Chapter 305: ‘Snake Swallows the Elephant’s Life and Death Gamble!

Liu Wei hesitated for a while and then said in a deep voice: "It's not that we have a plan, but the situation forces us to seek a breakthrough in the strategic direction of our group's development."

"As Mr. Su said..."

"Our group has no lithium ore resources, and due to cost considerations, we are overly dependent on a single supplier in terms of raw material suppliers."

"And now this supplier has experienced the most extreme situation."

“Due to the continued sluggishness of the industry and the pessimistic expectations of various investment institutions for this industry, related industry chain companies, whether upstream lithium resource companies, manufacturing companies like our group, or downstream product terminal manufacturing , sales companies have had a hard time in the past two years.”

"Our group can only maintain itself on the edge of profit and loss through continuous asset reduction and cost compression."

"And our important lithium resource supplier, the Australian Talison Mining Company, has been completely in the red due to the failure of foreign investment, the continued decline in lithium ore prices, and the rise in labor costs, and Talison Senmin Mining Company 'has made plans to sell its shares."

"I learned about Talison's situation..."

Liu Wei paused and continued: "We, Chairman Jiang, have realized that the strategic opportunity has arrived to reverse the group's operating environment and gain the right to speak in the industry."

"You want to take advantage of Talison's losses and the other party's intention to sell its equity to conduct mergers and acquisitions?" Su Yu said, "What a good idea. If Tianqi Lithium wants to break through and get rid of the current operating difficulties, it can only merge upward. Only lithium mining resource companies can open up new development space, and you, Mr. Jiang, have great vision and courage in the future strategic planning of the group."

Liu Wei smiled bitterly and said: "Mr. Su only talked about the good aspects. In fact, the acquisition of Talison is not only the only way for our Tianqi Lithium Industry to break the business environment, but it is also something we have to do. We have to do it." For one thing.”

"Because in terms of global lithium resources..."

"Australia, my country, and Chile have relatively abundant lithium resources."

"However, although my country's lithium ore resources are abundant, the grade of lithium ore is indeed low, the mining is difficult, and the production cost is high!"

“This is also the reason why we had to choose to cooperate with Talison, and due to cost and development considerations, Talison has gradually become our company’s largest or even single supplier.”

"Now, Talison has extreme problems."

"As you said, if it is acquired by other lithium resource giants, the global lithium resources will be further concentrated. In the face of the new takeover, if the negotiations cannot reach an agreement, the other party will treat us on the raw material side. If it is cut off directly, the business risk of the group will increase sharply, and it may even become unsustainable and lead directly to bankruptcy."

"So, in order to avoid this situation from happening, for the sake of the company's survival foundation."

"At this juncture, we must initiate the acquisition of Talison."

"However, Talison is much larger than our Tianqi Lithium Industry. If we want to eat it, it is like swallowing an elephant with a snake."

"According to the current market valuation, what is the size of 'Talison'?" Su Yu interjected and asked.

Liu Wei replied: "Although the stock price of 'Talison' has fallen a lot after the sudden performance explosion, based on the fair valuation of the stocks listed in Australia, in order to achieve 100% equity acquisition, the funds required should be 40 Around 1.5 billion, but our current total assets of Tianqi Lithium are only about 1.5 billion, and the market value is only about 2.5 billion, which is basically equivalent to one-half of Talison. Moreover, our group's current debt ratio is not low. This kind of Under such circumstances...it is extremely risky and extremely difficult to complete the acquisition of Shetunxiang."

"But it has to be done."

"Because if we don't do it and lose this strategic opportunity, it will just be equivalent to chronic suicide for us."

"With total assets of 1.5 billion and a high debt ratio, it would be a suicidal acquisition to swallow up a company at least twice the size of our own." Su Yu said, "You are taking a huge gamble. , and it is a gamble that puts everything aside, regardless of life and death."

"Yes!" Liu Wei nodded and responded, "It is indeed a big gamble, but in this bet, if we don't play, we will die, but if we play, we will have many chances to win."

"Chairman Jiang said that 'lithium' is the lightest metal on the periodic table of elements."

"No matter how the industry develops in the future, he firmly believes that the use of this metal element will shine. And isn't the current 'lithium battery' technology advancing by leaps and bounds? There are also many concepts of 'new energy' The institution has mentioned it and is optimistic about it, and I trust Chairman Jiang’s judgment.”

"And that's without even talking about future prospects."

"In terms of the lithium resources owned by Talison itself, at this time of crisis, it is absolutely cost-effective to purchase it at a price of about 4 billion."

Su Yu thought for a moment and nodded slightly.

Global lithium resources, on a larger scale, are mainly distributed in Australia, Chile and my country, but on a smaller scale, they are mainly in the hands of the four lithium mining giants Tellison, SQM, Lockwood, and FMC. According to the current global lithium mining resources These four suppliers together account for more than 90% of the global market share.

Among them, 'Talison' occupies the world's highest quality and best-grade 'spodumene mine' resources, and its mining cost and ore utilization rate are the highest among several companies.

But now, the market’s application of ‘lithium’ is very small, and the overall market size is not large.

Regarding the distribution of lithium ore resources and the market share of major giants, most investment institutions and operating companies that only use market size and profit as measurement criteria do not care who accounts for how much.

After all, the market size is small and profits are low.

So what if one family owns it? If market demand fails to increase, you still won’t be able to make much money.

Therefore, at this point in time, few people have such a vision for the strategic layout of this industry, and even fewer people have the strength to do so.

"So, you have launched the acquisition plan for 'Talison'?" Su Yu asked.

Liu Wei nodded and said: "Yes, it started two months ago. Since 'Talison' is the most important raw material supplier of our 'Tianqi Lithium Industry', and our two companies have been cooperating for many years, we have a close relationship with each other." That’s right, so when there was a crisis on Talison, we intervened as soon as possible.”

"In the past two months, we have established a subsidiary Wenfield in Australia."

"And using Wenfield Investment Company, we have obtained 19.99% of Talison's shares through secondary market transactions on the Toronto Stock Exchange."

"But due to insufficient liquidity within the group."

"After we reached a critical point in increasing our shareholding in the secondary market, even if Chairman Jiang mortgaged all his assets and pledged all his shares, it was still not enough to raise the funds to launch a comprehensive tender offer for Talison."

"The bank's group debt ratio is already high, and the central bank has tightened monetary policy in order to curb the market inflation rate this year, resulting in a lack of macro-capital funds in the entire market, and also causing banks to be unwilling to pay for this under the tightening liquidity. Mergers and acquisitions, lending more funds to us.”

"So...you found an agency?" Su Yu asked.

Liu Wei paused for a while and said: "If that were the case, I wouldn't go around looking for institutions to raise money. After all, later on, Mr. Jiang approached the leaders of Joaquin Company, and after many talks, he finally collected some funds. Basically, can complete our original acquisition plan.”

"But how could I know..."

"We have just raised enough funds to basically support the merger and acquisition, and are preparing to conduct comprehensive negotiations with Talison and initiate a comprehensive merger and acquisition."

"'Talison' suddenly entered into negotiations with another giant company in the lithium resource industry, namely American Lockwood."

"And after preliminary negotiations between the two parties, Lockwood is willing to acquire 100% of the common shares of Talison at CAD 6.5 per share."

"According to the price per share determined by Lockwood, the valuation of 'Talison' will increase to about 4.8 billion."

"This represents a 20% premium to fair market value."

"Faced with the sudden entry of competitors, if we want to continue to acquire Talison, the acquisition cost will increase by at least 1 billion compared with the original."

"Furthermore, coupled with the financial cost of the acquisition, I am afraid that even the final 5.5 billion won't be enough."

"No wonder!" Su Yu said, "The sudden entry of competitors has created a funding gap of at least 1.5 billion for you out of thin air. This is equivalent to the value of a 'Tianqi Lithium Industry'."

"Yes!" Liu Wei said, "But since 'Lockwood' has publicly announced the acquisition of 100% of the common shares of 'Talison' for 6.5 Canadian dollars, I'm afraid it will never give in. If we want to snipe its acquisition , the only way is to compete at a premium price to snatch the control of 'Talison'."

"But if this happens..."

“In the scramble for control, the premium on stock prices will only continue to soar.”

"The capital cost we need to acquire Talison will also skyrocket, and no one knows where it will end up."

"Originally, Chairman Jiang and I thought that if there were no other strong competitors to intervene in the short term."

"We can also raise funds through private placement of shares in the secondary market."

"But now that Lockwood has intervened strongly, the reaction time given to us is quite limited. Even if we want to raise funds through the private placement of shares in the secondary market, facing the market's lengthy review mechanism, even if the final private placement plan is It’s too late to get approval from regulators.”

"so……"

Liu Wei paused, took a sip of coffee, and continued: "I just came to Yuhang, and I want to ask Qiuyue for help. After all, the 'Anzhao Fund' she is in charge of, backed by the Eastern Group, is in the domestic investment community. It can be considered a strong organization, but... Chairman Wu of the Oriental Group also expressed that he was helpless."

"Just when I felt hopeless..."

"Qiuyue recommended you, Mr. Su, to me."

"That's why I said that I originally wanted to visit Mr. Su, but I didn't expect to meet you here today."

"That's it!" Su Yu was very emotional after hearing the whole story.

"Mr. Su thinks..." Liu Wei stared at Su Yu seriously, carefully observing the changes in the expression on his face. After considering his words for a while, he continued, "What you think is a big gamble, our Tianqi Lithium Is there any chance for karma?"

Su Yu thought for a while and did not answer directly, but said: "If Lockwood successfully acquires Talison, will the global lithium resources be further concentrated? And if our country wants to break this resource monopoly in the future, will it Will it become more difficult?"

"That's for sure." Liu Wei replied.

"It's so difficult for you to raise funds. It seems that the vast majority of people in the country still don't suffer enough from 'iron ore'!" Su Yu lamented, "As President Jiang said, 'lithium' is an important part of the periodic table of elements. The lightest metal in the world, no matter which direction the industry breaks through in the future, it will definitely shine, and I firmly believe this."

"Tell you, Mr. Jiang..."

Su Yu paused for a while and said without hesitation: "This is not his business war alone, nor is it the life or death of Tianqi Lithium Industry, but our country's fight for the right to speak on the entire lithium resources in the future. No one can I don’t want the tragedy of ‘iron ore’ in the steel industry to happen again, and someone will choke it and take away the majority of the industry’s profits for no reason.”

"Since you, Mr. Jiang, believe that the element 'lithium' is very important in the future, then... go ahead and do it boldly. Our 'Yuhang Investment' company can bear the funding gap of less than 3 billion. If 3 billion is not enough, more funds are needed, and I can help find a way."

According to his historical memory.

No one is optimistic about the cross-border merger and acquisition of Tianqi Lithium Industry. Despite the difficulties in the early stage, the group and its actual controllers tried their best and gambled everything, but they were not able to fully raise enough funds to compete with the powerful company. 'Knockwood' competed for funds, but in the end, at the last moment, with the full support of Chinese Commercial Bank and Joaquin Company, they still managed to seize control of 'Talison' in the 'Knockwood'' comprehensive acquisition plan. The successful attack on 'Knockwood' laid the foundation for China's future competition for the right to speak in global lithium resources and the development of the 'new energy' grand strategy.

So, when the opportunity came.

Whether it is out of self-interest or national interest, there is no reason why he should not support it.

And on the occasion of Su Yukang's speech.

When Liu Wei heard Su Yu's words, she was so excited that she couldn't help but stand up and stretched out her hand to Su Yu with a slight trembling. Her gratitude and admiration were beyond words.

Qin Qiuyue stared at Su Yu blankly, the coffee cup in her hand frozen in mid-air, her eyes full of shock.

She didn't expect that after listening to Liu Wei's brief introduction, Su Yu shouted out the investment amount of 3 billion without any hesitation at all.

You know, you can buy Tianqi Lithium directly for 3 billion!