The 90 million Hutchison Whampoa shares held by HSBC were sold to Lin Baichen at HK$7.15 per share, for a total transaction price of HK$643.5 million.
But right after signing that purchase agreement, Lin Baichen immediately signed another contract with HSBC: he would pledge those same 90 million Hutchison Whampoa shares to secure a HK$1 billion loan.
This meant that Lin Baichen didn't spend a single cent of his own money — and instead ended up with an additional HK$356.5 million in usable funds.
Of course, the price was that he now carried HK$1 billion in personal debt. And once he secured control of Hutchison Whampoa, he would have to push the board to take out another HK$500 million loan from HSBC — though that loan would be taken by the company, not by him.
For now, however, Lin Baichen suddenly had even more deployable capital.
Ignoring the Wharf Holdings shares for the moment, Hutchison Whampoa stock was something Lin Baichen had already stopped selling after offloading 2.8 million shares, recovering nearly HK$20 million in cash.
At Changjiang Industries (长江实业, the early Cheung Kong Holdings), Lin Baichen had spent about HK$140 million in total, acquiring 7.9 million shares, amounting to 19.75% ownership.
The money he previously borrowed from Standard Chartered Bank and Mitsubishi Bank totaled HK$1.14 billion; after buying into Changjiang Industries he had about HK$1 billion remaining.
Now, with the additional HK$356.5 million from the HSBC financing, plus the HK$20 million recovered from selling Hutchison shares, he had about HK$1.38 billion available.
As for Hutchison Whampoa:
Lin originally owned 14 million shares. After selling 2.8 million, he had 11.2 million shares left — 2.8% of the company.
Adding the 22.5% stake purchased from HSBC, his total holdings were now 25.3%.
This already exceeded the stake held by the Keswick family (the Qiduzun family in the text), who controlled around 20%. But Lin couldn't relax — their holdings were not much smaller.
Changjiang Industries Headquarters
"Mr. Li, we've found out the situation."
The door of the chairman's office opened. Li Ka-shing's two key assistants — senior executives Li Yekong and Michael Mak — walked in.
"Tell me."
Li Ka-shing rose from his desk and walked over to the sofa.
The two sat down, and Li Yekong began reporting:
"Lin Baichen signed an agreement with HSBC not long ago. But because our contacts aren't high-ranking enough, we couldn't confirm the exact contract details. What we can confirm is:
If Lin has made a deal with HSBC under the introduction of Bao Yugang (Sir Yue-Kong Pao), then the likelihood of him competing with Bao for Wharf is extremely low. They must have reached some sort of arrangement."
Li Ka-shing nodded slightly.
"These past two days, Wharf's stock hasn't moved at all, and Bao Yugang even brought Lin Baichen to HSBC. I knew something was wrong. As expected — whatever agreement they made, it stopped the acquisition battle from happening."
Wharf (The Wharf Holdings) was extraordinarily important to Bao Yugang, so the one who would continue pursuing it was clearly Bao. Lin Baichen, meanwhile, had shifted his target — though Li Ka-shing still didn't know which major corporation Lin was now aiming at.
When Bao Yugang bought Li Ka-shing's Wharf shares and responded only with, "I'm still negotiating with Lin Baichen; nothing has happened yet," Li Ka-shing immediately sensed a problem. Further investigation revealed that Lin, Bao, and HSBC were conducting quiet negotiations.
The acquisition battle he anticipated simply… never happened.
Li Ka-shing had originally believed Lin Baichen was determined to take Wharf, while Bao also viewed Wharf as vital. A bidding war felt almost inevitable. But he never expected the two men to reach an agreement — allowing Lin to easily walk away and target another major company.
Had he known things would turn out this way, Li Ka-shing would have negotiated with Lin directly:
He could have bought back the Wharf shares from Lin and compensated him in some other way.
Even if he already considered Lin a competitor, that wouldn't stop him from cooperating temporarily — profit always came first.
But during their last meeting, Lin had appeared completely firm in refusing Li Ka-shing. Yet the moment the same request came from Bao Yugang, Lin agreed.
Michael Mak added:
"Lin Baichen originally wanted to acquire Wharf. So even if he changed his target, it must still be a major company on the same level — and one in which HSBC holds substantial shares. There aren't many such companies in Hong Kong."
Li Yekong listed them:
"Wheelock & Co., Hongkong Land, Hutchison Whampoa, and Swire."
"Not Hongkong Land," Li Ka-shing said immediately.
"The Jardine Matheson Group controls Hongkong Land, and through Hongkong Land they indirectly influence Wharf. Jardines holds a high percentage of Hongkong Land. Lin cannot possibly acquire it."
"As for Swire…"
Li shook his head again.
"Even more impossible. Their headquarters is in London, and the UK parent company holds over 30% of the Hong Kong-listed entity. Acquiring Swire would be even harder than acquiring Hongkong Land."
Thus, by process of elimination, only Hutchison Whampoa and Wheelock remained as realistic candidates — both companies whose controlling shareholders did not hold extremely dominant percentages.
Li Ka-shing could not determine which one Lin Baichen was targeting… but he knew it had to be one of those two.