Chapter 370: This Is Just a Gamble
"I'm not looking to acquire Alcan Group!" Li Tang reiterated his true intentions. "My idea is this: since Alcan is eager to expand significantly in the Chinese market, increasing investment and capturing greater market share, then as a friend and business partner, I'm willing to invest both money and effort into your ventures. You already know that I have many influential business friends in China who are also willing to invest alongside me in Alcan Group."
"I have absolutely no doubt about that," Richard acknowledged Li Tang's influence. "Many major Chinese enterprises trust your vision and judgment and would gladly follow your lead."
"With so many partners involved, do you still worry about rapidly scaling your business?"
Li Tang chuckled lightly. "My plan is this—if I openly acquire Alcan Group shares in the secondary market, it would undoubtedly trigger significant market volatility, even leading outsiders to mistakenly believe I'm aiming for a hostile takeover. Therefore, if you know any major institutional or individual shareholders willing to privately transfer their shares, we would prefer to do the transaction discreetly."
His approach was designed solely to save money.
If Li Tang started openly buying shares in the secondary market, given his current international reputation and prominence in the financial world, it would inevitably cause a stir, driving the stock price upward significantly, thereby increasing the cost of future purchases.
If he could acquire large blocks of stock privately from institutional shareholders without alarming the market, the overall cost would be considerably lower.
"As a matter of fact, there is indeed a shareholder willing to sell a significant stake, and it's an institution you might already know."
After hearing Li Tang's plan, Richard felt relieved, realizing the immediate threat of a hostile takeover was diminished. He could now focus more energy on managing the enterprise rather than constantly fending off potential buyers. Nevertheless, Richard remained cautious toward Li Tang's intentions. "How many shares are you looking to acquire?"
"Around ten percent," Li Tang estimated roughly. "Ten percent of Alcan Group is still worth over two billion US dollars. Frankly speaking, that's a substantial financial burden for me."
"Ten percent corresponds to approximately 38 million shares of our parent company. Right now, our stock price hovers around sixty dollars per share," Richard calculated briefly. "Our shareholder base is quite fragmented. Anyone holding about three percent of our shares is already considered a major shareholder. But you've come at an opportune time. One shareholder holding roughly five percent is looking to offload their stake soon. However, given Alcan's current vulnerability to acquisition, the selling price might carry a considerable premium. You'll need to prepare sufficient funds because the asking price may be high."
"Which shareholder is it?" Li Tang inquired immediately.
"It's a company under the Mitsui Group."
Richard spoke with evident emotion when mentioning this name. "Mitsui Group has greatly assisted us in the Japanese market for aluminum-related businesses. However, recently, they feel our management direction no longer aligns with theirs, hence their decision to divest."
"Excellent! Inform them immediately—I'm willing to acquire their entire stake!" Li Tang felt amused by this unexpected twist of fate.
He was well aware that Mitsui Group had extensive global investments in various mineral sectors, deeply embedding themselves into multiple aspects of global industry.
In mining-rich and stable legal environments like the U.S., Australia, and Canada, Mitsui maintained numerous overlooked yet strategic investments. For example, in Australia, Mitsui held stakes in multiple mines operated by industry giants such as BHP Billiton and Rio Tinto, often holding around ten to thirty percent.
In Canada, naturally, mining giants like Alcan and Barrick Gold were also among Mitsui's strategic targets. Thus, Li Tang wasn't surprised Mitsui owned a five percent stake in Alcan—only surprised they intended to exit at this precise moment.
"Good. I'll contact them on your behalf," Richard assured.
Richard quickly evaluated the benefits of cooperating with Li Tang versus the Japanese market, concluding decisively that the Chinese market had become far more significant globally.
After leaving Alcan Group, Li Tang immediately returned to Yanjing without pause.
Even a five percent stake required at least 1.1 to 1.2 billion US dollars—funds he definitely didn't currently have available. To accomplish this acquisition goal, he would need external financial assistance, either through partners or loan financing.
His Li Tang Shengshi Holdings currently carried almost no debt, which, realistically speaking, was highly inefficient.
"You want to acquire Alcan Group?"
Hearing Li Tang's proposal, Lai Xiangrong nearly spilled his large teacup, clearly shocked beyond words by the announcement.
Formerly China Aluminum Corporation, now restructured as Chinalco Group, the state-owned enterprise still considered aluminum production its primary business and source of revenue, with Chinalco's listed subsidiary in Hong Kong performing steadily.
In recent years, Chinalco had also diversified into copper, rare earths, and other nonferrous metals, rapidly becoming a domestic industry giant with annual revenues exceeding 100 billion RMB—a rare accomplishment for any Chinese enterprise.
However, state-owned enterprises frequently shared a common weakness: high revenues but disproportionately low profits. Despite annual revenues over a hundred billion RMB, Chinalco's profits barely exceeded two billion RMB. Compared internationally, Chinalco was comparable to global giants like Alcoa, Rusal, or Alcan in scale and revenue—but its profits lagged significantly, even trailing smaller foreign aluminum companies, excluding the recently struggling Alcan Group.
"Not acquiring, just investing," Li Tang clarified clearly.
"You probably haven't conducted thorough due diligence on Alcan; otherwise, you wouldn't consider this idea," Lai Xiangrong sighed, setting down his tea and slipping on his reading glasses to examine Li Tang's proposal closely.
Many perceived Lai Xiangrong as a cautious, conservative executive, slow and methodical. Yet, under his careful guidance, Chinalco had grown step-by-step, building a robust industrial base and dominating domestic alumina and aluminum production.
This success was partly due to comprehensive support from the national reform office, but also undeniably benefited from Lai's prudent leadership.
Regarding overseas investments, Lai maintained cautious skepticism. Internally, Chinalco had repeatedly debated proposals, especially from Deputy General Manager Lü Caiqing, who regularly suggested expanding Chinalco's foreign investments.
"My understanding of Alcan isn't exhaustive, but I possess unique insights," Li Tang responded confidently, knowing Alcan's eventual outcome clearly from past insights.
"Alcan has approached me numerous times, and we already have cooperation in China," Lai said gently, placing down the proposal and removing his glasses, gazing fondly at Li Tang. He had grown increasingly appreciative of this younger generation.
"In the aluminum industry, Alcan once ranked second globally, annually earning billions in profit. Their current financial struggles originate from aggressive expansion into Europe years ago, nearly monopolizing the entire European aluminum market. However, besides aerospace aluminum sectors, other operations have become burdens. The profitable segments can't compensate for enormous losses in other divisions. To shed these burdens, they'd have to lay off tens of thousands of employees."
Lai raised his head, showing a bitter smile, obviously sympathetic toward a fellow enterprise's predicament.
"You should know, Western companies can't easily lay off employees. If you don't settle properly, you must either pay massive severance equal to years of wages or indefinitely bear the burden. There's no other way around it."
"I understand that," Li Tang fully recognized the complexities of investing in Western markets, whose market economies had evolved into entrenched, rigid systems.
"Personally, I prefer caution in overseas investments—better to avoid overly aggressive moves," Lai concluded, taking another large sip from his tea.
He choked slightly, coughing uncomfortably as tea leaves stuck in his mouth.
"I respect your decision," Li Tang said, slightly disappointed.
"I've lived cautiously my whole life. Even though Chinalco is enormous now, I don't believe I deserve the full credit." Lai's eyes glazed over, recalling his past decades.
His career had highs and lows, but he had always avoided reckless decisions. Thankfully, whether at the original Huazhou Aluminum Plant or now at Chinalco Group, his subordinates had mostly positive views of his leadership.
"These past years, with internal integration, Chinalco has become increasingly substantial..." Li Tang praised.
"It wasn't my doing, but rather thanks to our higher leadership!" Lai modestly deflected, a slight smile appearing. "Whether aluminum, copper, or rare earth sectors, all our achievements came from integrating many companies into a cohesive whole, creating economies of scale, reducing costs, and sharing technology. But Chinalco's future journey will inevitably be more challenging."
"That's why Chinalco needs your continued guidance," Li Tang flattered sincerely.
"I'm too old now," Lai sighed softly, revealing suddenly, "This news isn't public yet—it's internal only—but it's appropriate to inform you early, so you can prepare."
"What news?" Li Tang felt uneasy.
"I'm retiring soon," Lai said lightly, visibly relaxed. "It's not a bad thing—don't worry. Soon, I can spend all day carrying a teacup, strolling leisurely, playing chess. It's my lifelong dream."
Li Tang felt momentarily speechless, filled with complex emotions.
"Let me introduce you to someone. He's Chinalco's deputy general manager and my successor candidate." Lai summoned his secretary to invite others in. Luo Qingzhong entered, along with several unfamiliar faces—typical personnel changes among state-owned enterprises.
"This is Lü Caiqing, the strategic talent sent from above. He'll lead Chinalco to greater heights!" Lai introduced warmly, pointing toward a tall, thin middle-aged man.
Upon hearing Li Tang's name, Lü Caiqing's scholarly demeanor instantly became more enthusiastic, gripping Li Tang's hand warmly. "I've long admired you!"
"Nice meeting you, Mr. Lü. I'll rely on your support," Li Tang greeted warmly, nodding politely toward Luo Qingzhong and the others.
Lai concluded gently, "I'm not suited for international business. Your proposal—Caiqing will surely find it intriguing."
"Director Lai, let us handle these specifics," Lü Caiqing assured confidently.
Lü Caiqing smiled at Li Tang and said, "Mr. Li, please come with me to my office so we can discuss further."
Changing locations was no hassle for Li Tang; at worst, he'd only need to repeat his ideas once more.
"Congratulations on your promotion, President Lü!" Li Tang politely congratulated him first.
Lü Caiqing did not dwell on the compliment but quickly transitioned into business mode. It seemed that the new head of Chinalco Group wasn't particularly interested in formalities or pleasantries.
"I'm already aware of your conversation with President Lai," Lü began directly.
"That simplifies things for us," Li Tang replied, as he had already sent his proposal to Lai Xiangrong in advance.
"Investing in Alcan Group would represent one of the boldest moves ever made by Chinese mining companies and entrepreneurs overseas," Lü shared his thoughts candidly. He then openly expressed his stance, "Your plan is courageous, and I admire your willingness to take risks. However, considering all aspects, I think your proposal is very risky."
"Yes," Li Tang nodded slightly, sharing his perspective. "In global rankings of the most admired companies, Alcan Group consistently ranks near the top. Many Western financial analysts commonly believe that Alcan's stock is significantly undervalued."
"But that doesn't hide the financial difficulties Alcan is currently facing," Lü Caiqing clearly understood the situation abroad. "Years ago, Alcan heavily leveraged itself through two massive acquisitions in Europe, each involving billions of dollars. Now, the negative consequences of these leveraged acquisitions are gradually surfacing. They've failed to successfully integrate the European companies and generate substantial profits to cover the cost of their debts. The largest portion of their debt is approaching maturity, and they're at risk of default. These debt issues have become open wounds, bleeding and attracting predators."
"I'm aware," Li Tang had already discussed this during his meeting with Richard.
"Our investment would only yield returns if Alcan is successfully acquired. If the shareholders reject an acquisition or it gets blocked by antitrust regulators, our investment will quickly depreciate and might even sink with Alcan."
Lü Caiqing was very clear-headed. "Currently, Alcan's share price is at a historical high. This inflated price is mainly due to media reports since last year that Alcoa intends to acquire Alcan, artificially driving up the share price. Realistically, given Alcan's financial condition, their true stock value is probably around fifty dollars per share."
"But if the acquisition goes through and commands a high premium, we'd reap huge profits, wouldn't we?" Li Tang acknowledged that this was indeed a risky investment. "It's essentially a gamble."
But this was a gamble where he knew the outcome, giving him great confidence!
Lü Caiqing remained silent for a long time, quietly observing this young man he was meeting for the first time, though he had heard Li Tang's name countless times before.
Finally, he decided, "I trust you!" He appeared determined to take the risk. "Chinalco Group will join your consortium and become a key force!"
"We'll need to raise over ten billion yuan," Li Tang did not celebrate too soon.
Why was it necessary to raise more than ten billion yuan?
The answer lay in Alcan Group's corporate governance rules: owning a certain percentage—around 14%—would grant shareholders the power to veto major decisions, such as mergers or acquisitions.
…
Meanwhile, Huajin Corporation had also been renamed as Huajin Group.
Cheng Muye was in his prime, comfortably stable in his position as the general manager.
When Li Tang came to visit him, Cheng Muye was surprised but also delighted. Li Tang rarely sought him out; usually, it was Cheng Muye who sought Li Tang.
"You want to sell your 75% stake in Gongcun Gold Company?" Hearing Li Tang actively looking to sell mining rights made Cheng Muye extremely pleased.
Since last year, the price of gold had surged dramatically, making many previously marginal mining projects economically viable. The Gongcun copper-gold mine was exactly such a case: it held copper reserves of millions of tons and gold reserves reaching 120 tons!
Over the past year, prices for copper and gold had almost doubled, making this mine extremely valuable by any standard.
Furthermore, Gongcun copper-gold mine was conveniently located near major roads, had access to water and electricity, and required minimal additional infrastructure investment to begin production.
Adding to that, the Tibet railway line had been fully operational since July, greatly increasing transportation capabilities and providing excellent conditions for mineral development in the province.
Not only Huajin Group but also other major domestic gold companies like Zijin Mining and Handong Gold had recently studied the development feasibility of the Gongcun copper-gold mine.
Clearly, this was a highly attractive mining project.
However, the rights were tightly controlled by Li Tang. Over the past few months, attempts to contact Li Tang's Shengshi Holdings mostly resulted in the same response: Li Tang was abroad, and decisions would have to wait until his return.
Obviously, such a major sale required Li Tang's direct approval.
Secretly, several gold companies were already competing for the mining rights, but none had held detailed discussions with Li Tang about the transfer until now.
Cheng Muye previously couldn't locate Li Tang, so when Li Tang himself appeared, it was truly a pleasant surprise.
"Why?" Xiao Yongyue, having learned of Li Tang's visit, rushed to Yanjing and was equally shocked at Li Tang's intention. "We could get a loan to develop the mine!"
Xiao Yongyue was somewhat anxious since he still owned 25% of the project, initially investing over 20 million yuan. Now, that investment seemed incredibly wise!
"I've never had any experience developing domestic mines," Li Tang explained apologetically to Xiao Yongyue. "I understand your feelings, but I must do this."
"Then sell your shares directly to me!" Xiao Yongyue was anxious, somewhat annoyed Li Tang hadn't communicated this decision earlier. "Brother, friend—you should have talked with me first before making such decisions!" He glanced at Cheng Muye, clearly regarding him as an outsider.
"This decision was sudden," Li Tang explained. "I need to raise significant funds within half a year."
"For what purpose?" Xiao Yongyue asked casually.
"You'll find out eventually," Li Tang saw no reason to explain further.
"Your projects keep getting bigger, making it harder for me to understand. Honestly, you're becoming a legendary figure in global mining. It's truly an honor for me to know you," Xiao Yongyue, still straightforward and honest, praised openly. "But business between brothers can always be discussed privately. There's no need to make it public."
"So far, only you two parties know about the sale plan for Gongcun copper-gold mine," Li Tang assured them both, giving them special courtesy. Yet he also made clear his position, "If we fail to agree, I'll approach other domestic companies like Handong Gold and Zijin Mining to see if anyone else offers an appropriate price."
"Shazhai molybdenum mine had reserves of over two million tons, with economic value reaching hundreds of billions!" Xiao Yongyue couldn't help complaining passionately, "You originally held 51%, but you sold that stake for just over six hundred million! I don't mean to complain, but you've always favored outsiders over your own brother!"
"That's absolutely not true," Li Tang laughed.
"You hold 75% of Gongcun Gold, so it's entirely your decision. But as your brother, let me be selfish for once. Name your price for your shares," Xiao Yongyue bluntly ignored Cheng Muye and negotiated openly.
His Gaolu Potash Fertilizer Company was currently limited to selling potash to farmers, clearly an unsatisfying situation. He eagerly wanted to diversify into copper, iron, or gold, all of which were much more profitable.
Watching other mine owners making huge profits, Xiao Yongyue had long coveted the lucrative potential of Gongcun mine.
"For mines containing over a hundred tons of gold, I advise you not to try to gain controlling interest," Li Tang sincerely cautioned. "Our mining laws clearly state that private companies cannot hold mining rights for precious metals, especially large-scale gold mines. However, there's one exception: if a state-owned enterprise holds a majority, private enterprises can own minority stakes legally."
He continued with sincerity, "The reason Gongcun hasn't secured mining rights yet is precisely because it's purely a privately held company."
"Then let's each hold 50%, let Huajin Group take the lead to apply for mining rights, and we can jointly develop it," Xiao Yongyue proposed, looking at Cheng Muye.
Cheng Muye merely smiled without responding—his silence clearly rejecting Xiao's suggestion. Li Tang's approach indicated Cheng could gain full control and potentially dilute or buy out Xiao later.
Ignoring Xiao, Cheng directly asked Li Tang, "What's your asking price?"
Li Tang recalled another timeline in which Canada's Continental Minerals eventually acquired Gongcun's mining rights and later resold them to Chinese companies for over three billion yuan.
Given current high gold prices around 600 USD per ounce, which would remain stable for several years, Li Tang knew that selling now at a peak was ideal.
Still, he didn't reveal his price immediately. Instead, he simply smiled and replied, "I'd like to hear what Huajin Group offers first."
This was, after all, an essential negotiating tactic.
After slight hesitation, Cheng Muye referenced previous deals and tentatively suggested, "Three hundred million?"
Thank you for the support, friends. If you want to read more chapters in advance, go to my Patreon.
Read 40 Chapters In Advance: patreon.com/Johanssen