The Chaebol Returns To The Presidency 1967 [EN]: Chapter 142

142. Cargill Hunting

His son replied hesitantly.

“I’m not sure. It seems like there’s some kind of shift happening in China. That’s why they’re buying so much.”

“What on earth are our global salesmen doing? Information is power, and they have less sense than a small-time operation. Fire them all!”

“Father, we’re weak when it comes to information about communist countries. They’re so closed off that without strong connections to the party leadership, we can’t get reliable estimates.”

“Damn it, I can’t stand communist countries. You can’t do business when you can’t figure out what they’re up to!”

He was criticizing others while running his own tightly controlled family business.

“China, with its billion-plus population, is the biggest grain market in the world, and we need to think about why we were so slow to react to the detente [easing of tensions], Father. Our information on grain harvests in Central Asian regions like Kazakhstan and Ukraine, which are part of the Soviet Union, is also severely lacking.”

“Hmm, hmm, so you’re saying this is all my fault?”

“It’s the fault of the entire management team. We need to rebuild our global information network immediately. We need to take quick, decisive action, especially in China.”

“Hmm, hmm, call a management meeting right away and put it on the agenda!”

“Understood.”

“But, can’t we just buy that Ag-Plan company?”

“Ag-Plan?”

“I hear they have an information network already set up in China. Acquiring them would be the fastest way to build our own.”

“Ah, that’s right! You truly are a management genius, Father.”

“I’m not just sitting here as a figurehead. Go and get to work on it right away.”

“Yes, Father!”

*

Ag-Plan Headquarters.

President Jung was meeting with a managing director from Cargill.

He had been planning to visit them, but they contacted him first, which suggested that things might be resolved more easily than he’d expected.

The managing director said,

“There are rumors that Ag-Plan has made a lot of money betting on soybeans in China.”

“It’s hard to keep something like that quiet. It’s true.”

“Derivatives are all about information, and it seems Ag-Plan has reliable sources in China?”

“Ag-Plan is a Korean company, and recently, we’ve had opportunities to get good information while strengthening our diplomatic ties with both China and Taiwan. Getting information on food stocks in communist countries isn’t just a business matter; it’s a matter of politics.”

“I suppose so. Communist countries are so secretive that they try not to reveal their weaknesses. They won’t show it even if their own people are starving.”

“That’s right. The people may be starving, but the leaders aren’t. The people are just tools to keep the regime in power.”

“What do those who are well-fed know about hunger? But it seems Ag-Plan’s size isn’t really suited for dealing with the billion-person Chinese market. You relied on Cargill for supplies last time, didn’t you?”

“That’s a valid point. That’s why we’re looking for ways to increase the company’s size now that we’ve entered the Chinese market.”

Like a predator spotting its prey, the Cargill managing director’s eyes gleamed.

“Cargill’s scale as a major grain company, including production farms, distribution, shipping, and storage, is the result of years of accumulation. Simply adding more warehouses won’t increase your scale overnight.”

“I’m well aware. Major grain companies have the power to control prices.”

“That’s why I’m telling you this. This could be a way to expand your scale. How about Ag-Plan merging with Cargill, President Jung? China would also prefer to trade with a global giant rather than a small company.”

President Jung put on a straight face and reacted with wide eyes, as if surprised.

“A merger?”

“There’s no need to see it in a negative light. You can either sell everything, including future profits, or you can have a stake in Cargill. In the future, you won’t have to work so hard to do business; you can just benefit from Cargill’s success. Doing business under the Cargill name will expand your scale immediately, rather than using an unfamiliar company like Ag-Plan.”

“Hmm, I’m not interested in selling everything, but I might consider taking a stake. However, Cargill is a family-owned company, isn’t it? I’m hesitant to get involved in a family stake where management rights or decision-making power aren’t guaranteed to outsiders.”

“…….”

“If it were a publicly traded company, I would have immediately merged the shares without hesitation. It’s a shame.”

“Hmm, listing… Listing requires transparent accounting and a complete change in management style. My father doesn’t want others telling him what to do with his business.”

“There are pros and cons.”

With that, the merger was essentially stalled after the first conversation.

Before finishing the meeting, the managing director asked a question he had been holding back.

“You’re buying corn this time. Is something happening in China?”

“I’m sorry, but I can’t share the details because it’s a trade secret. Let’s just say we have information about crop failures due to locusts, so we’re responding to it.”

“Locust crop failure….”

*

The Cargill managing director returned and reported to his father.

“They’d only consider a merger through a shareholding method if it were a publicly traded company.”

“Listing? Absolutely not! This is my business. I hate anyone interfering in my business.”

“And, they say corn crops will be poor in China due to locusts. That’s why they’re buying corn.”

“Locusts! That’s right, the Chinese continent is prone to crop failure due to pests, droughts, and locusts. Good, let’s bet heavily on the rise in corn futures prices! We need to make up for what we lost last time.”

“Understood.”

*

A while later. Cargill Headquarters.

The Cargill president was furious.

“What’s going on? Why is the corn price continuing to fall?”

The managing director said,

“That’s strange. It should be rising if there’s a crop failure in China. I need to check the situation in China.”

“Find out quickly! We can’t afford the losses in this situation!”

*

The Cargill managing director made an international call to President Jung.

“Is Ag-Plan also suffering heavy losses?”

– “Losses? What losses are you talking about?”

“The corn price keeps falling, doesn’t it?”

– “Ah, the price isn’t great. There’s a lot of supply because the U.S. has a bumper crop.”

“Isn’t there a crop failure in China? You said there would be a supply shortage due to locusts?”

– “Did I?”

“You said that last time.”

– “Ah, that’s not China, it’s Kenya in Africa.”

“Kenya?”

– “When did I say I was buying corn because of China? There was a famine in Kenya due to crop failure, so I bought it as aid for the UN Food and Agriculture Organization this time. I barely made a profit because the corn price was so low.”

“Oh, what a disaster! We bet a huge amount on futures, thinking it was China! This is really a big problem!”

– “Oh dear! I’m sorry. I would have given you more accurate information if I had known this would happen.”

They had fallen for a very simple trick.

– “Surely, Cargill isn’t in financial trouble or anything like that?”

“…….”

– “If you go public, you can raise a huge amount of capital at once. If you issue new shares instead of going to the bank, it’s like getting free money.”

“…….”

*

Cargill Headquarters.

An emergency was declared.

A family meeting was held.

The president glared at the managing director and shouted,

“What are we going to do about this? The losses from the corn futures crash are enormous! We can’t even pay our debts! If people find out about our financial situation, the farmers won’t sell us their grain! Where did you get such ridiculous information that put us in this mess?”

“I did my best, Father. This is the downside of family management. We only exchange information with a limited number of contacts, so there’s no cross-checking, and we couldn’t filter out the risks.”

“Shut up! It’s because you’re incompetent!”

The vice president, his uncle, stopped him.

“Brother, calm down. He didn’t do it on purpose. What can we do about a misjudgment that happened while working? In fact, the managing director’s words make sense. Our company is too closed off and vulnerable to biased information.”

“…….”

“And it’s also a problem that we don’t separate grain trading from derivatives trading. We should leave finance to financial experts. What do we farmers know about that? That’s why we need to become a public company.”

“Hmm.”

“Father, you hate closed communist countries, don’t you? If others see it, they’ll accuse Cargill of being just as closed off.”

“Enough! The urgent thing now is to get out of this financial crisis!”

“That’s why we need to go public, Father. If we issue new shares, we can get hundreds of millions of dollars from investors as capital. We won’t have to beg the bank for loans.”

“Hmm!”

The president’s resistance was weakening.

The vice president urged him on.

“It’s also a good way to hand over the management to professional managers and live comfortably while collecting dividend payments, Brother.”

“Hmm, is that what everyone thinks?”

“The best way to overcome the current financial crisis is to cover up the problem by going public and keeping the business afloat with the money from the newly issued shares, President.”

“Hmm….”

The president’s eyes darted back and forth.

And finally, he decided to go public.

*

The managing director had an international phone call with President Jung.

“As you advised, we have decided to go public. We are adjusting our accounting practices to comply with regulations and separating the businesses.”

It was a process of separating and hiding the derivatives that had suffered huge losses and presenting only the grain distribution business as a healthy company.

– “Oh, that’s great.”

“Is the Ag-Plan merger proposal still on the table, President Jung?”

– “Of course. I’d be happy to participate.”

“How much of a stake are you thinking of?”

– “I’m thinking of 10%.”

“10%? Cargill is more than a thousand times bigger than Ag-Plan.”

– “I have the potential market of a billion people in China. If you think about it that way, a 30% stake would be more appropriate.”

They negotiated like that and merged with an 8% stake before going public.

*

New York Stock Exchange in the United States.

A grand listing event was held with financial tycoons and even the Secretary of the Treasury in attendance.

It was a special event with decorations on the walls of the exchange and even cheerleaders.

The Secretary of the Treasury gave words of blessing to the Cargill president.

“You’ve done a great job. The world’s largest grain company should be made public, the stock market should be stimulated, and investors should share the profits together. There’s no greater act of patriotism.”

“Haha, I guess you thought of me as a miser all this time.”

The host shouted.

“Three, two, one, zero!”

The president rang the golden bell with a wooden hammer.

Ding~

Wow!

Clap! Clap! Clap!

The transaction began.

The market closed on the first day with a 12% increase from the initial price.

*

Boom~

On the way back, the managing director said to the president.

“Father, we have $10 million left after covering the derivatives losses.”

The president lit a cigarette with a lighter and said,

“Even though it’s unsettling, it seems like a good thing.”

“You did a great job, Father!”

“Hmm, we’ll have to wait and see.”

Boom~

*

Cargill Headquarters.

A board meeting was held.

President Jung was also attending as one of the five directors.

President Jung pointed out sharply.

“Separating the derivatives company and covering its losses with the capital from the listing is an act that violates accounting law.”

All the executives, who were family members except for President Jung, were embarrassed.

Everything used to go smoothly with the president’s approval, but suddenly someone was challenging him.

The president and chairman shouted,

“The reason for going public was to compensate for the losses from the derivatives, so how can it be illegal?”

“It seems like you don’t trust my word, so ask the accountant.”

“Hey, accountant! What does Director Jung mean?”