Chapter 1120 Crazy MBO

Although Fan Wubing was operating in many ways, taking precautions and worrying about the stability of his father's position, his father Fan Heng himself did not take this seriously.

In Fan Heng's view, he has indeed done a lot over the years. With the help of his son, whether it is building a rock, developing the economy of Jiangnan Province, or the series of efforts he has made since joining the State Council, State-owned enterprises have made remarkable achievements in making breakthroughs in several major projects.

Even though he doesn't appear much and spends most of his time operating behind the scenes, when he reaches a certain level, people feel comfortable with what is right and wrong, and he doesn't necessarily have the ambition to fight for power.

On the contrary, it was Fan Heng's high-level career in the past few years that made Fan Heng feel so tired. After all, it is quite tiring to deal with so many things and face a battle of wits and courage with a group of subordinates who are always ready to be cunning.

Even in this restructuring activity of changing property rights, there are many disturbing things.

In this property rights movement, due to the lack of institutional guarantees and regulations, almost all corporate property rights changes have turned into a huge risk, right or wrong. There is often no clear line between legality and illegality, and the fate of entrepreneurs suddenly becomes extremely dangerous and unpredictable.

Just this year, two legends in China's dairy industry both started exploring property rights in the companies they founded. The difference in their fates still makes people sigh after many years.

One of these two people is Zheng Junhuai from Yili and the other is Niu Gensheng from Mengniu.

In 1981, Yili was just a Hui food factory under the Hohhot Municipal Government with a profit and tax of less than 50,000 yuan this year. Under the management of Zheng Junhuai, Yili seized the development opportunity of China's pure milk market and built the largest dairy enterprise in China at that time. In 1996, Yili became one of the first listed companies in Inner Mongolia. This year's sales revenue reached 40 Yiwu.

As early as 1999, Zheng Junhuai tried to carry out property rights reform. Under the premise that it was impossible to directly seek to clarify property rights, he, like many people at the time, chose the path of "curved assistance".

He and more than 20 Yili executives invested in the establishment of a Huashi Trading Company and successively acquired the legal person shares of Yili held by a state-owned enterprise.

Since Zheng Junhuai's team did not have much cash, they adopted gray methods in the acquisition. Once Zheng Junhuai transferred 1.5 million of Yili's funds to Huashi Company and used the money to purchase Yili's legal person shares. Soon after, he transferred The money was quietly returned.

Another time, for a sum of 15 million Yili shares, he instructed a dairy farm that had close business dealings with Yili to obtain a loan from the bank for Huashi to purchase Yili's shares. Huashi then pledged the purchased legal person shares to obtain the loan from the bank. The loan is repaid to the dairy farm which then repays the money to the bank.

This empty-handed approach was almost universally used back then.

Zheng Junhuai's approach seemed very smooth and seemed to have the tacit approval of the local government.

By this year, the Hohhot State-owned Assets Administration Bureau has transferred all the state-owned shares it holds to the Municipal Finance Bureau and transferred 5 million shares to the company invested by Zheng Junhuai's team for a fee.

At this time, Huashi Trading had been renamed Qiwu Investment, which suddenly became the second largest shareholder of Yili.

While Zheng Junhuai was trying to obtain Yili through a curve, one of his old subordinates, Niu Gensheng, chose another way.

Niu Gensheng, who is four years younger than Zheng Junhuai, once worked hard for the world with Zheng Junhuai. He was a poor child and was sold to others for fifty cents by his extremely poor parents one month after he was born. He had been herding cattle on the prairie with his adoptive father since he was a child and later entered the industry. He worked hard as a bottle washer in the Huimin Food Factory and rose to the position of workshop director. In 1992, he was appreciated by Zheng Junhuai and became the deputy general manager in charge of operations.

Niu Gensheng is particularly ruthless in the market and very considerate of people's hearts.

This person doesn't read much, but he naturally understands the principle of "spreading money and gathering money, gathering people and scattering".

One year, Zheng Junhuai gave him a bonus to buy a high-end car. As soon as he turned around, he divided the money into several low-end cars and distributed them to his subordinates.

Since he is in charge of Yili's marketing and advertising, he is very active in the media. At one time, the outside world only knew Lao Niu but not Zheng.

In 1998, the relationship between Zheng Junhuai and Niu Gensheng deteriorated rapidly. Niu Gensheng was suddenly dismissed for no reason.

The next year, Niu Gensheng and several people raised 10 million yuan to start Mengniu. He later recalled that at that time, he rented a small bungalow as an office in a residential area in Hohhot. The total monthly rent was only more than 50 square meters. More than a hundred.

When Mengniu was founded, it had no milk source, no factory buildings, and no market. It could be said that it had nothing. It ranked more than 1,100 among national dairy companies. But what Niu Gensheng has is the connections and experience accumulated in market operations over the years.

At that time, domestic milk packaging mainly used Tetra Pak bricks and pasteurized milk. Tetra Pak, the world's largest flexible packaging supplier, promoted it in China.

Yili and others were unwilling to take risks, but Niu Gensheng, who had no money to buy a production line, dared to give it a try and unexpectedly succeeded.

By the end of last year, Mengniu's sales revenue had exceeded 700 million, becoming the fourth largest pharmaceutical company in China.

This year, almost at the same time as Zheng Junhuai made music, Niu Gensheng also made innovations in equity.

Morgan Stanley in June. CDH Investments. Fubu, an international institution from Actis Investment, invested US$60 million to invest in Mengniu. The two investors also proposed a harsh gambling agreement while investing. If Mengniu's annual earnings per share compound growth rate falls below 50% in the next year, the management headed by Niu Gensheng will have to pay a foreign shareholder 7,000 yuan. If the management can achieve the above targets, the two foreign shareholders will add 78 million shares to Niu Gensheng's team.

Niu Gensheng was very eager for the money at this time and took the risk again to sign and accept the bet.

Although the equity reform of Yili and Mengniu has been widely discussed, everyone does not know much about the inside story. However, judging from the superficial behavior, it is obvious that Niu Gensheng's approach is more clever.

In fact, Mengniu's time-betting approach should fall within the category of equity incentives. As long as your management has the ability, investors will be willing to spend large amounts of money to reward you and make you a shareholder. If you don't have the ability, then just pack up and leave. As long as I have money, management can't hire me anywhere.

Yili's approach is obviously very problematic. The method of secretly achieving management shareholding through gray means is untenable in itself.

In fact, subsequent facts also proved this point. The fates of Bei Junhuai and Niu Gensheng took different directions here.

Two years later, Zheng Junhuai was reported to have embezzled state-owned assets. Zheng Junhuai was already traveling in a gray area of ​​the law and found it difficult to defend himself. In court, Zheng Junhuai said that everything he did was to solve the problem of the source of management's shareholding, and he still did not understand that his behavior was illegal.

Zheng Junhuai was eventually sentenced to six years in prison for embezzlement of public funds.

Niu Gensheng became a lucky man and won the bet with his management.

In the same month that Zheng Junhuai was reported, Mengniu was listed on the Hong Kong Stock Exchange and raised a total of more than 1.1 billion. Hong Kong Wu Niu Gensheng entered the Forbes list of China's richest people that year with a net worth of US$12.5 billion.

Of course, no one can see this at this time. Even those who see the problem are holding back because it is unreasonable to discuss this matter under the premise of large-scale restructuring, and this matter, especially the gray curve, is helping In fact, their behavior will become the handle that someone has, and when necessary, he will stab the rich in the back and ruin their future.

When Fan Wubing discussed with his father Fan Heng, he said that in essence, privatization is a process of enterprise privatization, and because of this, it is not suitable for enterprises in monopolistic and resource-based industries such as telecommunications, energy, aviation, and transportation. It is related to the national economy and people's livelihood, and it is impossible to put it under the control of a few people. It is related to the economic lifeline of a region and even a country. "

Fan Wubing then said that it is relatively more suitable for competitive industries because the integration of operators and owners reduces agency costs. The speed of market response and decision-making is accelerated, making it easier for companies to stand out in the fierce market competition. The state-owned economy must make major strategic adjustments, insist on progress and retreat, and do something and not do anything. This includes providing room for maneuver for relevant enterprises. Of course, even if it's smooth. It must also be carried out under the legal sun. If it is done privately and without the knowledge of all employees, it is undoubtedly embezzlement of state-owned assets. "

What you mean is that Mengniu’s approach is worthy of recognition but Yili is very problematic. Fan Heng asked.

Fan Wubing nodded and responded, "This is natural. I think you should pay special attention to Yili's problem." Although this is a corporate behavior that deviates from the central government’s policies, as the top leader who has been responsible for this matter for more than two years, you cannot leave such a story behind so that someone can use it to attack you in the future. "

After hearing this, Fan Heng thought about it carefully and realized that it was indeed the case. Even if this person did not use it to attack him, he might use it to attack Boss Zhu, the great butler. Therefore, Fan Heng decided to investigate the matter and see what was going on. Is there any problem that needs to be solved?

At the same time, some deviations and corruption phenomena that occurred during the restructuring of state-owned enterprises also need to be corrected in a timely manner.