Chapter 763 Phoenix Merrill

…

Dealing with everybody’s gaze, Guo Shouyun strode to the middle of the desk within the convention room and sat down. Wang Jue and Wu Xiaojing sat behind him. Stephen Bryan introduced a consultant of Phoenix Financial institution, Michael Moretz introduced a consultant of Merrill Lynch, and Liu Zhixing introduced a consultant of the Bruce Basis to their seats one after the other.

every little thing’s prepared!

After his eyes rapidly swept throughout everybody’s faces, Guo Shouyun mentioned solemnly: “Welcome to the Phoenix Merrill financing assembly. You and I are pals who’ve identified one another for a few years. Time is valuable, and the tasteless hospitality can be averted right here. Wait. It is over, we nonetheless have sufficient time to speak with one another. … Subsequent, let’s get to the purpose.”

With out ready for Guo Shouyun’s order, Wang Jue and Wu Xiaojing have distributed the detailed working info of Phoenix Financial institution and Merrill Lynch, particularly the copies of the monetary info, to each consortium consultant current.

“There may be loads of info, you may take it again and skim it intimately! Immediately, we’ll briefly introduce the overall operation and monetary statements of the 2 firms to set a tone for the following negotiations.”

After seeing the gesture in his eyes, Stephen Bryan nodded and took out the supplies he had ready.

“As of the primary quarter of 2005, Phoenix Financial institution achieved working earnings of US$12.249 billion, a year-on-year enhance of 13.5%, web revenue of US$3.671 billion, a year-on-year enhance of 11.3%, return on web property 21.57%, return on complete property 9.73%, and capital adequacy ratio 12.07%, of which the tier 1 capital adequacy ratio is 12.41%. The non-performing mortgage ratio is 0.65%. The whole financial institution property are 698.37 billion US {dollars}.”

“…Presently, Phoenix Financial institution has 4,277 branches all through North America, masking nearly all monetary segments together with business banking, funding banking, monetary credit score, wealth administration and insurance coverage. Our non-public fairness funding enterprise has grown over the previous three years 12.8 occasions greater than all friends on the planet. Our wealth administration and asset administration enterprise has repeatedly made the entrance web page of enterprise media comparable to Enterprise Week and Fortune Journal. Our enterprise capital enterprise, particularly for high-tech Investing within the trade has at all times been a mannequin for Wall Road and Silicon Valley to observe.”

“…As well as, the best wealth of our Phoenix Financial institution is our chairman. His monetary expertise has been vividly mirrored in lots of incidents prior to now 5 years! Subsequently, I consider that the way forward for Phoenix or Phoenix Merrill is inevitable. Restricted!”

Guo Shouyun, who was out of the blue flattered, smiled and motioned for Michael Moretz to take over.

“As of the primary quarter of 2005, Merrill Lynch had complete property of $179 million, together with $132 million in non-public consumer enterprise, $557 billion in international asset administration, $22.78 billion in shareholder fairness, and $9.5 billion in web earnings. US {dollars}, web revenue of 1.73 billion US {dollars}.”

“Presently, Merrill Lynch has 975 branches and 48,000 staff in 44 international locations all over the world. The corporate has a complete of 49 enterprise items. At current, we’re the world’s largest financial firm and the world’s second largest mutual fund firm. Mergers and acquisitions in the US No. 1 in enterprise, No. 1 analysis workforce in the US by Institutional Investor journal, No. 1 in municipal merchants. Finest worldwide inventory analysis establishment of the 12 months and most modern derivatives buying and selling by Euromoney journal Establishments, finest financial firms, finest European and international bond lead underwriters. Japan’s main international securities firms chosen by “Nikkei Survey”, and many others. Merrill Lynch, with a historical past of almost 100 years, shouldn’t be solely wealthy in heritage, but in addition the world’s prime A complete funding financial institution!”

After his introduction, Guo Shouyun rapidly swept his eyes from everybody, “Everybody, I consider you’ve heard it. If Phoenix and Merrill merge, it would create an organization with complete property exceeding 2.5 trillion US {dollars} and annual predominant enterprise earnings exceeding 75 billion yuan. US greenback, annual web revenue of greater than 16.8 billion US {dollars}, and its personal property of greater than 90 billion US {dollars}. It’s a tremendous monetary large that occupies a dominant place in lots of sub-fields comparable to non-public fairness financing, wealth administration, asset administration, monetary product analysis, municipal bonds, and many others. Sure! Think about what the market can be after such a monetary group goes public!”

“…I consider that when that second comes, each one in all us current can be rewarded handsomely!”

“Clap…!”

After a interval of not too heat applause, Guo Shouyun continued: “Concerning the merger plan of the 2 firms! The detailed plan is already within the doc given to you, you may return and skim it once more. In brief, it’s a sturdy alliance, Give full play to their respective strengths and make Phoenix Merrill Lynch a brighter future. Relating to the management of the corporate, I’m the chairman of the board, Stephen Bryan is the CEO, Michael Moretz is the co-CEO, and Ruben Destein is the CEO. President and COO, with Patty Sellers as CFO…!”

Greater than half of the highest executives of the brand new firm are Phoenix folks. Aside from Gregory Fleming, Peter Krause, Thomas Montag and some succesful cronies who should not Stan O’Neill, Merrill Lynch’s prime executives had been retained. As well as, the remaining had been fired by a paper contract.

“…As well as, I at all times assume that Merrill Lynch’s ‘administration committee’ system is superb, so I plan to maintain this technique. As for the particular personnel, it is going to be determined after the assembly and dialogue after the merger of the 2 firms.”

Merrill Lynch’s administration committee system is the corporate’s decision-making physique. The members are all senior executives of the corporate. There are 23 folks! Teamwork ensures Merrill’s continued development. In fact, there isn’t any really good system on the planet, in any other case Merrill Lynch wouldn’t have suffered heavy losses within the subprime mortgage disaster and was acquired by Financial institution of America.

Nevertheless, in contrast with the administration system during which the CEOs decide, the collective administration system of Merrill Lynch’s “administration committee” is extra acknowledged by Guo Shouyun.

“…As for the corporate’s board of administrators, amongst all of the establishments current at present, those that personal 1% of Phoenix Merrill’s shares have the correct to ship representatives to the board of administrators. The variety of administrators on the board of administrators can be restricted to 25-30!”

“…particular financing requirements. Now the biggest monetary establishment in the US is Citi. Its income within the first quarter of this 12 months was 22 billion US {dollars}, its web revenue was 7.46 billion US {dollars}, tier 1 capital was 79.4 billion US {dollars}, 2.1 trillion in complete property, 21.7% Web revenue development, 37.2% return on funding. P/E ratio of twenty-two occasions, market cap of $253.7 billion.”

“The second largest monetary establishment is Financial institution of America, with income of $15.2 billion within the first quarter of this 12 months, web revenue of $4.96 billion, Tier 1 capital of $61.4 billion, complete property of $1.6 trillion, 18.7% enhance in web revenue, 31.2% ROI. 19 occasions earnings, $191.7 billion market cap.”

“The third largest monetary establishment is MG Chase, with income of $12.7 billion within the first quarter of this 12 months, web revenue of $3.96 billion, Tier 1 capital of $54.4 billion, complete property of $1.4 trillion, a 19.3% enhance in web revenue, and a 29.2% enhance in web revenue. ROI. 18 occasions earnings, $152.3 billion market cap.”

“As compared, Phoenix Merrill’s income within the first quarter of this 12 months was US$19.749 billion, web revenue was US$5.4 billion; Tier 1 capital was US$90.7 billion, complete property had been US$2.57 trillion, and the excellent web revenue development fee was 20.97%. Citi, our key figures are not any worse than any financial institution, and we even far surpass Citi when it comes to Tier 1 capital adequacy and complete property.”

“In accordance with Phoenix Merrill Lynch’s complete operations and varied monetary knowledge, we consider that Phoenix Merrill Lynch’s market worth needs to be round $220 billion. In view of the particular circumstances of this financing, I’m keen to make use of a 90% low cost as the premise for the Let’s discuss.”

The estimated market worth is 220 billion US {dollars}, a ten% low cost is 198 billion US {dollars}!

After everybody within the viewers exchanged glances, Goldman Sachs CEO Clean Fein spoke first.

“Bruce, I feel Phoenix Merrill’s estimated market capitalization is a bit too excessive. First, Phoenix Merrill’s $5.4 billion in web revenue doesn’t signify a ample benefit in comparison with Financial institution of America’s $4.96 billion web revenue. Second, Citibank’s fairness multiplier The quantity is eleven, Financial institution of America’s is ten, and Phoenix Merrill’s mixed fairness multiplier is fourteen, which undoubtedly signifies that Phoenix Merrill’s $2.5 trillion in complete property comprises a better threat than Citi.”

The reciprocal of the shareholders’ fairness ratio known as the fairness multiplier, that’s, what number of occasions the entire property are the entire shareholders’ fairness. The fairness multiplier displays the dimensions of an organization’s monetary leverage. The bigger the fairness multiplier, the smaller the proportion of capital invested by shareholders in property, and the better the monetary leverage.

“…So, I feel Phoenix Merrill’s estimated market capitalization is extra cheap between $180 billion and $200 billion!”

“I agree with Mr. Fein’s viewpoint. As well as, at present’s financing isn’t just a easy financing There are additionally sure over-the-counter elements. Taken collectively, the valuation of Phoenix Merrill Lynch and the worth low cost Needs to be higher.” Bear Stearns consultant Charles Prince.

He was additionally within the Schiff and Citi camps initially, however in the long run he was unable to withstand the temptation of financing after the merger of Phoenix-Merrill Lynch, so he was pulled over by Clean Fein. Now, the 2 sides clearly have the looks of a united entrance.

As for the over-the-counter issue he talked about, it’s nothing greater than turning into a shareholder of Phoenix Merrill Lynch, and we should mobilize our personal power to advertise the merger of the 2 firms, which can undoubtedly be against the merger of Phoenix and Merrill Lynch with Schiff, Citi, and ING Group. The massive establishments are competing towards one another, and loads of vitality and even monetary assets can be spent within the center!

“Everybody, my battle with Citi, Schiff, ING Group and different establishments shouldn’t be a secret, and I consider you’re all conscious of it. It’s exactly due to their opposition that I took a decrease low cost in Phoenix Merrill Lynch’s financing. Let. In any other case, wouldn’t I preserve the tens of billions of {dollars} of wealth in my very own palms?… I hope everybody understands that making a living comes at a worth! As for the distinction between me and also you within the estimated market worth of Phoenix Merrill Lynch, we are able to’t speak about it now. It is too early. If you learn the data you’ve and have a greater understanding of Phoenix Merrill’s state of affairs, it isn’t too late for us to debate this matter! Nevertheless, in view of the present exterior state of affairs, I’ll solely provide you with Two days. In two days, I hope to listen to extra constructive feedback!”