A century-old wealthy family that rose from Shanghai

Time came to 1982.

As the adjustment in Hong Kong's real estate market had become apparent in the fourth quarter of last year, the land grant method for the 'bus terminus' site was changed from auction to tender, in order to prevent the land from failing to sell or fetching a high price.

In the conference room of Landmark, Bobby and Newbridge were discussing the bidding.

They remain optimistic about the trend of Hong Kong property prices, believing that after a period of adjustment, prices will rise again.

"I think Cheung Kong thinks so too," said Paul Bauer. "Based on the comments made by their real estate executives recently, I think we need to offer no less than HK$60 billion to have any hope of acquiring this land."

Real estate market adjustments are indeed inevitable, which is why prices have been driven up from a peak of 80 billion to now being able to win a bid for 60 billion.

Newbigen said resolutely, "We would have competed for 8 billion anyway, but now that we have a chance to win for 6 billion, why not! So, isn't 62 billion a sure thing?"

After thinking for a moment, Bobby said, "I think there's still a good chance. How about 62.99 billion? Chinese people like the number 8, so maybe Cheung Kong will go for 62.88 billion."

(In the past, Hong Kong Land won the bid for HK$47.5 billion. Now, the value of Hong Kong real estate itself is higher, and coupled with Cheung Kong's previous statements of determination to win, this price is much higher.)

"it is good"

Then, Bovet added, "If we acquire this land, we should also consider acquiring Hong Kong Electric. In that case, Hongkong Land's asset value will be close to that of Cheung Kong."

Hongkong Land already held less than 10% of HK Electric's shares, making it HK Electric's largest shareholder.

Newbijian's eyebrows twitched, and he took a deep breath, saying, "Then our debt will probably exceed 200 billion!"

Their assets are only worth 200 billion (and if the real estate market crashes, even 150 billion in assets will be difficult to achieve), and the key issue is that interest rates are high now, which means their debt may increase.

But Bobby doesn’t think so. He said, “Hong Kong Electric is a must-acquire because it has a lot of profit; and in 1980, Cheung Kong Holdings had already entered into a real estate partnership with Hong Kong Electric. I am worried that Cheung Kong Holdings also wants to acquire Hong Kong Electric.”

If surpassing Cheung Kong Holdings becomes a reality in their hands, then the Keswick family will find it difficult to regain control of Jardine Matheson. Simply put, the Keswick family only holds a 20% stake in the Jardine Matheson group, which doesn't constitute a true monopoly.

Newbikini said fiercely again, "Fine, acquire Hong Kong Electric!"

To put it bluntly, he was the biggest beneficiary. It was because of these achievements that he was able to maintain his position as the taipan of Jardine Matheson for so long.

On the other hand, Chen Guangliang didn't want to miss out on the Exchange Plaza project either, but he didn't want to be a sucker.

So when Chen Wenjie was discussing the price with him, Chen Guangliang said, "If we can find a bargain, that would be great."

Chen Wenjie immediately said, "We've done some research, and Sun Hung Kai Properties is probably the only Chinese-owned real estate company that might be competitive, but it's far less competitive than Hongkong Land. If we can acquire this plot of land for HK$57.5 billion, we won't lose out no matter what; it's just that Hongkong Land might be willing to gamble everything."

Chen Guangliang waved his hand and said, "There's nothing to hesitate about! It's just 200 million square feet of floor space. It's not a business deal, and it's never been something our Chen family absolutely has to sell. So we'll fill it in according to your price."

"Yes, father"

Then, Chen Wenjie immediately said, "Father, once things settle down, Cheung Kong will immediately begin acquiring shares of Hong Kong Electric to raise its share price, and then release the news of the acquisition to see if Hongkong Land will join in."

The main purpose is to further expand Hongkong Land and increase its debt.

As a result, Hongkong Land may face bankruptcy within the next three years, even worse than in its previous life.

At that time, it will be time for CK Asset Holdings to step in and salvage the situation.

"Yeah, it works!"

After a brief chat about work, it was clear that Chen Guangliang truly delegated a lot of authority to Chen Wenjie, only providing him with a general outline of the future.

Then, Chen Guangliang asked, "How did Ze Rui perform?"

In the second half of last year, his eldest grandson, Chan Chak-yui, returned to Hong Kong from the United States. At that time, he was 23 years old and had worked for a real estate company in the United States for two years after graduating from university. After returning to Hong Kong, he immediately joined Cheung Kong Holdings, but only as a junior manager.

Chen Wenjie said, "I don't pay much attention to his work performance, but he gets along well with people!"

Chen Guangliang nodded and didn't ask any more questions. He was no longer the one teaching his grandchildren, and he believed that his children could manage their own family affairs.

As for the 'successor', there is no need to worry. Chen Wenjie has three sons and one daughter. In the future, Cheung Kong Holdings will only need one successor. The rest can only work in other positions in the company, or go out on their own, or even become scholars, lawyers or other professions.

On February 9, the results of the bidding for the 'Bus Terminus' were announced, with Hongkong Land winning the bid for the world's most expensive commercial land with a huge advantage of HK$62.99 billion.

This immediately shocked the entire Hong Kong media.

The HK$57.5 billion offer from CK Asset Holdings and the HK$49.5 billion offer from Sun Hung Kai Properties undoubtedly represent a huge gap.

Some media outlets jokingly referred to this as a competition between Hongkong Land and CK Asset Holdings, except that Hongkong Land was spending more generously.

Just as Hongkong Land was celebrating, HK Electric's share price began to rise sharply, and rumors began to circulate in the market that Cheung Kong Holdings was acquiring HK Electric, which immediately attracted the attention of Hong Kong citizens.

"The Cheung Kong Group missed out on the prime land deal in Central; the second generation of the Chan family certainly doesn't have the same boldness as the first generation!"

"Not necessarily! The bus terminus site is a fixed piece of land, and Cheung Kong Group may not have had a 'must-buy' mentality. Moreover, this was a tender, not a government land auction, so there are subtleties involved in bidding—bidding too high will inevitably invite ridicule from competitors; bidding too low will result in missing out on the bid. In short, it's not surprising that they lost this time. But after losing the Central land king, Cheung Kong Group immediately invested in the acquisition of HK Electric, which shows they were determined to win."

“That makes sense! It’s understood that Hongkong Land was originally a major shareholder of HK Electric, and Cheung Kong Holdings is snatching food from a tiger’s mouth!”

In a very short period of time, the share price of Hong Kong Electric Holdings Limited rose from over HK$5 to over HK$6. Such a significant situation led investors to believe that Cheung Kong Holdings was determined to acquire the company.

Meanwhile, HK Electric's share price did not stop falling, with large amounts of buying every day, clearly indicating that CK Asset Holdings was snapping up shares in the market.

Land acquisition.

Newbridge and Paul Johnson held an emergency high-level meeting to discuss the Hong Kong Electric issue.

As the general manager of Hongkong Land, Bobby Paul immediately stated, "Hongkong Land cannot stand idly by and watch Cheung Kong Holdings acquire HK Electric, giving them another powerful asset." A deputy general manager of Hongkong Land raised a question: "Hongkong Land's liabilities have exceeded HK$180 billion, which is equivalent to its asset value, and bank interest rates continue to rise, significantly increasing acquisition costs. If a risk occurs, Hongkong Land will be in dire straits."

Paul Beebe stated directly, "You're wrong about one thing. Our asset value isn't 180 billion, it's much higher, because we've secured the prime project in Central—Exchange Square (a government-guided project), and the rise in our share price is a fact. HK Electric is very important to Hongkong Land; it not only has stable profit growth, but its inclusion in Hongkong Land allows us to rival Cheung Kong Holdings. As for debt, we only need to quickly complete Exchange Square, and we can repay the debt and interest with rental income. And once the property market adjusts and rises, our debt will be even easier to manage."

Newbijian subsequently expressed his support!

Of course, one senior executive also said: "At this time, the price of Hong Kong Electric has been driven up, and Cheung Kong Holdings is showing a determined attitude. Instead of acquiring it with a high cash price, Hongkong Land would be better off acquiring it through a share swap."

Newbikini immediately said, "No! Jardine Matheson already holds only 20% of Hongkong Land's shares. If it is diluted further, it will inevitably give others an opportunity."

Everyone was startled and felt a chill run down their spines.

Jardine Matheson only holds a 20% stake in Hongkong Land, and while they want to increase their holdings, the Keswick family disagrees. Jardine Matheson's main battleground is overseas, and they invest all their funds overseas; where would they find the funds to increase their stake in Hongkong Land?

On the other hand, starting in 1975, Hong Kong property prices soared, and Hongkong Land's share price rose rapidly, catching Jardine Matheson completely off guard.

Bobby nodded and said, "Although the acquisition of HK Electric will be financed through a loan, HK Electric's annual profit dividends can alleviate a lot of the problem. Therefore, a cash acquisition is acceptable!"

Newbridge made the decision: "Okay, immediately hire Howard and Jardine as financial advisors and launch the acquisition."

On Monday, February 26, Jardine Fleming, acting as broker for Hongkong Land, acquired 2.22 million shares of HK Electric at HK$8.50 per share, HK$2 higher than the previous week's closing price of HK$6.53.

To avoid triggering a mandatory takeover, the additional shares were kept below 35% (according to the Takeovers and Mergers Committee, if the threshold of 35% is exceeded, a mandatory takeover is required, and the shareholding must exceed 50% for the takeover to be considered successful). 1200 million HK Electric warrants were purchased on the market at a price of HK$11.20, accounting for 20% of the total issued warrants.

Hongkong Land is attempting to acquire HK Electric at a price 31% above market value.

However, the market was not particularly interested in the offer at first, and everyone was waiting for CK Asset Holdings to launch a counter-takeover bid.

CK Asset Holdings Limited.

The Chen brothers, Chen Wenjie and Chen Wensheng, are waiting for news from Hongkong Land's press conference.

After receiving the report from their subordinates, the two brothers both laughed.

Chen Wensheng laughed and said, "Brother, the investment in this Exchange Square is over 100 billion, the acquisition of Hong Kong Electric requires more than 20 billion, and Hong Kong Land has increased its debt by more than 120 billion in less than a month."

Chen Wenjie regained his composure and said slowly, "Not only that! The total price of the old wing of the Miramar Hotel invested by Jialing Group and Zhidi is over 30 billion, and this debt will also fall on Zhidi's shoulders."

Chen Wensheng immediately said, "I forgot that. Chen Songqing of Caring Group can fool the whole of Hong Kong, but he can't fool Father. Ping An Bank and Hang Seng Bank have not yet made any loans to Caring Group. Chen Songqing only managed to trick the Malaysian state-owned bank into joining the Hong Kong finance company through insider trading. To be honest, if it weren't for Father, we probably would have been fooled too."

To their knowledge, HSBC was one of the main lenders to the Caring Group.

Chen Wenjie nodded and said, "This time, HSBC is behind Jardine Matheson. My opening of HSBC is going to be a huge problem for me!"

HSBC's investments in Caring Group and Hongkong Land will bring disaster to the bank.

In its previous life, HSBC might have been able to suffer only minor damage due to its strength, but in this life, Hong Kong's banks, especially those with Chinese capital like Ping An Insurance, are not as powerful as they were in its previous life.

Chen Wensheng then said, "Never mind those things, I need to hurry up and arrange for people to sell all my Hong Kong Electric shares to Hongkong Land. After all, the price is very generous!"

Chen Wenjie said, "Yes, I'll also arrange to cash out."

Originally worth just over HK$5 per share, it's now being traded for HK$8 per share, representing a massive 50% increase. This price is also 20% higher than its peak last year.

Just three days later, savvy investors realized something was amiss, as CK Asset Holdings Limited had yet to issue a counter-takeover order. As for rumors that Carignan Group intended to compete with Hongkong Land, there was no further action taken.

Therefore, the existing shareholders immediately went to the registry offices of Jardine Matheson and Walmart, fearing that they would regret it if they were too late.

Many people regretted the Wharf Holdings takeover battle back then, as the price of over 90 HKD per share quickly fell back to 60-70 HKD and never rose above 80 HKD per share again.

Newbikin and Bobby also realized that something was wrong; this was not like the style of Cheung Kong Holdings!

"Perhaps the second generation of the Chen family lacks the courage. After all, the four members of the Chen family have now split up and are not as united as when Sir Chan was in power. Therefore, Cheung Kong Holdings may not be able to get the full support of Ping An Bank."

Newbijian became very worried and said, "I'm afraid that old fox Sir Chen is still plotting behind the scenes. Last time, I felt something was unusual about the 'Miracle Hotel Old Wing' project. The other party insisted that Hongkong Land provide full guarantee. We really shouldn't have agreed at the time."

Bao Fuda blushed slightly. Chen Songqing was really good at fooling people. When he tried to persuade him afterward, he quickly fell for the trick.

However, he stubbornly insisted, "Jackson Land is stronger than ever before, so there's no need to worry!"

"That's all we can do."

Despite losing the old wing of the Miramar Hotel, the Exchange Square project, and Hong Kong Electric, Chen Guangliang did not feel any regret.

Multiple sources indicate that Hongkong Land was already on the verge of bankruptcy.

The strength of Landmark in this life was damaged because of the loss of Landmark Plaza (the land was not lost, but the business was lost) and Star House in the 1960s, and the loss of Connaught House (Yee Wo House) in the 1970s.

However, today, Hongkong Land's debt has increased by at least 40 billion compared to its previous existence, and may reach 200 billion.

By September of this year, Hong Kong property prices have plummeted by 9%, meaning Hongkong Land's net assets may only be slightly over HK$120 billion; however, its HK$200 billion debt will not decrease, but will instead increase year by year due to interest payments.

Even if Jardine Matheson wanted to help, it was powerless to do so.

At that time, when the Chen family steps forward again, they can not only reclaim the old wing of the Miramar Hotel, the Exchange Square project, and Hong Kong Electric, but also at a reduced price and with an excellent reputation.

People would think that Cheung Kong Holdings saved Jardine Matheson, which is essentially the same as letting Jardine Matheson go. (End of Chapter)