it won’t lead to a complete breakdown in relations right now, as long as this phase continues to move forward…”

He turned to look at Liu Chiping and said, "Under the European GDPR regulation, it would be illegal for us to disclose user data to shareholders like our competitors."

Liu Chiping was not surprised by the content of the regulations at first, but felt that President Yu and his group were indeed carefully studying the various impacts of the European GDPR regulations.

Xiong Xiaoge looked somewhat bewildered: "What is GDPR?"

Liu Chiping gave Xiong a brief explanation.

"Let's wait for Facebook to contact us. We can also take this opportunity to reorganize our companies in several regions. They'll act as third-party companies, and we'll act as third-party companies too, incorporating data management into our subsidiaries," Yu Xing said with a smile. "Consider it Facebook helping us optimize this system."

Just as Mus has no right to interfere with changes in GI's shareholding structure, GI, as a shareholder, also has the right to know only for the company it holds shares in. It has no right to interfere with the internal data management of its wholly-owned subsidiaries, and the data of subsidiaries is increasingly protected by rules such as GDPR.

Mus has always maintained isolation in overseas markets to facilitate data collection, and this time the isolation has become even more thorough. As for the issues that may arise from subsequent financing or even the listing process, those can be addressed later. If things don't work out, they won't go public. The company's influence and profitability are sufficient as they are.

Liu Chiping nodded; this would indeed mitigate some of the impact.

He didn't think Facebook was about to come and tear off their mask, but he did feel a bit of a thorn in his side.

Xiong Xiaoge pondered silently, and only then did she finally receive a reply from Jim.

“I have respect for the development of Mus and the management’s capabilities, but I believe this is my legitimate right within the legal framework.”

He read those words aloud.

Yu Xing nodded: "What they said makes no problem. Thank Jim. We'll deal with Facebook."

Xiong Xiaoge nodded earnestly, feeling that President Yu was very classy and confident.

A moment later, he read again: "Jim said that Facebook welcomes Mus's challenge."

Yu Xinggang was about to light a cigarette when he heard this and paused, "President Xiong, President Xiong, you don't need to say the second half of the sentence."

Xiong Xiaoge: "..."

Holding his phone, he sighed and said, "Mr. Yu, please explain yourself clearly. I was about to threaten him, telling him to be careful of the king of short sellers."

Liu Chiping's eyes flickered; he absolutely couldn't say those words.

(End of this chapter)