The two parties involved in this matter may also double people's interest: Xugong, a leading equipment manufacturing industry in China. Carlyle, the world's largest private equity investment fund, is called the "President's Club" because many national leaders hold important positions in the fund.
Exposing this "conspiracy" is the general manager of Sany Heavy Industry, a competitor of the Group. He said on his blog that China's machinery industry will fall into crisis because of this merger. He didn't expect that this would trigger a big discussion that swept through China, and the final result even reversed China's traditional attitude towards foreign investment.
cause
In March, 2004, when Wang Min went to Hongkong with officials of Xuzhou Municipal Government to hold a xuzhou economic and trade promotion meeting, I didn't expect that two years later, a project at this investment promotion meeting turned into a bomb.
After the Hong Kong exhibition, in April, Xugong Group published a global "recruitment" announcement in Hong Kong Economic Daily. Xugong Group, a local state-owned enterprise in Xuzhou, wants to reform itself by introducing investors, or simply put, the Xuzhou government wants to sell most of the shares of Xugong Group, the largest local enterprise.
Perhaps it is a common problem of old state-owned enterprises. Xugong Group also carried out debt-to-equity swap to reduce the company's heavy bank loan burden, go into battle lightly and re-develop. Introducing new capital and investors is undoubtedly one of the ways to accelerate development.
China Huarong and four other asset management companies took over the company's debt in 2002 and converted it into corresponding shares. These four asset management companies have solved the heavy bank debts of many state-owned enterprises in a similar way.
This equity was once put on the resale agenda of the four major management companies, but Xugong Group "redeemed" this equity, which accounts for about 48% of Xugong, with a loan of 680 million yuan. In a sense, this transaction of Xugong Group is very "smart". According to the calculable caliber, this "redeemed" equity will be sold at a price of about 3 times. However, in the condemnation of the fire sale in 2006, Xugong's state-owned assets appreciation transaction was not mentioned.
Investment institutions have come to Xuzhou to inspect Xugong and discuss the acquisition. "Since the second half of 2004, more than 30 organizations have come," recalled Wang Group's deputy general manager in March 2009 19, who was Xu Gongfang's main negotiator in the acquisition case. Among these 30 companies, there are international investment funds such as Carlyle and JPMorgan Chase, world giants in the same industry such as Caterpillar, and Sany Heavy Industry, an industry giant in China. Sany Heavy Industry is a private equipment manufacturer in China, which is developing rapidly. It was at this time that the "enemy" was forged. In the summer of 2006, the CEO of Sany Heavy Industry detonated the discussion about Carlyle acquisition through his blog.
Around 2002, private equity funds sneaked into the mainland of China. At that time, the domestic understanding of private equity investment funds was still relatively shallow. The discussion about Carlyle's acquisition of Xugong alarmed the ruling and opposition parties and pushed the private equity fund, which had kept a low profile before, to the front desk.
At that time, China people only knew that venture capital funds (VC for short) could turn the stone into gold, and they made young people in China rich by listing on Nasdaq. However, private equity investment funds (PE) are completely different from VC. The investment direction of PE is generally mature enterprises. Through debt restructuring, advanced management mechanism and good projects are introduced to make "old trees sprout", while VC is an enterprise that may succeed in early investment and has great risks. Both are private equity funds, but they are completely different in nature. The fund that Carlyle acquired Xugong, which was included in the discussion this time, belongs to PE. From 2004 to 2005, 10 month, all the protagonists appeared: Xugong Group, Carlyle and Sany Heavy Industry, all of whom wanted to sell their shares. The climax of the play is eight months after all the main characters appear.
rise (up) in revolt
On June 6, 2006, a blog post made a "recruiting husband" action led by Xuzhou municipal government a major event. The situation was stable before, and there was not much turmoil. This blog was written to Xiang, in which he expressed his willingness to replace Carlyle at a price of 30%. This is his first blog to discuss Carlyle's acquisition of Xugong.
According to the acquisition agreement initialled by both parties on June 25th, 2005, Carlyle will acquire 85% equity of Xugong Machinery at a price of more than RMB 2 billion.
Subsequently, Xiang gradually enriched the events in the blog: Sany Heavy Industry contacted Xuzhou very early, but lost the qualification to enter the next round. The seven institutions that entered the second round are all international consortia.
Xugong responded to this statement: Sany Heavy Industry's bid was too low and it was eliminated in the first round.
Xiang also believes that choosing Carlyle may be an arranged "game". There is data to support him, because he got the bid from Carlyle's rival JPMorgan Chase Fund: 365,438+98 million yuan. Obviously, this figure is much more generous than Carlyle.
However, Xuzhou has set many thresholds for "mother-in-law" that can't be simply measured by the amount: whether it can bring new projects and technologies, whether Xugong has a veto power to prevent it from being controlled by industrial capital when it withdraws, and the retention of Xugong's brand. Carlyle has the highest comprehensive score-this is judged by Xuzhou Municipal Government and Xugong Group. These opaque so-called scores are tailored for Carlyle-this is the judgment of the opponent.
It is based on this completely different judgment that this acquisition case, which has been successfully carried out for nearly 8 months and is waiting for the approval of the national government, has evolved into a big battle with the project.
By June 24th, 2006, 14 articles had been published in the blog of 18 days, each of which hit the nail on the head. In his blog, many undisclosed transaction details and figures were disclosed, but Xugong did not respond positively to the details.
As a result, the participants' views began to be one-sided: they decided to sell Carlyle at a low price through shady transactions, so that Carlyle could make huge profits through this local state-owned enterprise in China, which would also greatly damage China's industrial security in the equipment manufacturing industry.
These have gradually condensed into the national spirit, and the logical relationship between betraying Xugong and betraying the country has gradually been established.
Similar painful memories, such as selling state-owned assets cheaply in the name of restructuring, and the loss of competitiveness of China enterprises after being acquired by foreign investors, have been constantly refreshed in this big discussion, especially for netizens in China.
On the one hand, it is aggressive, on the other hand, it is silent with Carlyle, which is easy to understand why public opinion has been one-sided for more than a month since June 2006.
Xugong is hard to argue. According to international practice, this acquisition is a trade secret and the core data cannot be published. "You don't have to believe us, but these documents are completely transparent at the regulatory level. Management can review these documents at any time. Do you think I dare to tell a lie? " On July 6, 2006, Wang told this reporter.
At this time, there is also a blog on the internet, which is in sharp contrast with Xiang's blog. The two sides exchanged news and were at daggers drawn. Netizens waved flags and shouted, and the folk hidden dragon crouching tiger was exposed.
In this lively June, another thing happened that puzzled all beings: Fu Jian, the general manager of Xugong Group, received an order from the municipal government at the beginning of the month to be transferred to the general manager of Xuzhou State-owned Assets Management Co., Ltd., which mainly invests in public facilities. In an interview with our reporter on June 26th, 2006, Fu Jian thought that "this transformation is a bit big for me, and I prefer to be an enterprise".
Because Fu Jian is opposed to selling Xugong to foreign capital, the transfer at this critical moment is undoubtedly adding fuel to the fire.
Everything that can't be explained from formal channels has become a symbol of the progress of the event, and these symbols have been given different meanings by different parties. The IQ of all parties involved in the discussion has been severely tested.
A month later, this discussion alarmed the upper level.