Breaking Up Is Better Than Divorce

dilemma

“The stock price of Daeyang Electronics fell below 20,000 won. It’s going to be the lower limit for a week in a row until today.”

Yoosung, who was scanning the stock price with his smartphone, said.

“The whole Daeyang group is in a riot. I don’t think it’s the first time I’ve seen stock prices drop this much since subprime mortgages. It would be terrifying for those who own shares in Daeyang affiliates.”

“Have you ever had a subprime mortgage? Weren’t you in the army at the time?”

Eugene smiled and asked his brother.

“uh? no. I just saw it as a book.”

“okay. But what is the market cap of Daeyang Group now?”

“It was estimated at 82 trillion won. It has gone down tremendously.”

As of April 2015, the total market capitalization of the Daeyang Group was approximately KRW 128 trillion.

It has been holding the 3rd place for 10 years, following Cheil Group, which boasts an overwhelming market capitalization of 350 trillion won, and Dasan Group, which has 140 trillion won.

The market cap of the Myeongseong group that follows it is 104 trillion won, which is quite a difference from the 4th place.

But a lot has changed since the Freescale crisis. As the market cap of Daeyang shrank to 82 trillion won, the third place was lost to Myeongseong.

Even the SC group, which ranked fifth in the past, is not much different.

This is truly humiliating.

“The people of the oceans will burn.”

Yoosung said with a smile.

“I will be upset. But the group’s market cap is not going to decrease. The owners of large corporations are surprisingly not very happy with the market cap being too high.”

“okay? why?”

“The higher the market cap, the higher the transfer tax and inheritance tax burden. Chairman Daeyang is now 90 years old. You have to prepare slowly.”

“ah! I see Then there are cases where the group’s market cap is lowered on purpose to reduce the inheritance tax?”

“Rather than doing it on purpose, when the market cap is so low, I take the opportunity to transfer it to the next one. Of course, it is said that there are cases where the stock price drops on purpose, but it is something that outsiders cannot know.”

Yoosung made an absurd expression on his face.

“I am. If that’s the case, isn’t that a betrayal?”

“Even if it’s a breach of trust, there’s no way to prove it.”

“Listening to hyung, you think the Daeyang guys will be more than happy, don’t they?”

“no. It won’t. You must be quite upset over DL Capital. As it is now, I can’t buy Freescale or not.”

When Media Focus first reported on suspicions about the relationship between Daeyang Group and DL Capital, most media outlets ignored it.

However, after the terrorist attacks in Malaysia, the situation changed completely.

This is the hottest news in Korea right now, but it is impossible not to touch the story of Daeyang Group and DL Capital.

Now, not only newspapers but also general and terrestrial broadcasters have reported on DL Capital at least once or twice.

Of course, even if the material is the same, the content is quite different depending on the medium.

Even a little pro-business media argued that the suspicions between the Daeyang Group and DL Capital were exaggerated. claimed to do.

“Then are you taking over? Are you drinking?”

“If it’s normal, you shouldn’t take over. It would be cheaper to pay the down payment instead. If it wasn’t for terrorism, you could just say that the premium for management rights is huge, but it’s not at that level now.”

“How much will the down payment be?”

“It will be at least 10%. Usually that’s what I do.”

“Then $2.86 billion? Are you going to give up more than 3 trillion won?”

“Otherwise? What would you do if you paid 30 trillion won to buy a 10 trillion won company? I don’t know how much it will cost again to get it back to normal. You may have to invest 10 trillion won over a few years. Doing that could shake the entire Daeyang Group.”

“That too. Then you should give up.”

“If that happens, DL Capital will lose a lot of money. huh.”

Eugene laughed slyly.

He sold his stake in the Carlyle Group for $450 million.

Until the terrorist attack, you would have liked to have made a lot of money from it, but if the contract was broken, it would be catastrophic.

“Ah… that’s right. I can’t do this or that. Isn’t this going to destroy the ocean?”

“No way. Big corporations never go bankrupt in this country. At least if you are in the top 10 chaebols.”

“There were a lot of people saying that when a large corporation goes down, the country goes down.”

“Because it’s not wrong. There are hundreds of thousands of people directly or indirectly hired by the four major groups. And not to mention the impact it has on the national economy. If you’re in a position to decide that, you won’t be able to easily let a big company collapse.”

“It’s difficult…”

Yoosung shakes his head.

“uh. It’s easy to say, but I can’t let a large company collapse when it comes to taking responsibility.”

“But shouldn’t we be held accountable for bad management?”

“I also took some responsibility. Donating your personal wealth to a welfare fund, or setting up a foundation. It is questionable whether that is really the way to take responsibility properly.”

“So, isn’t that a problem? Even if we say that we should prevent a large corporation from collapsing, it does not mean that we are not held accountable properly.”

“I can’t help it. In fact, it’s the voters’ choice.”

“This is so… Oh! The report on the profits from this short sale of the Daeyang Group is up.”

Now, investment in Korea is proceeding through Yoosung.

The experience I have accumulated over the years has made it to the extent that I can do it.

“How much?”

“Daeyang Electronics KRW 880 billion, Daeyang Motor KRW 360 billion, and other affiliates KRW 270 billion.”

With $600 million as collateral, a total of 3.5 trillion won worth of short selling was bet on Daeyang Group affiliates, and it was liquidated because it wanted to run out.

Even after the liquidation, the stock price was falling even more, but Eugene did not regret it too much.

“It’s 1.5 trillion won for a full month. In hourly terms, this is the highest return on any investment so far.”

Even when Eugene short sold, the share price of Daeyang Group was slightly higher than before due to expectations for the Freescale takeover.

In that situation, Daeyang Group paid all the losses from terrorism, so it was able to make such a record profit.

“Good.”

Frankly, for Eugene, it was more meaningful to show it to the family of the head of the Daeyang Group rather than expecting a big profit.

However, after the work was done, even as Eugene, there was a profit that could not be ignored.

“I’m going to do some more shopping with this.”

“What else are you going to buy?”

“I will live a lot. Shall we start with Market Cullinan first?”

“Market Cullinan?”

At that time, when two brothers Eugene and Yooseong were enjoying the profits from the misfortune of Daeyang in such a relaxed manner, the Daeyang Group office building just across the street was still in a mess.

“How is it? Can I get my deposit back?”

Ryu Geun-il, president of Daeyang Electronics, asked the head of the legal team.

“It seems difficult. The contract contains an exception to terrorism in the MAC (Material Negative Change).”

“what is that?”

“When you sign a merger and acquisition agreement, you promise that by the end of the agreement, if there is a significant problem with the company to be acquired, the agreement can be terminated. The sales side tries to fulfill the contract with various exceptions.”

“therefore? Should there be a terrorist attack and we should buy Freescale?”

“yes. Unless it’s Freescale’s mistake or illegal act, there’s nothing we can do about it.”

“no! Why did you leave such an exception in the midst of an outbreak of terrorism like these days?”

President Ryu Geun-il was furious.

“In the United States, M&A contracts are usually made on such terms. The UK doesn’t even have a MAC clause at all. Since 9/11, the United States has included terrorism as an exclusion clause in the MAC clause of M&A contracts. Moreover, the US courts rarely acknowledge the termination of the contract due to the MAC clause. We do not know if the seller commits an illegal act or hides something, but we do not want to admit that the cause is external as a condition for canceling the contract. They have a culture that takes contracting very seriously.”

The legal director gave a diligent explanation.

“Does that make sense? Americans are Americans, what did we do?”

“There has never been a terrorist attack in Malaysia, so I overlooked it.”

The truth is, I just followed the opinion of the American law firm, but saying that will only expose the incompetence of the legal team.

“So what are you going to do? Should we just go ahead with the contract?”

“Presumably, giving up the down payment is the way to reduce losses.”

This time, the vice president of finance, who was next to him, said:

“Three billion dollars! 3 billion dollars! Is that a penny or two?”

“Of course it is, but considering that Freescale’s present value is barely over $10 billion, it’s unreasonable to pay $28.6 billion to acquire it.”

“What about insurance? Shouldn’t you have insurance?”

“They say the insurance will be set at around $300 million.”

“Does that make sense? How much is the factory loss? And what about operating losses?”

“General insurance is indemnified against damage caused by terrorism. It is said that they can get as much as possible from the terrorism insurance they have in place.”

“I’m going crazy…….”

President Ryu Geun-il sharpened it inevitably.

“Think of a way, everyone. You have to reduce the damage somehow. I can’t give you all three billion dollars!”

“It’s the only way to sue, whether it’s good or bad.”

The legal team leader said with a firm face.

“No?”

“That’s not to say it’s never going to happen. We may be able to get some money back through negotiations during the litigation process.”

“okay? how much?”

“It depends on where the trial is held and what law firm you hire…”

“Then give it a try. Calculate and report the cost of the lawsuit and the down payment we can get back.”

“All right.”

“And oh tell me to move in. Prepare to report on the safety of our Malaysian plant and other overseas plants.”

While at the company, Geun-il Ryu was the head of a normal company.

“The acquisition seems to have to be abandoned. There’s too much pressure coming in from all sides.”

As the second son, not the president of Daeyang Electronics, Ryu Geun-il showed a completely different appearance.

The company seemed to be working hard to reduce the loss, but in reality, it was going to take over Freescale even at the cost of the loss.

This is because of the 22% stake it has secured through DL Capital.

But public opinion was not so good.

“We received calls from KDB, and also from the Ministry of Finance and Industry. The acquisition of Freescale is difficult.”

It cannot proceed with the acquisition, which is opposed by the main bank and the government.

“I also received a message from the Blue House.”

Chairman Ryu Jae-duk said with a hard face.

“Forcing the Freescale takeover is a burden on the government.”

He doesn’t hide his displeasure in the slightest.

But everyone here was acknowledging that things weren’t too good to really invest a huge sum of $28.6 billion.

“There is no way around this.”

First, the president of Daeyang Motors said with the tone of giving up.

“What happens to the shares we bought if we break the contract?”

The first asked the second who was in charge of this case.

“If Freescale is valued at $10 billion, it means that our 22% stake is worth $2.2 billion…”

“We bought 7% for $1.2 billion and 17% for $3.5 billion, so we spent $4.7 billion in total.”

Third, Ryu Geun-soo said.

“We have lost 2.5 billion dollars. Where should it be sold for $2.5 billion, or $4.7 billion will be tied up as it is.”

“What if I give up my $3 billion down payment?”

Again the first asks

“That would save us roughly $650 million in losses.”

At that moment, the eyes of everyone in the family changed.

Abandoning the down payment would harm the company, but would instead save them a loss of $650 million in their own blood.

“If I had known this would be the case, I would have bet a bigger down payment.”

“Iknow, right. Ha… indeed.”

“No one can hold us accountable for the terrorist attacks in Malaysia. Also, legally, getting the down payment back is too long, so giving up cleanly reduces litigation costs, and I think it would be much better.”

In fact, it is a normal way to go to court and get at least part of the down payment.

However, the funds tied to DL Capital were far more important than the company’s losses.

A company at the level of Daeyang Electronics will somehow be able to afford a loss of about $3 billion.

The opinions of the family were arranged in an instant.

“But if you take your hands off it right away, it doesn’t look good. You have to take a little time and make a gesture to get your down payment back and then give up.”

“Do that. And Sunggyu, you stay a little longer.”

On that day, Chairman Ryu Jae-duk, who had rarely opened his mouth, called his grandson, whom he had been delighted with.

“How much profit did you make this time?”

After biting all the sons, Chairman Ryu asked Sungkyu.

“You knew.”

Sunggyu said with a slightly nervous face.

“Didn’t you put about 50 billion won in the short sale?”

Chairman Ryu Jae-duk asked again.