The Complete Collection of Li Ka-shing's Business Wisdom

Author: Wang Weifeng
Publisher:
Publish Date: 2006-12-01
Features: Hongkong and Shanghai Electric Company (HSE) is Hong Kong's second-largest electricity provider. It began supplying power to Hong Kong Island on December 1, 1890, and has always been a major electricity supplier. After World War II, with the rapid population growth in Kowloon and the New Territories, and the proliferation of factories, it later surpassed its competitors, making substantial profits and even planning to supply power to Guangdong. Economic development led to demand for electricity, making HSE's revenue very stable. Additionally, the Hong Kong government was preparing to implement an "encourage electricity usage" policy, where higher consumption would result in lower prices. As a result, HSE's power supply volume was expected to increase significantly, and its profits would naturally rise. HSE is a patented enterprise, meaning no other electricity company could compete with it in Hong Kong. It can be said that in the Hong Kong electricity market, HSE holds a monopoly, ensuring stable profits. This is the primary reason why Li Ka-shing favored HSE. The numerous advantages of HSE made it a target for many companies, who were eager to participate. Besides Li Ka-shing's (CK Hutchison), the British-owned (Hutchison Whampoa) and other well-funded conglomerates like also had their eyes on this lucrative opportunity and had already taken action. Although Li Ka-shing had long desired HSE, he remained unfazed by the strong competition, adhering to a strategy of "retreat to advance" to avoid direct confrontation. He was waiting patiently, observing the situation, and looking for the right opportunity. In April 1982, rumors surfaced that the (Hysan Development) was preparing to acquire HSE. Everyone assumed that (CK Hutchison) and would also join the bidding, causing the stocks of HSE, , (CK Hutchison), and to soar. By April 1982, the news of 's potential acquisition of HSE had become an open secret. On April 26, a Monday, as the Hong Kong stock market opened, launched a formidable offensive, acquiring 222 million shares of HSE in one go. According to the takeover and merge committee regulations, a 35% threshold must be exceeded to trigger a full takeover, and ownership of over 50% is required to complete the acquisition. To avoid triggering a full takeover, kept its additional share purchases below 35%. With a decisive move, successfully acquired HSE at a price 31% higher than the market value, eliminating the rumors of (CK Hutchison) and joining the bidding. was also facing a crisis at this time, while (CK Hutchison) deliberately allowed 's acquisition to proceed without resistance. 's rapid expansion in Hong Kong quickly depleted its cash reserves, forcing it to take out massive loans from banks, with a debt level reaching 16 billion Hong Kong dollars. Li Ka-shing's decision to hold back was the result of careful analysis and deliberation. He believed that the time was not yet right for him to act and that could not sustain its position for long. The shrewd Li Ka-shing was waiting for the moment when would be exhausted. Li Ka-shing's strategy was sound. He believed that 's acquisition at this time was a sure thing, and their morale was high. If he had confronted directly, it would have fought with all its might. With his current strength, he believed he could win.