Chapter 167: Spending One Billion to Buy Two Buildings, Seeking to Acquire Lane Crawford
"A commercial building in Central? Actually, there is one," Chen Shoulin said after thinking for a moment.
"Who's selling it? Which building? What price are they asking?" Lin Haoran pressed.
"The seller is Wheelock & Company. They intend to sell two properties held by their subsidiary, Federal Realty — the Federal Building and International Building. After its construction, Federal Building was the tallest commercial building in Hong Kong between 1964 and 1966 until it was surpassed by the Overseas Trust Bank Building in North Point. From the news they released, Wheelock wants HK$1.2 billion, but that's considered overpriced right now, so no buyers have expressed interest," Chen Shoulin replied.
"Federal Building and International Building, huh." Lin Haoran nodded. He was familiar with their locations. Central wasn't large; Federal Building was less than a hundred meters from where he had previously lived at Hang Seng Building. He had also heard of these two buildings in his previous life. They were connected to Li Jiacheng as well.
By the end of the year, property prices in Hong Kong would almost double compared to now, but even then, selling high-end buildings for over HK$2 billion wasn't easy, as HK$2 billion was no small sum. Wheelock had devised a method: have its subsidiary, Federal Realty, set up a joint venture with Li Jiacheng's Cheung Kong Holdings. Then, Federal Realty would "sell" the two buildings to the new joint venture at a valuation of HK$1 billion — each party contributing HK$500 million.
However, since the buildings belonged to Federal Realty, it didn't actually contribute real funds. Instead, it pocketed Cheung Kong's HK$500 million investment upfront. Relying on Cheung Kong's prestige and strength, they soon resold the two buildings for HK$2.235 billion. Ultimately, Federal Realty received over HK$1.1 billion in cash from the deal, pocketing over HK$1.6 billion overall. Cheung Kong also profited handsomely — netting more than HK$600 million.
And now, it was only early 1980, yet Wheelock was already planning to sell?
Still, HK$1.2 billion was high. No wonder they hadn't found a buyer yet.
Wheelock was desperate to fund its shipping expansion strategy, selling off land assets to invest in ships.
In the short term, the strategy seemed sound. Many British firms were pulling back from Hong Kong, fearing its future.
But no one could have predicted that the shipping industry would soon plunge into depression.
Wheelock's move was essentially digging its own grave.
Look at Pao Yue-Kong: wise enough to foresee the downturn, he quickly retreated, selling ships and even abandoning his "King of the Sea" title.
"HK$1.2 billion…" Lin Haoran frowned. That price was indeed too high. In two or three months, maybe it would make sense, but right now, it was barely February — HK$1 billion would be more appropriate.
Even at year-end, when Wheelock finally sold, the two buildings yielded HK$1.6 billion in profits,
but by then property prices had almost doubled compared to now.
"Mr. Chen, what's the estimated market value of these two buildings currently?" Lin Haoran asked.
"About HK$1 billion. There's not much fluctuation around that figure — it's been appraised recently," Chen Shoulin replied.
Lin Haoran nodded and said, "Mr. Chen, help me contact John Madden. Offer HK$1 billion for the two buildings."
John Madden was currently the chairman of Wheelock.
It was precisely due to his pessimism about Hong Kong's future that he sought to sell off local assets and reinvest in shipping.
Lin Haoran wasn't trying to lowball.
Given the booming property market, it was impossible to expect a discount below market price.
If he could buy at HK$1 billion now, it would be an excellent deal.
By year-end, these properties could easily fetch over HK$2 billion — doubling his investment.
"Alright, Boss, I'll contact them now," Chen Shoulin responded swiftly.
Two minutes later, with the phone still in hand, Chen Shoulin turned to Lin Haoran and said, "Boss, Mr. John Madden would like to meet you in person. He's willing to come here."
"Good, tell him I'll be waiting," Lin Haoran nodded.
Chen Shoulin relayed the message over the phone.
"Boss, he'll be here in about half an hour," Chen Shoulin added.
Lin Haoran nodded again.
"Mr. Chen, do you think they'll agree to sell at HK$1 billion?"
"Boss, given that they're so eager to come negotiate after hearing your offer, I think there's a very high chance. If they weren't interested, they wouldn't have rushed over like this," Chen Shoulin analyzed.
"Let's hope so. I'm quite willing to buy these two properties," Lin Haoran smiled.
In any case, it would take time to spend several billion on stocks.
Better to park some of the funds into prime real estate now.
At current prices, property values were climbing fast —
half a month's rise could exceed a full year's bank interest.
Chen Shoulin, observing Lin Haoran, was increasingly astonished.
Even after spending massively to acquire Hongkong Electric Holdings, Lin Haoran could still easily produce another HK$1 billion — and it would be a personal investment, not through the company.
This level of wealth was terrifying.
Less than half an hour later, John Madden arrived at Chen Shoulin's office.
Madden, a man in his sixties, smiled warmly as he shook hands with Lin Haoran.
"Mr. Lin, young and accomplished — very impressive," he praised.
"Hello, Mr. Madden, please have a seat," Lin Haoran replied with a polite smile, unfazed by the compliment.
Speaking of it, although Wheelock & Co. was once one of the four major foreign trading houses in Hong Kong, its current market value on the stock exchange was actually lower than that of Hongkong Electric Holdings. In fact, Wheelock's market value was only half of Hongkong Electric's. Lin Haoran had not targeted Wheelock because he knew that currently, Wheelock was entirely under the control of John Madden, with the influential Zhang family merely letting Madden manage things as he saw fit. Thus, even if Lin Haoran secretly absorbed Wheelock's shares on the market, he would not be able to seize control unless he could somehow acquire either Madden's or the Zhang family's stake.
Moreover, Wheelock had invested heavily into the shipping industry, and taking over Wheelock would mean inheriting a hot mess. In another timeline, Pao Yue-Kong dared to acquire Wheelock in 1985 because he was already a shipping giant and was moving from "ships to land" to escape the downturn. Although Pao Yue-Kong suffered heavy losses during the Wheelock acquisition, he succeeded in shifting his assets ashore and had recovered strongly by 1985.
However, Lin Haoran was different. He knew nothing about the shipping industry and had no network there. Taking over a heavily indebted Wheelock would only drag him deeper into trouble. The global shipping industry entered a severe depression throughout the 1980s due to falling trade demand and excessive shipping capacity. During the early 1980s, the shipping market was extremely difficult, and even by 1986–1997, the international shipping market showed no clear cycle of recovery or collapse. Wheelock, which once held vast Hong Kong property assets, had sold them off to expand its shipping business, a move that would soon prove disastrous.
Thus, Lin Haoran had no interest in touching shipping unless absolutely necessary. For now, he would focus only on assets he deemed worthy.
After Lin Haoran, John Madden, and Chen Shoulin sat down, they quickly got to business. Although this matter didn't directly involve Chen Shoulin, since Lin Haoran was now his boss, he naturally tried to assist wherever he could.
"Mr. Madden, I heard that Federal Realty is selling Federal Building and International Building. I'm interested, but you're asking HK$1.2 billion — that's too high compared to the market. Based on what I know, the market value is around HK$1 billion. I'm a straightforward person. I won't negotiate for a lower-than-market price, but I will pay the fair market price. HK$1.2 billion? I doubt you'll find any buyers willing to pay that," Lin Haoran said with a smile.
"Mr. Lin, I specifically came here to discuss this. Selling for HK$1 billion isn't impossible, but I have one condition: payment must be in cash, not with any form of collateral. Wheelock urgently needs cash to develop its shipping business," John Madden stated clearly.
In commercial transactions involving large sums, it was common for buyers to offer partial payment with assets or stocks as collateral to ease the cash burden. Madden clearly anticipated that raising such a massive sum in cash might be difficult for Lin Haoran, so he emphasized cash payment, which was critical for Wheelock's liquidity strategy.
Lin Haoran understood perfectly. Wheelock's current aim was to liquidate Hong Kong assets and directly obtain cash, not acquire more illiquid assets. Their urgent need for cash flow reflected their lack of confidence in Hong Kong's future.
"Mr. Madden, I can agree to that. I have enough funds. Once we sign the contract, I can transfer HK$1 billion to you immediately. By the way, Mr. Madden, are you willing to sell Lane Crawford? I'm very interested in your Lane Crawford Group," Lin Haoran said.
Lane Crawford was a luxury brand company with a long history in Hong Kong, established in 1850. Lin Haoran wasn't attracted by its luxury goods business but by its retail department store operations. Lane Crawford controlled two of Hong Kong's four major department stores, namely Da Sun Department Store and China Department Store, and had expanded into interior design, antique sales, jewelry, cosmetics, and more. Its chain stores were located in Hong Kong's busiest districts, making it one of the city's largest retail groups.
The future prospects for Hong Kong's retail industry were bright, and owning such a giant would greatly boost Lin Haoran's business empire. Most importantly, Lane Crawford's market value was not high — only HK$390 million. Lin Haoran had considered secretly buying it on the stock market but abandoned the idea after checking its shareholding structure. Wheelock-controlled Federal Realty owned 56.5% of Lane Crawford's shares, making a hostile takeover impossible without Wheelock's cooperation.
"Mr. Lin, you're interested in Lane Crawford?" Madden was slightly surprised.
"Yes, Mr. Madden, I'm very interested in retail," Lin Haoran nodded with a smile.
"Mr. Lin, that's a significant matter. I'll need to call a board meeting to discuss it. It's not something I can decide on my own," Madden said cautiously.
In reality, Wheelock was practically under his sole control, but Lin Haoran's request was too sudden, and he needed time to think it through.
"Very well, Mr. Madden. I'll await your response," Lin Haoran said calmly.
Acquiring 56.5% of Lane Crawford's shares at market price would cost just over HK$200 million. Even if Wheelock demanded a premium of 10–20%, Lin Haoran could still accept it. Now, it was just a matter of whether they were willing to sell this valuable asset.
"Alright, then let's finalize the deal for Federal Building and International Building first," Madden said, steering the conversation back to the main transaction.
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