Chapter 373: Acquiring Shares in Galuminium Group
Li Tang met Fukushima Rikihiro, vice-president of Sanjing Trading Company, in Toronto.
Besides Fukushima, he also encountered an acquaintance, Yoshida Yuki.
"Mr. Li Tang is the founder of Prosperity Holdings," Richard introduced, having arranged the meeting as an intermediary. He continued, "This gentleman is Mr. Fukushima Rikihiro, vice-president of Sanjing Trading, a longstanding and reliable partner of Galuminium Group."
"Our relationship with Galuminium goes beyond shareholding; we've collaborated extensively in logistics for many years," Fukushima Rikihiro added politely, having previously offered Li Tang a deep bow. He turned to Yoshida Yuki, "I heard that Mr. Li and Mr. Yoshida have had interactions in Mongolia before. I presume you're already friends?"
Li Tang glanced briefly at Yoshida Yuki. Truthfully, they'd barely interacted meaningfully, but he nodded politely, then smiled at Fukushima, "Before arriving, I heard Vice-President Fukushima works out of Yanjing?"
"Sanjing Trading established its first branch in Haigang as early as 1877. Although operations paused briefly due to historical reasons, since China reopened its markets in 1980, we've established offices in more than ten Chinese cities," Fukushima explained, gesturing toward himself. "I'm Sanjing Trading's chief representative in China, permanently based in Yanjing. Our two sides actually have quite a close connection."
"Is that so?" Li Tang replied with genuine surprise. "That practically makes us neighbors. There's an old saying here—close neighbors are better than distant relatives. It's a pity our work keeps us so busy; otherwise, we'd have already met long ago."
"Mr. Li is indeed quite busy," Fukushima replied reservedly. "I've actually visited Cloud Peak Tower several times, but unfortunately, I've never had the good fortune of meeting you until today."
"Really?" Li Tang expressed sincere regret. "That's truly my loss. Since you've visited personally, Vice-President Fukushima, is there something particular you wish to discuss?"
"Your Lianying Mining's iron ore operations in Chiche have commenced production. I hear your output could surpass ten million tons this year. Moreover, as operations stabilize, annual output could steadily grow, easily reaching 30 or 40 million tons," Fukushima Rikihiro smoothly transitioned into the topic of Lianying Mining. After all, who in the industry hadn't heard of Lianying Mining by now?
"Vice-President Fukushima is certainly well-informed about our iron ore operations."
"Everyone is closely watching Lianying Mining's growth," Fukushima laughed softly before continuing carefully. "Our Sanjing Trading has extensive expertise in maritime logistics between Australia and China. With a large fleet of ships, we can provide any service your company requires. Enterprises that choose our services invariably become repeat customers, frequently praising the quality of our offerings."
Li Tang instantly understood Fukushima's intentions. Sanjing Trading was eyeing Lianying Mining's lucrative shipping contracts. If annual iron ore production indeed reached 30-40 million tons, annual logistics fees could amount to roughly 200 million USD—a significant business opportunity.
Before commencing official production, Frette had already selected a suitable logistics partner for Lianying Mining, eventually choosing a Hong Kong-based shipping firm. Millions of tons of iron ore had already successfully been transported from Tehran Port to various Chinese ports, running smoothly so far. Therefore, changing transportation partners wasn't immediately under consideration.
"Sanjing Trading is consistently among the Fortune Global 500, often ranking near the top," Li Tang noted diplomatically. Although he didn't intend to discuss shipping contracts today, directly dismissing Fukushima's overtures could hinder the subsequent discussions on Galuminium shares. Clearly, Fukushima was strategically using the logistics contract as leverage in negotiations.
"If an opportunity arises to cooperate with Sanjing Trading, I'd certainly consider it a privilege," Li Tang added politely.
Fukushima persisted confidently, "Currently, your partner is Villy Hong Kong Shipping, correct? It's an emerging shipping company, established only in 2003. Despite this, they've rapidly made a name globally, with dozens of vessels capable of annual maritime logistics of 20-30 million tons."
"Indeed," Li Tang nodded, listening quietly.
"Villy Shipping is an industry leader in bauxite transportation, but soon their capacity won't match your rising iron ore output," Fukushima elaborated, clearly prepared with thorough market analysis. "Starting next year, if your production reaches 30-40 million tons, even if Villy dropped all their other clients and exclusively transported your ore, they'd still fall short. You'd still need to ship at least 20 million tons annually with other logistics providers."
"Impressive indeed. Truly deserving of the title as the world's largest maritime logistics company," Li Tang couldn't help but offer sincere praise. Normally, he delegated logistics arrangements entirely to Frette's team and rarely got involved personally. Recently, Frette had indeed mentioned the need to seek additional contractors for next year's shipping, but Li Tang hadn't given it much thought until now. Fukushima clearly recognized this opportunity and was eager to seize it, positioning Sanjing Trading as Lianying Mining's future maritime logistics partner. Indeed, with its global logistics dominance, Sanjing was fully capable of fulfilling any shipping contract.
"Our services will surely satisfy you," Fukushima leaned forward earnestly, maintaining impeccable etiquette. "Whether you wish to entrust us with 5 million, 10 million, or even 30-40 million tons annually, we can guarantee exceptional service!"
As Sanjing Trading's top representative in China, securing such a substantial logistics deal would certainly boost his professional achievements. His multiple visits to Cloud Peak Tower, despite repeatedly missing Li Tang, highlighted his determination.
Li Tang admired Fukushima's sincerity and perseverance. Yet, diplomatically, he responded, "Actually, Frette's team manages all operations for Lianying Mining. I rarely interfere directly. How about this—after today's meeting, I'll personally talk to Frette and ask him to contact you."
"Thank you very much, Mr. Li!" Fukushima smiled broadly. Li Tang's promise at least opened the door to potential collaboration on this major logistics contract.
Without lingering further, Li Tang shifted focus to Richard. "I heard from the CEO that Sanjing Trading intends to sell approximately 5% of its shares in Galuminium Group?"
Besides maritime logistics, Sanjing Trading was involved in chemicals, banking, mining, real estate, and more. Its shares in Galuminium represented only a minor portion of its vast business empire.
"Sanjing Trading has gradually reduced its holdings over the past two years. Previously, they held about 6%," Richard explained briefly.
Facing Richard, Fukushima quickly clarified, "Our decision to sell Galuminium shares is solely due to strategic portfolio adjustments within Sanjing Trading. We strongly believe Galuminium Group, under Mr. Richard's leadership, will reach new heights, with its share price continuously rising."
"Thank you for your kind words, Mr. Fukushima," Richard acknowledged with a polite nod.
"Do you intend to sell the entire 5% stake?" Li Tang asked directly.
"Initially, we had no such plans. We intended only partial reductions to secure liquidity for other urgent needs," Fukushima admitted carefully. After a brief pause, he added, "Of course, if a suitable buyer emerges, we wouldn't mind transferring our entire 5% stake."
"What's today's share price?" Li Tang asked.
"57.8 USD," Alice immediately replied.
"Galuminium's historical peak price was slightly above 60 USD recently," Li Tang openly mentioned the company's valuation before Richard. "Currently, the price remains quite high. Vice-President Fukushima, if you find us an appropriate buyer, why not base our transaction price on today's valuation?"
Clearly, each side had its own criteria for evaluating the fairness of this price. Fukushima, naturally, hoped for a premium. After all, who wouldn't desire substantial gains?
"Many economic analysts recently declared Galuminium shares severely undervalued, forecasting a potential price exceeding 70 USD," Fukushima countered politely.
"I don't disagree," Li Tang acknowledged smoothly, yet quickly shifted perspective. "But economic analysts naturally thrive on rational analysis and bold predictions. As business managers, if we overly rely on analysts' external views, our own management decisions could become chaotic. They look from outside in; we look from inside out—our viewpoints differ fundamentally."
"If Mr. Li agrees to my earlier proposal, making Sanjing Trading the maritime logistics contractor for Lianying Mining's iron ore—with annual shipping volumes of 40 million tons under a 10-year contract—then…" Fukushima unveiled his carefully planned strategy, "I'd willingly accept your proposed price for Galuminium shares."
A 10-year, 40-million-ton annual contract totaled 400 million tons. At current shipping rates, the entire contract was valued above 2 billion USD—an enormous deal. By comparison, Sanjing's 5% stake in Galuminium was worth roughly 1.1 to 1.2 billion USD. Clearly, the logistics contract vastly outweighed the shares in value.
Li Tang couldn't suppress his laughter, impressed by Fukushima's calculating boldness beneath his outwardly humble demeanor.
"Vice-President Fukushima, your negotiation skills truly impress me," Li Tang commented humorously.
"This is mutually beneficial cooperation, isn't it?" Fukushima politely replied.
"Forty million tons annually means you'd control virtually all our maritime shipping," Li Tang remarked gently. "Vice-President Fukushima, that might not be entirely appropriate."
Fukushima smoothly adjusted his proposal. "As your mines increase capacity from 50 million to 100 million, then eventually 150 million tons annually, our shipping volumes can proportionally expand. Initially, we'll transport 20 million tons annually, then increase gradually to 50 million, eventually even 80 or 100 million tons. You'd save considerable hassle, and we'd maximize our logistics expertise."
"You're right," Li Tang habitually affirmed politely before offering his viewpoint. "Yet, plans rarely keep pace with reality. Production targets have already shifted timelines. Moreover, Lianying Mining seeks diverse partners for logistical flexibility. Committing all iron ore shipments to one company risks disruptions in smooth operations."
Internally, some at Lianying Mining had even proposed forming their own shipping fleet.
Because the port they built could only be accessed by cargo ships during high tides, loading operations were severely restricted. If they had sufficient capital to custom-build specialized cargo ships capable of carrying 200,000 to 300,000 tons of iron ore yet still maintaining a draft within 25 meters, their ships could dock for loading at any time, greatly enhancing transport efficiency.
Once the mine eventually reached its planned capacity of 150 million tons per year, establishing their own specialized shipping fleet would become increasingly essential. However, such customized super-sized vessels would cost over a hundred million USD each, far beyond what Lianying Mining could currently afford.
Yet having this target in mind would at least give them direction, guiding future actions gradually toward this objective.
If they signed a long-term shipping agreement now with Sanjing Trading, typically lasting ten, fifteen, or even twenty years among international mining giants, this would undoubtedly restrict their future shipbuilding plans.
Previously, when discussing this with Frette, Li Tang had agreed to engage multiple shipping contractors, allocating each around five to eight million tons annually. This arrangement would foster competition among shipping companies, allowing greater flexibility in pricing negotiations.
Thus, Li Tang could not possibly accept Fukushima Rikihiro's current proposal. Agreeing would disrupt Lianying Mining's established transportation plans entirely.
"We enjoy competition and are willing to be one of several contractors for Lianying Mining's iron ore transport," Fukushima Rikihiro acknowledged pragmatically. He knew perfectly well he had no justification for monopolizing all of Lianying Mining's shipping business.
He wasn't Li Tang's father, after all, and couldn't make such unreasonable demands. Yet, discussing this face-to-face today and using it as leverage for the Galuminium share deal was meant to persuade Li Tang into giving Sanjing Trading an opportunity to cooperate.
Lianying Mining had already evolved into a globally recognized mining giant, its market valuation surpassing 40 billion Australian dollars, rivaling century-old industry giants.
If future iron ore production truly rose to 100 million or even 200 million tons annually, the logistics revenue generated would become enormous every year! Sanjing Trading, being the world's largest maritime logistics company, couldn't possibly ignore such a lucrative opportunity.
This was precisely why Fukushima had repeatedly visited Li Tang, persisting despite never having succeeded in meeting him before. Ignoring such enormous business was unthinkable. Moreover, as Sanjing Trading's Chief Representative in China, securing such contracts was exactly his duty. If he failed to secure any orders from Lianying Mining, it could even be considered a failure on his part.
After all, Lianying's parent company, Prosperity Holdings, was headquartered in Yanjing—right within Fukushima's reach. Losing such a golden opportunity would be impossible to justify to his headquarters.
He firmly believed that if given the opportunity, Sanjing Trading's unparalleled global logistics services would impress Li Tang and Lianying Mining, potentially leading to deeper future cooperation or even strategic investments into Li Tang's mining businesses.
"I can relay your interest to Lianying Mining's team and secure a shipping contract of about five million tons annually," Li Tang evaluated this carefully and found the figure feasible. After all, Lianying was actively seeking new shipping contractors. Engaging Sanjing Trading—the world's leading logistics firm—was certainly not a bad idea. Five million tons annually was just a modest starting point.
"Only five million tons?" Fukushima clearly wasn't fully satisfied, having ambitions for much greater volumes.
"This is just preliminary. If our mining capacity and production really take off, we can sit down again and renegotiate, alright?" Li Tang looked directly at Fukushima, adding diplomatically, "You constantly praise Sanjing Trading's first-class service—so let us experience your quality firsthand."
"Our service will definitely satisfy you!" Fukushima proudly affirmed, genuinely confident in Sanjing's capabilities.
"Well, then, let's set aside shipping for now. Today's main agenda is Galuminium Group's shares," Li Tang redirected, pointing at Richard, who had been quietly observing. "Look, even our CEO nearly fell asleep waiting."
"Agreed." Fukushima nodded.
"At today's price of $57.8 per share, I'll fully acquire all of your Galuminium Group shares immediately," Li Tang swiftly offered, eager to finalize matters promptly.
"It must be a cash transaction, paid fully within one month—no installments or alternative payment methods," Fukushima laid out his conditions clearly, knowing a cash transaction was the safest and simplest arrangement.
"Deal!" Li Tang rose decisively, extending his hand to seal the agreement.
They quickly signed a preliminary agreement, planning to follow up later with a detailed formal contract. With this handshake, both sides effectively secured their objectives—the iron ore transport partnership for Lianying Mining and the 5% Galuminium Group share transaction.
"Immediately get in touch with Frette from Lianying Mining to finalize this shipping agreement!" Fukushima instructed his subordinates enthusiastically afterward. "Five million tons annually might seem small now, but it's an excellent start! Once they witness our fleet's outstanding efficiency and service quality, they'll surely grant us contracts for fifty million tons or more!"
He then cheerfully patted Yoshida Yuki's shoulder. Yoshida had been borrowed from Nippon Steel specifically to smooth relations with Li Tang, who Fukushima initially expected to be notoriously difficult to handle. Yet their conversation today went surprisingly smoothly, rendering Yoshida practically unnecessary.
"Congratulations, Vice-President Fukushima," Yoshida said politely. His relationship with Li Tang was tenuous, marked by brief encounters and even some friction. Initially, he'd feared his presence might even complicate negotiations. Seeing Fukushima's success now, he was genuinely relieved.
"Perfect!" Fukushima laughed heartily. "We were already planning to gradually sell off our Galuminium shares. A sudden bulk sale could depress the stock price significantly. With Li Tang now absorbing all our shares at once, our troubles vanish instantly. Two birds, one stone—such a satisfying outcome! Yoshida-kun, let's celebrate with a nice dinner tonight!"
Yoshida nodded cheerfully but then asked curiously, "Why would Li Tang purchase so many Galuminium shares? Isn't selling all our shares suddenly a bit risky?"
"Li Tang's just a geologist—what does he know about real investment?" Fukushima scoffed dismissively. "We hold a board seat in Galuminium and know its internal issues inside and out. Their European operations are an absolute mess, impossible to untangle. If those problems keep festering, they'll eventually drag Galuminium down completely."
"But despite poor financial reports over the past year, Galuminium's share price actually kept rising. Many economic analysts remain optimistic about the company's future, even ranking Galuminium among the world's most admired companies," Yoshida, a technician by training, observed in confusion.
"All superficial nonsense! Anyone can put on a glamorous facade to cover ugly wounds underneath," Fukushima replied confidently.
"But what if Alcoa really acquires Galuminium?" Yoshida cautiously pointed out.
Fukushima paused briefly, then shook his head decisively. "Alcoa and Galuminium are similarly sized. Neither can afford a significantly high premium for acquisition. Last time Alcoa made an offer, it was significantly below Galuminium's current stock price. Clearly, they lack sufficient funding for a high-premium takeover."
…
After leaving Galuminium's headquarters, Li Tang promptly summoned Alice and Gao Jingjing.
"Jingjing, immediately book tickets—we need to get to Hong Kong as fast as possible!"
"Yes, sir." Jingjing swiftly departed without hesitation.
Li Tang then addressed Alice, "We currently have some foreign currency already transferred into our newly established Hong Kong investment firm. In the meantime, arrange for our people to acquire as many Galuminium shares as possible from secondary markets in Toronto and New York, before news breaks that we fully purchased Sanjing Trading's shares."
"Understood," Alice acknowledged, adding, "However, I still need to complete the mineral rights transaction with Barrick Gold. Only after securing that $250 million USD can we significantly expand our operations."
"Handle both simultaneously," Li Tang pressed urgently. "Also, investigate Galuminium's convertible bonds. If buying shares directly proves too expensive or difficult, purchase more convertible bonds instead."
"At what maximum price per share should we buy Galuminium stock from secondary markets?" Alice asked carefully.
"Anything below seventy USD per share—buy without hesitation!"
"Seventy dollars per share?" Alice hesitated. Clearly, this was an unusually high valuation, far above current market expectations. Such a price only made sense if someone intended to initiate a high-premium takeover of Galuminium.
"Yes," Li Tang answered firmly without any doubt.
"I understand," Alice responded quietly, suddenly feeling immense pressure. "But our funds are still severely limited—even with Hualu Group's involvement, it might not be sufficient."
Li Tang sighed, briefly troubled, "Previously, Lianying Mining borrowed four billion yuan from the Export-Import Bank, guaranteed by Prosperity Holdings. I also contacted Jiang Sizhe at Huaxia Bank, who indicated we could quickly secure another loan using Zhongcheng Mining shares as collateral, but converting funds to foreign currency involves complicated procedures, potentially delaying our timeline."
Alice rarely saw Li Tang this concerned, realizing how seriously he took this venture.
"Is investing in Galuminium really worth all this effort?" she asked, genuinely uncertain.
"Of course, it's profitable!" Li Tang laughed confidently. "Domestic loans, the Barrick Gold mineral rights deal, acquiring secondary market shares—all rest squarely on your shoulders. I worry about your workload, and unfortunately, there's little else I can do to help."
Alice smiled reassuringly, "Don't worry—I've built a capable team, especially our investment department. Managing domestic financing is something we're quite familiar with. Trust me; we have adequate personnel."
"Then I'll head to Hong Kong with confidence."
"What will you do in Hong Kong?"
"This investment uses Hong Kong as our base. We'll likely partner with local enterprises and seek additional financing from investment banks there."
Previously, Li Tang had primarily funded exploration with his own capital, requiring little intricate financing. Now diving headfirst into high-level financial investments, he suddenly recognized the vast complexities ahead.
"Be careful and stay in close contact," Alice urged gently, immediately diving back into her demanding workload.
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