Chapter 338: Refusing Investment

Chapter 338: Chapter 338: Refusing Investment

"There is indeed something more critical." Chen Shiyu stopped smiling and pulled up a draft of the financing agreement. "This past year, we rejected Yahoo’s investment request because they wanted to kick us all out for $1 billion. I rejected that directly without even involving you. But now Microsoft has also taken the initiative to approach us. They are willing to invest $300 million for a 10% stake, and the share transfer must be completed before the IPO."

He paused and added, "Zuckerberg is already tempted. His team’s shareholding is currently only 35%, and he thinks this is a good opportunity to lock in a high valuation. However, the final decision-making power is in your hands. After all, through subsequent share increases, your stake has risen from 51% to 56%, making you the absolute majority shareholder."

Irene’s fingertips landed on the "10% stake" clause, her brows furrowing slightly.

Her financial advisor, Jean Williams, spoke up at the right time: "From the perspective of the equity structure, Microsoft’s request is not considered harsh. Based on the current total share capital, after they join, your stake will return to 51%, and you will still maintain your position as the largest shareholder. However, the Zuckerberg team’s 35% will be reduced to 30% again, which won’t have much impact on the company’s current structure."

She pushed up her gold-rimmed glasses and opened the calculation report. "But the key is the valuation gap after the IPO. If we proceed with the IPO ourselves, based on current user data and revenue growth, the pricing is expected to be between $12 and $14 per share, and the total market value will stabilize between $4.5 billion and $5.8 billion, which is much higher than the $3 billion valuation given by Microsoft."

"If we don’t accept Microsoft’s involvement and rely solely on Facebook going public, how much money can I cash out? Will it be enough to take down Marvel?" Irene asked Jean.

Jean opened the folder she was carrying: "According to the latest calculations for the Facebook IPO pricing, the 30 million restricted shares you hold can be cashed out for about $350 million to $450 million after the lock-up period ends. This has already exceeded our early-year estimate of $250 million, but there is still a large gap from the $2.2 billion needed to acquire Marvel." She paused and added, "Furthermore, Marvel’s stock price has been performing strongly recently. After Q1 earnings exceeded expectations, the stock price rose to $20.24, so the actual acquisition cost might be even higher than $2.2 billion."

Irene’s brow furrowed slightly, her fingertips tracing circles on the table.

Seeing this, Jean spoke up at the appropriate time: "Actually, we don’t need to be obsessed with a complete acquisition. Marvel’s current total share capital is about 100 million shares. Based on a mixed average price of $15, the cost of becoming the largest individual shareholder is far lower than a full takeover. Reaching the 5% disclosure threshold only requires $75 million, and a 10% stake is only $150 million. Even if you want to surpass the current largest shareholder at 13%, it would only take $200 million. A 20% controlling stake is just $300 million."

"You mean..." Irene looked up.

Jean smiled, "Becoming the largest individual shareholder is much more flexible than buying the whole company. Just like when Mingly Corporation acquired AJ Corporation, they collected circulating shares through hidden accounts, which controlled costs and didn’t cause the stock price to skyrocket. As long as your stake exceeds 13% and you become the largest shareholder, you can join the board of directors and still influence core decisions like IP development and film and television collaborations. Once Future World Pictures has sufficient cash flow, you can then join forces with other capital to acquire the remaining shares at a premium."

"Then will accepting Microsoft’s offer affect our subsequent cashing out?" Irene continued to ask.

Chen Shiyu took over the conversation: "Accepting the offer now affects your shareholding percentage. Currently, the lock-up period for Facebook’s IPO restricted shares is 18 months. The 30 million shares you hold will take a year and a half to cash out. If you accept Microsoft’s investment, you can simultaneously transfer some of your old shares and cash out about $180 million immediately. However, your shareholding percentage will drop by nearly 10% at the same time. It depends on whether you think this deal is worth it."

Jean immediately added a risk warning: "But such a transfer will trigger the ’acting in concert’ clause. According to SEC regulations, large-scale share transfers before an IPO require disclosure of the use of funds. Once our intention to acquire Marvel is exposed—now that Marvel’s stock price has risen to $20.24 and with 100 million total shares—the cost for a 20% controlling stake will soar from $300 million to $405 million."

She opened a case in her folder, "Furthermore, a hidden acquisition takes time. Just like when Mingly Corporation acquired AJ Corporation, it took 12 months to collect circulating shares through BVI accounts to avoid a stock price surge. The time window is already tight."

Irene’s fingertips traced circles on the table, her gaze lingering on Marvel’s stock price trend chart.

Seeing this, Chen Shiyu quickly said, "Zuckerberg believes that Microsoft’s resources can help us quickly open up the enterprise service market, which is very important for supporting the stock price after the IPO."

Irene looked up. "Microsoft wants a 10% stake because they essentially want to control Facebook’s advertising channels. Their MSN has always wanted to transition to social networking, and this is an opportunity for a back-door entry."

She looked at Jean, "Based on a $5 billion valuation after the IPO, the 30 million restricted shares I hold can be cashed out for $400 million after the lock-up period ends. It doesn’t matter even if we have to wait 18 months. Let’s go with Jean’s suggestion. We’ll aim to become Marvel’s largest shareholder. We’ll start now, acquiring shares quietly in private. We can afford to wait this long. In a year and a half, I can completely become Marvel’s largest shareholder. Why dilute my equity now?"

A look of approval flashed in Jean’s eyes: "Exactly. And after Marvel’s Q1 earnings exceeded expectations, although the stock price rose, the valuation is still at a low point. We can first quietly absorb 5% of the circulating shares through trust accounts. It only takes $101 million, which neither triggers the disclosure threshold nor locks in some of the chips."

Irene put down her coffee cup and tapped her finger heavily on the decision document: "Tell Microsoft that I refuse their investment."

She looked at Chen Shiyu, "Have Zuckerberg focus on the IPO. After going public, we will use 30% of the cashed-out funds to first secure a 20% controlling stake in Marvel. The remaining funds will be used to complete a full takeover through a leveraged buyout. Facebook’s growth momentum is far from peaking. There’s no need to sacrifice long-term strategic initiative for the sake of $300 million right now."

After Irene confirmed that Facebook would provide her with a stable source of funds in the future, it was as if she could already see herself developing Iron Man with Marvel in the future.

She called Lisa again to tell her to put Marvel aside for the time being and confirm the publication of Twilight and Taken. After all, the first volumes of these two novels had been completed under Irene’s supervision and were about to be printed and published.

Whether Twilight, with an outline provided by Irene and written by Taylor El, could achieve the same success as the original author in her previous life, Irene herself was very curious to know.