[Chapter 502: The Madness Will Eventually Come to an End]
A new year had begun, and humanity officially stepped into the 1990s. Clearly, this year didn't look too promising, especially for the Japanese, who faced incredibly tough times.
The past decade had not left much for America to reminisce about. With severe inflation paired with a serious economic crisis, America was certainly having a tough time.
A Japanese bomber circled over New York City, but instead of dropping bombs, it released various electronic products and cars.
This was the cover of Time magazine, and you could just imagine the depth of resentment behind it!
For the past two years, various proposals targeting Japan had never ceased. Many lawmakers stubbornly believed Japan was waging a financial war against America, with the aim of destroying the very foundation of the country.
Well, William White believed that the average Joe might think so, but those renowned economists couldn't possibly make such a foolish mistake.
Are you guys really unaware that American conglomerates are causing quite a stir in Japan? They're all getting fat off it now.
A financial war launched by Japan?
Come on, that's a joke. All these sudden short-sell agreements are clearly the handiwork of firms like Morgan Stanley and Goldman Sachs.
The knives were sharpened, and the moment the opportunity arose, they were ready to strike. You guys at Newsweek are quite amusing, though -- you even find time to poke fun at Japan.
"Sir, there are rumors that Japan is going to levy a land tax, one that's punitive in nature. The Nikkei index is crashing because of it."
"Hey, what's the date today?"
"January 12."
Filson was dumbfounded. The boss had recently taken on the role of a good father and had lost track of time.
"Land tax? That can't be true, right? If so, then Japan is really finished."
"For now, it's just a rumor. Prices of land and property are still stable, but related stocks are unmanageable."
"Wait a second, weren't you saying not long ago that Panasonic planned to acquire Universal Pictures? How's that stock doing?"
"Their average price-to-earnings ratio is around a hundred times. Stock declines are plain obvious but shouldn't greatly impact their operations. I really can't understand why MCA hasn't sold earlier at $7 billion."
"Ha! Greed gets the best of them. Honestly, $7 billion is probably a no-go now; at most, it's $6 billion. If they don't sell soon, they might not sell it at all."
William White was right on the money; MCA was currently suffering. If the deal had gone through, they wouldn't just break even, but would have made a decent profit. Now, the sudden crash in the Japanese stock market dealt them a fatal blow.
In reality, MCA was overthinking things. If it weren't for their wariness of William White, Panasonic might have even considered acquiring White Films outright. The temporary fluctuations in stock prices wouldn't alter their long-term strategy.
There were plenty of reasons to acquire an American film company. Disney was raking in profits from its parks in Japan. Why would the Japanese be indifferent to that?
Since the Japanese liked Hollywood so much, why not buy it outright? And let's not forget Universal Studios, which was a terrific investment as well.
Well, they had indeed tested the waters. The one they most likely to buy was undoubtedly Disney. The Japanese had their eyes set on Disney far more than Universal.
However, William White wasn't playing ball. He shot back at Goldman Sachs' attempts to coax him, without even listening to their offer.
Goldman Sachs could only marvel at William White's obstinance. But when faced with someone who wasn't cash-strapped, there wasn't much they could say.
What Goldman Sachs didn't know was that William White didn't dare listen. He wasn't sure if he would sell. After all, the Japanese were unpredictable. If they presented an unbelievable offer, William White would absolutely be torn.
If a severely loss-ridden Universal was worth $7 billion, then what would high-performing Disney be worth? Very few could make a proper guess.
"Filson, Hollywood's inflated valuations won't last much longer, right?"
"I think it's about done. If there are no surprises, MCA will likely choose to lower its price."
"Ha ha ha, isn't that self-sabotage? At least $500 million is gone; let's see if these fools can stay pretentious."
"Sir, if two Japanese film companies were to merge, Hollywood's landscape might change, so we should keep a closer eye on this."
"Yeah, I get it. I'll have someone monitor it."
Though William White said that out loud, he was actually skeptical. The enmity between these two companies ran deep, and any cooperation was virtually impossible.
Panasonic was a traditional Japanese company, while Sony had become a hybrid. In terms of business philosophy, Sony resembled an American firm more closely.
Having suffered losses due to the VCR format, it was unimaginable for Sony to cooperate with its arch-nemesis. The hatred between these competitors was palpable, with no effort to disguise it.
Acquiring Universal Pictures would mark the final battle. The plummeting stock market troubled Japan but hadn't reached a level of national security threat.
..
"That's a bundled price of $6 billion. If you disagree again, it's back to square one for finding other intermediaries. We're out of options."
The head of MCA was furious. Just last year, he had spoken about assets worth more than 10 billion. Less than a month into the new year, and it was being slashed in half!
"Damn those guys! Their stock prices plummeting has nothing to do with us. We can't accept that kind of pricing."
While the old man continued his ranting, the Goldman team had already started packing up. The guy across the table hadn't even grasped the situation. $6 billion was a significant premium, and Goldman Sachs couldn't see MCA turning it down.
They didn't expect that while they'd managed to sway the Japanese, trouble was brewing on MCA's end. Damn, if they had signed the agreement before the new year, everyone would've been happy! Our commission would also be secured.
To finalize the deal, they had even reduced their fees. This damn old guy wasn't buying it and was daydreaming instead.
If it were White Films, they'd have that kind of confidence. But who did MCA think they were?
Seeing Goldman Sachs' people leave, panic ensued. It wasn't that they didn't want to keep up appearances; Universal simply couldn't hold out any longer.
The free-fall of the Nikkei Index was nothing new to the American public, who had experienced it back in 1987.
Including Japanese economists, most professionals believed Japan's economy remained strong. This drop mirrored the US stock market crash of '87. In a year and a half at most, Japan's stock market would rise again; they were absolutely certain of it.
*****
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