Chapter 837 - Acquisition of Miura Machines (2) – Part 2
Chapter 837: Acquisition of Miura Machines (2) – Part 2
Gun-Ho spoke first while having his green tea, “What do you think, Mr. President Miura? Do you think we can take over Miura Machines’ production and successfully perform the work here in this factory?”
“The factory’s size and its power capacity look good. You have 12 workers now which is enough as well. And, most of the workers here are in their 40s. They are younger than the workers in Miura Machines, which is nice as well.”
“You think so?”
“The only concern that I have is that our machines in Miura Machines are a bit more advanced than the machines here. The machine operators here will have to receive adequate training before they begin handling our machines.”
“Hmm.”
“Also, most of the work here seems to be assembly work rather than carving a piece of metal to make machine parts. Assembly work, of course, requires advanced skills; however, its level of difficulty is lower than carving skills.”
“You are right.”
“So, if GH Machines acquires Miura Machines, you will probably want some of our Japanese engineers to stay in this facility for quite a long while to train your workers.”
“How long do you mean by ‘quite a long while’?”
“I would say, you will need 3 or more engineers for at least 6 months.”
Gun-Ho looked at Jong-Suk Park’s face to find out what he was thinking about President Miura’s recommendation. At that moment, Jong-Suk Park nodded his head and said, “I think you are absolutely right, Mr. President Miura. I agree with you.”
Jong-Suk Park immediately accepted President Miura’s suggestion.
Gun-Ho said, “I don’t know about the engineering side of the business. Accordingly, if Mr. President Miura and GH Machines’ President Park agree to it, I will accept it, and I will take it into consideration if I decide to acquire Miura Machines.”
President Miura said, “The next important issue is the price for the acquisition.”
Gun-Ho replied, “I’ve offered 300 million won the last time we visited Miura Machines in Japan.”
“The Taiwanese company actually offered the same price to us as you did, Mr. President Goo. But, their company didn’t seem to be financially stable, and their manufacturing facility is located in the countryside. I believe that company is less competitive than GH Machines.”
Gun-Ho added, “Speaking of location, GH Machines is also conveniently located in a city very close to Seoul, and Pyeongtaek Port is nearby.”
“Additionally, GH Machines seem to have an excellent labor force that could handle Miura Machines’ production, definitely better than the Taiwanese company. Moreover, GH Machines has President Park who the world-renowned engineer—Mr. Sakata Ikuzo highly spoke of. So, I do hope that GH Machines acquire Miura Machines.”
“Does that mean that you will accept my offer price—3 million won?” Gun-Ho asked.
“I will, under one condition though. It’s about the right to sell our products. We have a major client company—Isehara Machines. We’ve been providing them with our products for more than 30 years. I want to sell this right to sell our products to Isehara Machines for an additional price”
“How much do you want to sell it for?”
“I’d like to receive 100 million Korean won.”
Gun-Ho shook his head from side to side.
“100 million won for a right to sell is not possible. Moulding companies like GH Mobile always retain a mold for each of their client companies, so it’s almost guaranteed that those client companies will continue the business with them. However, Miura Machines is different. It doesn’t have a customized mold for each of its client companies because the work is to skillfully carve a piece of metal in manufacturing its products. Demanding an additional price for giving us its major client company doesn’t sound reasonable.”
Miura Machines’ president handed a document to Gun-Ho.
“This is the certification issued by Isehara Machines for the products that we’ve been providing them with.”
“I see, but this is not enough.”
“What about the supply contract for our products with Isehara Machines? According to the contract, in the event that Miura Machines is not able to perform its contractual duty providing the said products, it can designate a company who would do the work instead, that is properly equipped with adequate technology, facility, and labor. That will last as long as the contract is still valid.”
“When will the contract expire?”
“It has 2 more years left.”
“Hmm.”
Gun-Ho thought about it for a while, he then said, “Let’s take a 10-minute break, and we can talk about it again then.”
“Sounds good.”
President Jong-Suk Park walked out of the office, and then he smoked a cigarette. Gun-Ho walked toward Jong-Suk and asked him, “Hey, what do you think?”
“I don’t know. I didn’t see that coming. I mean, I haven’t expected that they would want to sell the right to sell to their major client company—Isehara Machines.”
“Do you want to acquire Miura Machines even though we might have to pay for their major client with an additional cost, or do you rather want to give up acquiring Miura Machines?”
“I’m not sure.”
Jong-Suk kept smoking his cigarette without saying anything further.
“Hey, Jong-Suk. You are a tough guy who knows what you want. How come you just smoke cigarettes without giving me a clear answer? It’s not like you.”
“Well, I don’t know.”
The acquisition negotiation resumed.
Gun-Ho said, “We are not intending to acquire Miura Machines by overpaying for it. I think 100 million won for a right to sell is unreasonable.”
“If we sell this right to sell products alone to Isehara Machines in Japan without selling anything else, we can easily get 100 million won for it.”
“Well, I guess we don’t have the necessary meeting of the minds to continue our negotiation here.”
President Miura let out a deep sigh, and President Jong-Suk Park sighed deeply as well. Silence filled the air for a while. Mr. Yoshitaka Matsui finally chipped in.
“I know that I’m not in a position to chip in, but may I make a suggestion? What about you two meet halfway? What if Miura Machines sells the right to sell to Isehara Machines to GH Machines for 50 million won, instead of 100 million won?”
Everyone’s eyes were glittering, but no one said anything. Silence filled the air again. Finally, President Miura nodded his head. Gun-Ho then said, “Okay. I will pay 50 million won for the right to sell. I own businesses other than GH Machines. I am not desperate to make this deal work out. If we sign the acquisition contract now, I will send the down payment for the contract today.”
President Miura pulled out some documents from his briefcase.
“Well, I’m not fully satisfied, but I will accept the deal. I prepared and brought the acquisition contract. Also, I have the supply contract with Isehara Machines as well.”
Gun-Ho suggested, “Let’s make a contract as if GH Machines purchased Miura Machines’ equipment, rather than make an acquisition contract to acquire the entire company of Miura Machines. That would be easier and simpler.”
President Miura replied, “I understand what you mean. The acquisition contract that I brought is for the equipment, not for the entire business. So, it should work.”
“Hmm.”
“As you see, you can find all the necessary terms in the contract such as delivery period, the duration where we cover any problems with the machines that we will transfer to you, and the event that leads to termination of the contract.”
“Have you, by any chance, brought the list of the machines?”
“Of course.”
Plant Manager Yanagi Masatoshi, who was sitting next to President Miura, pulled out thick documents from his bag.
“This is the list of the machines that you will take over. There are 30 types of machines. The document shows each machine’s production year and price. We have attached the appraisal of those machines, done by an independent appraisal organization with public confidence as well.”
“Hmm, that’s nice.”