Chasing Stars in Hollywood

At Simon's desk, a woman in an OL (Office Lady) suit handed over several documents and introduced, "Boss, these are the latest meeting notes on the Christie's acquisition negotiations from Europe, along with the collected information on the auction industry you requested. Additionally, here is the agenda for tomorrow's work in San Francisco."

Simon turned off his computer and picked up only the meeting notes on the Christie's acquisition. "Let's head home. I can review the rest of the documents there."

Allison quickly gathered the remaining documents and followed Simon out of the office.

As they walked through the corridor and into the elevator, Simon opened the notes and directly searched for the part he was most concerned about.

After agreeing on Sophia's plan to acquire Christie's Auction House a few days ago, the senior management began negotiations with Christie's management and shareholders.

Christie's, like its rival Sotheby's, has been a publicly traded company for over two hundred years.

Due to the economic downturn affecting the auction industry, Christie's recent market value has dwindled to £430 million, approximately $670 million, which is only about 13 times its earnings from the previous fiscal year.

Public companies' stock prices tend to reflect their long-term business prospects.

With a P/E ratio of only 13 times, it's evident that the capital market holds a bleak view of the future for this venerable auction house.

Following the acquisition plan's approval, Melisandre's company began secret negotiations with Christie's shareholders and management while simultaneously quietly accumulating the company's shares. This way, even if the acquisition couldn't be completed, Melisandre could still profit by selling the shares at a higher price.

In reality, Simon wasn't particularly determined to acquire Christie's. Hence, the arrangement.

Initially, Christie's board proposed an acquisition price at 20 times its P/E ratio, totaling $1 billion, which is a 50% premium over its recent market value.

For a hostile takeover, a 50% premium isn't considered high.

However, Christie's case is different due to the inherent limitations of the auction industry.

Investing $1 billion in the internet could potentially yield returns hundreds of times greater in the future. Investing in fashion, if managed well, could also yield tenfold returns.

However, because the auction industry primarily caters to high-end clientele and its market size fluctuates cyclically with the economy, even if the auction house provides stable returns during prosperous times, Christie's intrinsic value wouldn't increase significantly over the next ten or twenty years.

In a decade, tripling the value of this auction house would be its limit.

Therefore, in Simon's plan, the maximum premium he was willing to offer above the recent $670 million market value was 30%, bringing the total to around $870 million.

If an agreement couldn't be reached within this 30% premium, Simon would decisively abandon the acquisition.

At that point, selling the accumulated shares during a price surge caused by leaked news to make a quick profit wouldn't be illegal.

Moreover, Simon didn't plan for Melisandre to shoulder the entire $870 million. Cersei Capital's Apollo Management had agreed to invest $100 million, and Sophia was seeking other investment partners. Simon's goal was to achieve Melisandre's absolute control over Christie's.

However, while Simon saw it this way, others didn't necessarily share his view.

In recent years, enterprises favored by the Westeros system have shown strong growth momentum, creating a pronounced halo effect. Any field the Westeros system showed interest in quickly attracted widespread attention.

Thus, when Melisandre made an offer for Christie's, it wasn't just outsiders but also many of Christie's shareholders and management who began to change their initially pessimistic outlook on the auction house's future.

After all, this was a company Simon Westeros was interested in.

Inevitably, Christie's may either see Westeros as a deep-pocketed sucker or may not even intend to sell anymore.

With the US economy yet to fully recover and Europe recently weathering a financial crisis, the likelihood of competitors bidding against the Westeros system for Christie's was low. If negotiations fell through, Simon had no intention of initiating a hostile takeover. Christie's wasn't worth a hostile bid, which everyone was aware of.

In summary, the acquisition's future was very uncertain.

The notes in Simon's hands reflected this.

Over the past two weeks, during two separate meetings, Christie's board had shown no sign of budging from their $1 billion offer.

Additionally, Christie's stock had seen an 11% rise over the past two weeks, indicating that news of the negotiations had quietly leaked.

The drive from Malibu's Daenerys Studio back to the estate at Cape Dume was short. Sitting quietly beside Simon, Allison Knowles noticed he was still engrossed in the documents as they neared home. After some thought, she spoke up, "Boss, I don't think acquiring Christie's is such a good deal."

Simon looked at her, smiling, "Why do you think so?"

Allison, clearly having done some research, replied, "The auction industry itself has limited growth potential, and its annual performance is highly unpredictable. Even if you believe the world economy will recover rapidly in the coming years, spending over $800 million in cash still seems excessive. This money could yield better returns if invested in other areas."

Simon nodded. "You're right. However, I don't plan on using all my own money to buy this auction house. And buying Christie's isn't just about acquiring an auction house."

Simon didn't elaborate further, leaving Allison to understand on her own.

High-end auction houses cater to the elite at the top of the pyramid. Owning Christie's would be akin to holding a golden ticket to a vast network of connections.

With wealth at an unparalleled level and immense influence in Hollywood, Simon recognized the growing importance of relationships even at his current stature.

Moreover, the glamorous part of the auction industry is just what's visible above the surface.

Below the surface lies a world of money laundering, tax evasion, and secret transactions.

Ideally, Simon would prefer the Westeros system to operate transparently.

However, that remains a fantasy.

Recently, Simon had been discussing with his core team about significantly increasing the Westeros system's "investment" in the political arena.

According to preliminary plans, in just one year, the Westeros system, including Danerys Entertainment, Cisco, AOL, Verizon Telecom, Cersei Capital, and Igrette, aimed to spend $100 million on political donations and lobbying in 1993 alone.

In this era, possessing $300-$500 million could secure a place on Forbes' list of America's 400 wealthiest.

The Westeros system's planned annual investment in politics might seem extravagant, but it was necessary. Even if a significant portion of this spending ended up wasted, it wouldn't be reduced. On the contrary, this expenditure would only increase in the future.

Moreover, much of this $100 million wouldn't be openly disclosed. According to US lobbying laws, perhaps less than a fifth would be officially recorded.

But simply throwing money wasn't enough.

Even for self-preservation, the Westeros system inevitably needed to delve into the "deep waters" of this world's darker aspects.

Acquiring Christie's and controlling this historic auction house could facilitate numerous future operations.

People outside the USA often view it as an exceptional country. However, being within and experiencing its complexities, one realizes that despite different languages, systems, and ideologies, the fundamental nature of many issues is remarkably similar worldwide.

Because human nature is universal.

Allison, sharp-minded, quickly grasped Simon's point and wisely refrained from further comments.

The next day, February 25th, Thursday.

Simon left early for San Francisco.

Igrette's 1992 annual financial report had recently been released.

Compared to Danerys Entertainment's steady growth, Igrette's past year was nothing short of explosive.

Thus, when the new annual report was released, the entire Igrette management team was a mix of overwhelming joy and palpable unease.

Igrette's 1992 financial data was exceptionally eye-catching.

In 1991, Igrette's annual revenue was $491 million, with a staggering $381 million loss, nearly wiping out the net worth of someone on Forbes' list of America's 400 richest.

Whether it was the $491 million revenue in a nascent industry or the jaw-dropping $381 million loss, both figures sparked intense media attention early last year.

However, the 1992 figures would draw even more attention.

In 1992, Amazon Online Mall, which opened early last year and benefitted from Igrette's exclusive gateway to the World Wide Web's massive traffic, achieved $623 million in annual sales in its first year of operation.

This was a milestone Amazon originally took three years to reach.

While retail typically sees higher sales figures with lower profit margins, the $623 million in Amazon Online Mall's annual sales still surpassed Igrette's total revenue in 1991.

Amazon was just one of Igrette's core businesses.

Additionally, thanks to the near-exponential growth of web traffic over the past year, Igrette's YWS division also achieved $437 million in revenue from software sales, server space rentals, solutions services, and corporate email licensing.

Of this, the most basic web design software alone sold $283 million, surpassing the $233 million from the IE browser software.

Igrette's most valued advertising business grew significantly from $83 million in 1991 to $278 million in 1992, a 330% increase, as traditional advertisers like Coca-Cola and P&G joined existing tech giants like IBM, Compaq, HP, Microsoft, and Intel.

Finally, with various other revenues from Ystore, Ypay, and other miscellaneous sources, total income reached $366 million.

Overall, Igrette's total revenue for 1992 was $1.937 billion.

This represents a 394% increase compared to 1991.

Even after accounting for a

 $139 million net loss for 1992, the revenue growth rate was extraordinary. Even if the company's loss had doubled, it would have been worth the investment.

In 1991, the financial data hinted at the enormous growth potential of the internet industry. In 1992, Igrette's performance reached a level that could make anyone green with envy.

A global economic downturn doesn't mean capital is scarce. In fact, more funds struggle to find the right investment avenues.

Igrette's 1992 financial report, once published, would be like a beacon in the darkest night for investors.

A single flame might draw a couple of moths, but a multitude would risk extinguishing the flame itself.

Igrette had a critical weakness with its monopoly.

The revenue from the fundamental web design and IE browser software was driven by Igrette's monopoly over World Wide Web technology.

While Microsoft had other competitors, and Oracle faced other database companies, Igrette's software stood alone due to its early strategic positioning and patent barriers.

Thus, with the market demand ballooning, these two seemingly insignificant software products brought in huge revenue for Igrette.

In a market of growing need, these products, essential for everyone, required minimal marketing, achieving profit margins exceeding 80%.

These foundational tools were just one facet of Igrette's monopoly.

Originally, the internet industry began to flourish in 1995, with a diverse range of companies like Netscape, Microsoft developing browsers, Yahoo offering portals, and Amazon and eBay leading e-commerce. At that time, web services, software, and server rentals were fields with many players.

Currently, due to Igrette's early establishment of a World Wide Web technology patent barrier, they held a unique position in the internet space. From core software to server rentals, to graphical browsers, and successful online businesses like portals and online malls, Igrette dominated it all.

Thus, as the internet industry took off, Igrette expanded rapidly.

A near 400% annual growth rate meant that even if it slowed in the following years, Igrette had the potential to become a behemoth with revenues reaching into the hundreds of billions.

While other sectors struggled under the weight of a sluggish economy, Igrette alone thrived in a pasture teeming with abundant resources.

What's the outcome?

Capital, entering the world, is soaked in blood and dirt from head to toe.

With a 10% profit, capital is attracted; with a 20% profit, it becomes bolder; with a 50% profit, it is ready to risk everything; with a 100% profit, it defies all laws; with a 300% profit, no crime is too great for it to commit.

Marx said this in "Capital."

Now, with Igrette's monopolistic grip on the internet industry, it stands on the brink of potentially reaping over 1000% profit.

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