Unexpectedly, Sun Hongbin, the chairman of Sunac China, helped his Shanxi fellow and the founder of LeTV Holdings, Jia Yueting. In the past six months, the music department led by Sun Hongbin’s fellow villager has been deeply troubled by the tight capital chain.
On the evening of January 13, Sunac China announced that Sunac’s strategy to acquire LeEco was to acquire 8.61% equity of LeTV.com for RMB6.041 billion, to acquire a 33.5% stake in Leshizhixin after the issuance of RMB7.9 billion, and to acquire LeTV as RMB1.05 billion. 15% of the film industry. At this time, Sunac spent a total of 15.041 billion yuan. After the transaction is completed, Sunac China will become the second largest shareholder of LeTV, which is listed in the LeTV system, and become an important shareholder of LeTV's super TV and film industry.
For the financing of the entire music system, the company's founder, chairman and CEO Jia Yueting said in a recent media interview that "the next three to four months will gradually solve the funding problem." Earlier reports said that three or four real estate developers in China promised to provide funds for LeTV, including at least Sunac and Country Garden, and decided to participate in the investment also included a private equity fund and a US investment bank.
Sunac China's strategic shareholding in LeTV is a "rejoicing" news for LeTV in crisis. The 15 billion strategic shareholding, as Jia Yueting said publicly, "With another 10 billion yuan, it will guarantee the large-scale mass production of Faraday's future FF91."
LeTV's financing, in addition to Sunac China's 15 billion, also includes Leran Investment and Huaxia Life's total investment of 1.8 billion yuan to LeTV, the total financing of about 16.8 billion yuan. And this amount is close to LeTV's operating income in the first three quarters of last year.
Real estate developer Sun Hongbin's "strategic investment"Sun Hongbin is known as the “M&A madness†in the real estate industry. In the past year, he rarely appeared in public. He described his status to the 21st Century Business Herald reporter as "a busy day, a lot of meals, old people on the road, and a lot of business trips."
Behind Sun Hongbin's state is that he has been launching a number of surprising large-scale mergers and acquisitions in the past year. However, the creation of this strategy by Sunac China is LeTV. This cross-border is still unexpected. On January 12, the 21st Century Business Herald reporter still asked Sun Hongbin for an uncertain attitude. Of course, according to the rules of the listed company, Sun Hongbin did not make any statement.
To sort out Sunac China's strategic shareholding, it can be divided into three parts. The first part is based on the LeTV network, a listed company in the LeTV system. The company acquired the 8.61% LeTV shares held by Jia Yueting for a total price of 6.041 billion yuan, equivalent to 5% of the average transaction price of the previous trading day after the suspension. Sunac has also become the second largest shareholder of LeTV. According to the data, LeTV has China's largest Internet content copyright library and the most advanced content production capabilities, the world's largest cloud video platform, China's largest smart TV company, has built "platform + content + hardware + software + applications" Internet video ecosystem.
The second part revolves around LeTV, which is based on the LeTV Super TV segment. Sunac acquired 33.5% of the shares after the issuance of RMB 7.95 billion, of which RMB 2.95 billion was purchased from LeTV and LeTV Holdings for a total of 26.1%. The former old stocks, at the same time according to the pre-investment valuation of 27 billion yuan, increased capital by 3 billion yuan, accounting for 10% after the issuance. According to the data, LeTV Super TV currently ranks first in the national smart TV market, and the market stock is expected to reach 40 million units by 2019.
The third part is centered on LeTV. According to the overall valuation of 7 billion yuan, Sunac acquired 15% of the shares held by LeTV Holdings for 1.05 billion yuan. In 2016, LeTV Pictures participated in a total of 11 films including investment, production, distribution, etc. The total number of box-offices in each movie exceeded 100 million, and the number of films exceeded 100 million. The participating films received a total of 3.95 billion yuan in box office, ranking second in the industry. Compared with the total box office of 2.274 billion yuan in 2015, the total number of box office increased by 73.7%, becoming the fastest growing company in the industry, including "Great Wall" and "Tomb Notes". , "Machinist 2" and so on.
Anyone who knows Sun Hongbin knows that Sun Hongbin's style is different from other real estate developers. With the gradual decline of the golden age of the real estate industry, many real estate developers are either eager to transform or diversify. However, Sun Hongbin focused on his "high-end boutique" and key urban residential layout, and has never done any other industry exploration.
People close to Sunac China said that this time, Sunac's shareholding is regarded as a “strategic investmentâ€. While enjoying the return on investment, Sunac also laid out its development ahead of its 5-10 years later. Although it belongs to two different industries, LeTV and Sunac have a high degree of strategic matching in the positioning of family consumption content and customer groups. According to reports, the two sides will conduct in-depth cooperation in their respective areas of strength and resources.
As the real estate industry faces an incremental ceiling bottleneck, the above-mentioned people believe that “whether it is scale or resources, Sunac has the need and ability to seek investment layout on a larger scale.â€
Cross-border possibilityLeTV's financing, in addition to Sunac China's 15 billion, also includes Leran Investment and Huaxia Life's total investment of 1.8 billion yuan to LeTV, the total financing of about 16.8 billion yuan. Compared with the rescue of the glasses won by LeTV, this time, it is clear that the “fundamental†of the LeTV capital chain can be stabilized.
Since November 2016, LeTV has ushered in the toughest moment since its inception. Jia Yueting ignited the outside world's attention to the fund situation of this "eye-scarred" company by means of an open letter. Subsequently, LeTV's layoffs, suppliers' arrears, and the continued decline in stock prices were all plagued by LeTV.
What is LeTV's total funding gap? Since LeTV is divided into listed companies and non-listed companies, this issue is still a mystery. LeTV Mobile is one of the hardest hit areas under the LeTV system. When Jia Yueting released an internal letter to disclose the financial situation, LeTV’s mobile phone was unable to achieve normal supply due to the supply chain funding gap. However, as of the recent LeTV mobile funding situation has not been resolved. Recently, an insider of a logistics company that did not want to be named told 21st Century Business Reporter that LeTV Mobile owed the company a sum of 10 million yuan, and the company is planning to sue LeTV for a refund.
The emergence of Sun Hongbin, while changing the fate of Jia Yueting, will also rewrite the decision-making status of LeTV's board of directors.
After the transaction is completed, LeTV will further improve the corporate governance structure of the listed company through the new investment decision-making committee, management committee, increase the nomination right of the strategic investor's board of directors, set up a full-time president or COO, and introduce advanced management experience and optimization. The management structure of listed companies, strategic investors will participate in important decisions of relevant companies by appointing directors and participating in shareholder meetings, which will help improve and optimize the shareholding structure of related companies, improve the efficiency and quality of business decisions, and improve operational efficiency and market. Competitiveness, build a long-term and stable shareholder governance mechanism, and reduce the management risks of listed companies in the rapid development and expansion of business and personnel.
At LeTV, Sunac will nominate one non-independent director and one independent director. After the reorganization, the total number of seats on the board of directors will be maintained at five. The investment decision-making committee and the management committee will be added, and Sunac will nominate one member respectively. After the completion of the investment, the company's articles of association will also be revised to redefine the scope of major issues approved by the board of directors, and stipulate that major matters must be approved by more than 2/3 members of the board of directors; in Lezhi Zhixin and Leshi Film, Rongchuang also One director will be nominated separately, and the total number of seats on the restructured board will be three and seven respectively.
This also means that after the completion of this transaction, Sunac, which has performed well in capital utilization and risk control in recent years, will bring positive improvement to LeTV's operation and governance.
Although in the open letter issued by Jia Yueting in November 2016, it said that it will promote LeTV's gradual shift to profitability, but the industry generally believes that it is not overnight to turn from huge losses to profit. Especially after Jia Yueting reiterated his determination to build a car, the latter’s industrial investment and return cycle was extremely long. This also constitutes a problem that still needs to be observed after LeTV obtained a strategic investment of 16.8 billion yuan including Sunac China.
However, the deal raised the possibility of cross-border real estate and IT. LeEco said that the two sides have established long-term strategic cooperative relations and carried out all-round cooperation in business cooperation, equity cooperation, capital market cooperation and other fields. Business cooperation includes but not limited to smart hardware, internet + real estate, automobile ecological town and film and television theme park. Such as Internet eco-towns, smart homes and smart communities.
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