This time, Barron acquired the shares of Gucci Group in the name of DS Holdings. DS Holdings mortgaged its 75% of Argos Retail Group shares, 78.5% of Woaw Technology shares, 31% of Argent Real Estate Group shares, and 20 million shares of Google to Northern Rock Bank and borrowed a total of 2.5 billion pounds.
Among them, Argos Retail Group was valued at 1 billion pounds, and 75% of Argos Retail Group shares were worth 750 million pounds; Woaw Technology was valued at 1 billion pounds, and 78.5% of Woaw Technology shares were valued at 785 million pounds; Argent Property Group was valued at 1 billion pounds, and 31% of Argent Property Group shares were valued at 310 million pounds; 20 million shares of Google were worth about 1.15 billion pounds at this time...
With the assets worth 3 billion pounds as collateral, Colin Hall of Northern Rock Bank lent DS Holdings 2.5 billion pounds, and the interest rate was only 5%...
It can be said that the terms of this loan are the best at present.
It is worth mentioning that, up to now, although Barron's industry has been expanding, the debt assumed by his DS Capital is also increasing like a snowball.
The larger debts alone include a £4 billion loan from Northern Rock Bank secured by O2 Telecom's shares - and this does not include the £2 billion of corporate bonds issued by O2 Telecom in two installments.
In addition, when acquiring Manchester United, the 400 million pounds raised from Goldman Sachs was later replaced by a loan of the same amount with a lower interest rate from Goldman Sachs, using 60% of Pioneer Sports Group's shares as collateral...
There is also the US$3 billion in financing from Goldman Sachs when acquiring the shares of Standard Chartered Bank; and the £1.55 billion loan from Standard Chartered Bank for the shares of Summit Media, a listed company held by DS Holdings.
That is to say, before this mortgage loan to Northern Rock Bank, all the shares held by DS Holdings in O2 Telecom, Pioneer Sports Group, Standard Chartered Bank and Summit Media were mortgaged.
Including the shares pledged to Northern Rock Bank this time, just on the surface, all of the relatively high-value company shares held by Barron's DS Holdings have entered the mortgage state.
Frankly speaking, this situation is still very dangerous for an investment company.
Fortunately, the companies that DS holds the mortgages have developed well and most of them are not listed. Otherwise, if there is an economic crisis or the stock price is shorted, the "value" of the mortgaged assets will decrease, and the banks will face pressure to collect the debts.
The loan of 2.5 billion pounds is equivalent to approximately 4.5 billion US dollars based on the exchange rate of 1.8 pounds to the US dollar.
After signing an agreement with Bernard Arnault's LVMH Group to acquire its 20% stake in Gucci Group for US$2 billion, Baron also sent someone to contact the management of Gucci Group.
The current Gucci Group owns several brands including Gucci, Yves Saint Laurent (YSL), and Sergio Rossi. Since April this year, Gucci Group's CEO, De Sole, who once led Gucci Group to resist the acquisition of LVMH Group, has had a conflict with PPR Group, the largest shareholder of Gucci Group, due to the decline in Gucci's performance in the past two years.
The PPR Group once considered replacing the CEO of the Gucci Group, fearing that once they gained more shares, de Sol's departure would be a foregone conclusion.
Frida Giannini, the creative director who made great contributions to the Gucci Group, and De Sole were lovers, and could be said to be inseparable - in the original time and space, the two left the Gucci Group together.
Therefore, at this time, DS Holdings under Barron's name purchased 20% of LVMH Group's shares and acquired 15% of shares from the secondary market, and its shareholding in Gucci Group reached 35%. When it was not much different from PPR Group's 42% shareholding, it was very important to obtain the support of Gucci Group CEO De Sole.
In fact, in 1999, when LVMH Group acquired 34% of Gucci Group's shares and became the largest shareholder of Gucci, Gucci Group's CEO De Sole once asked Bernard Arnault to let LVMH acquire the Gucci Group in its entirety.
However, Arnault rejected this proposal at the time. The main reason was that after LVMH had made several acquisitions, the remaining funds were not enough to completely acquire the Gucci Group. In this case, Arnault hoped to achieve the goal of killing two birds with one stone by holding a controlling stake in the Gucci Group.
On the one hand, it can control the Gucci Group at a relatively low cost, thereby suppressing the other party's strong competition in the luxury goods field; on the other hand, it can obtain considerable returns from this investment.
Arnault's idea is definitely unacceptable to the Gucci Group. It's like the United States' attitude towards Mexico. It doesn't want you to fully join the United States, but it wants to take away your richest territory. If you have no power to resist, it would be fine, but if you can resist, the Gucci Group certainly cannot surrender.
At that time, they approached the PPR Group. Before that, the PPR Group had not entered the luxury goods field. Therefore, if the PPR Group became a "white knight", it would not be harmful to the Gucci Group.
But the problem now is that after acquiring 42% of Gucci Group's shares, PPR Group also saw the "money prospects" in the luxury goods sector. Although PPR Group could not increase its shareholding in Gucci Group in the past five years, they turned to support Gucci Group's acquisition of a series of luxury brands including Bottega Veneta and Balenciaga. When PPR Group obtained these additional shares, it invested a lot of money in Gucci Group, which became the ammunition for Gucci Group to acquire these brands.
As the five-year period is approaching, the PPR Group is bound to significantly increase its stake in the Gucci Group.
If no one else showed up, even if there were differences in business philosophy with the PPR Group, the Gucci Group would eventually have to accept being completely acquired by the PPR Group. This would be a better outcome for the group than being acquired by the LVMH Group.
But now, with the emergence of DS Holdings, De Sole has another option - you know, Gucci management still holds about 10% of Gucci Group's shares. The shares they hold plus DS Holdings' current 35% of shares already exceed PPR Group's holdings.
If DS Holdings can work harder and hold more than 40% of Gucci Group's shares, then it will be invincible if it cooperates with Gucci Group's management...
Therefore, in the competition for the Gucci Group, the most important thing, in addition to continuing to absorb Gucci Group's shares, is to persuade De Sol to cooperate with their side and expel the PPR Group.
The $4.5 billion in funds currently held by DS Capital are fully capable of supporting them in achieving this goal.
What Barron did not expect was that when facing the representative of DS Holdings, De Sol asked to meet with Barron directly.
So the Gulfstream G450 took off from France and flew to Italy.
After meeting Barron, De Sol asked directly:
"Your Highness, I just want to know whether you have the ability to completely acquire the Gucci Group."
De Sole asked Bernard Arnault the same question five years ago, but unlike Arnault, Baron gave an affirmative answer without hesitation.
"I can help you complete the acquisition of Gucci Group, but there are two conditions. The first is that you must acquire Gucci in full. The second is that even if you acquire other luxury brands in the future, you must acquire them with Gucci Group as the core."