Chapter 35: The Acquisition of Golden Elephant

Bangkok. The Oriental Hotel.

"Boss." Achang knocked and entered Chen Bingwen’s room, clutching a stack of papers covered in Thai text and scrawled Chinese notes. "I’ve listed seventeen coconut milk factories and cooperatives in and around Bangkok that are large enough to provide a stable supply. Tanaphon and I spent the day running around, and we visited nine of them..."

He paused, handing the documents to Chen Bingwen. "The situation... is not optimistic. Either they’ve already signed long-term exclusive contracts with big companies like Golden Elephant or Taifeng, and their capacity is fully booked—not a drop more to be had—or they are too small, with primitive equipment and inconsistent quality that simply doesn’t meet our requirements. Then there are a few that are asking for an exorbitant price..."

"Thank you for your hard work, Achang." Chen Bingwen took the documents without looking at them immediately. "What about the rest?"

"Tanaphon is still out there. We’ll finish contacting them all by tomorrow noon at the latest. But..." Achang hesitated. "Boss, looking at how things are going, I’m afraid there isn’t much hope. Should we... talk to Golden Elephant again? Or... accept the terms from Siam Gold Coconut? Even though the quality is a bit worse, at least..."

Chen Bingwen waved his hand, cutting him off. Far from the frustration Achang had expected, a profound smile slowly spread across Chen Bingwen’s face.

"Achang, we’ve been fixated on the product and the suppliers, but we’ve forgotten the most fundamental thing!" Chen Bingwen’s voice was calm, yet carried a piercing insight.

Achang was stunned. "The fundamental thing?"

"Yes, the fundamental thing! Why does Golden Elephant dare to hike prices by 30% without consequence? Why is Songpa’s coconut milk considered top-tier? And why was Taifeng able to sign a three-year exclusive deal with Songpa?"

Chen Bingwen pointed to the sofa by the coffee table, signaling for Achang to sit. "Achang, we aren’t playing the same game they are! They are focused on products, channels, and upstream resources, and we fell into the trap of conventional thinking, struggling in the same mud as them! Now, it’s time to change the game. It’s time for our home court!"

Achang was completely bewildered. "Our... our home court?"

Chen Bingwen didn’t answer directly. Instead, he picked up the copy of the *Bangkok Post* he had been reading, turned to the business section, and said heavily, "The Thai stock market!"

"Huh?" Achang stared at him blankly.

While Achang and Tanaphon were out visiting clients, Chen Bingwen hadn’t been idle. He had collected all the recent English-language newspapers, including the *Bangkok Post* and *The Nation*, along with various financial bulletins, searching for any clues related to the coconut milk industry. At first, he was just looking for industry trends or policy shifts behind Golden Elephant’s price hikes and Taifeng’s deal with Songpa. However, when he saw a short blurb about the Stock Exchange of Thailand in a corner of the *Bangkok Post*’s business section, he froze. The information in that snippet was incredible.

In 1978, the Stock Exchange of Thailand had only twenty-seven listed companies. Most had a market capitalization between 10 million and 100 million Thai Baht. Golden Elephant Food Industry Co. was on that list. The article mentioned that due to a rare typhoon in the southern coconut-producing regions, the company’s stock price had remained depressed, trading volume had withered, and investors were extremely pessimistic about its future profitability. The stock price had fallen to 1.2 Baht per share that week, with a total market capitalization of only about 13.6 million Baht (approximately 5.15 million Hong Kong dollars).

Five point one five million Hong Kong dollars. After calculating the market cap, Chen Bingwen realized that perhaps there was another path to take besides hunting for high-quality raw material bases.

...

The next day, at Narong Accounting Firm in Bangkok, Chen Bingwen sat on a hard wooden chair. Across from him, an elderly accountant with graying hair named Narong pushed a stack of files toward him. Driven by five hundred US dollars, the old accountant had managed to purchase detailed information on Golden Elephant Food Industry Co. from his peers in less than an hour.

"Mr. Chen, the situation is more interesting than what was in the newspapers," Narong said, his English thick with a Thai accent. "Golden Elephant Food is a classic family business. The Songchai family controls about 43% of the shares through cross-holdings. The remaining 57% is scattered among thousands of small Thai retail investors, with another 7% held by several small local funds."

"And the debt?" Chen Bingwen’s voice was steady, his eyes locked on the report.

"Not healthy, but not fatal," Narong said, flipping through the files. "Short-term bank loans total about 1.2 million Hong Kong dollars, mainly used to maintain production recovery after the disaster and pay suppliers. Their core assets..." He paused and smiled meaningfully, "...are those two thousand acres of coconut and sugarcane plantations in the south that were battered by the typhoon. They look valuable on paper, but the residual value... I’m afraid it’s heavily discounted. However, they do have a full set of coconut milk and syrup processing plants in the Rayong industrial zone, with well-maintained equipment and clear land titles."

43% against 50%+ in retail hands! Two thousand acres of plantations plus processing plants! A near-insane plan formed instantly in Chen Bingwen’s mind. Golden Elephant was no longer an opponent strangling him; it was prey delivered to his doorstep!

A prey severely undervalued by market panic! This was not just revenge! Acquiring Golden Elephant was not an act of impulse. Once he controlled Golden Elephant, the threat of a 30% price hike would vanish. Golden Elephant’s southern plantations and processing plants would become the dedicated, stable raw material heart of Chen’s Sugar Water. Not only would the current supply of Yangzhi Ganlu and coconut sago soup be secured, but all future product lines requiring coconut milk would have a solid guarantee.

The throat of the supply chain would be in his own hands! Directly owning the raw material source and primary processing capabilities meant cutting out all the profit margins taken by middlemen. Even after accounting for Golden Elephant’s operating costs, Chen’s future comprehensive cost for coconut milk would be far lower than the market purchase price, not only offsetting the 30% hike but achieving a long-term structural cost advantage. This provided unprecedented strategic depth for Chen’s competitiveness and profit margins in the high-end market.

Back at the hotel, Chen Bingwen immediately made an international call to Hong Kong, reaching Manager Zhou Mingzhe at Wing Lung Bank. His total assets were less than three million. To acquire Golden Elephant, he was still short. Therefore, he had to use a leveraged buyout to meet the funding requirements. Simply put, a leveraged buyout is "borrowing money to buy a company." Chen would put in a small portion of his own capital as the foundation and raise the majority of the acquisition funds through bank loans. The collateral for this massive debt would come primarily from the assets and future cash flow of Golden Elephant itself! In other words, Chen Bingwen was using the value and earning power of "Golden Elephant" as a guarantee to borrow money to buy "Golden Elephant."

However, doing this meant exposing the target to the bank before the acquisition was complete, invisibly increasing many unknown risks. Chen Bingwen prepared to use Chen’s Food as collateral for the leveraged buyout.

"Manager Zhou, hello, this is Chen Bingwen." Once the call connected and they exchanged brief pleasantries, Chen Bingwen got straight to the point: "I’m in Thailand, and I need a bridge loan of four million Hong Kong dollars. The collateral is 100% equity in Chen’s Food Co., Ltd., the full ownership of our two factory buildings in Cheung Sha Wan and Kwun Tong, and all of Chen’s Food’s profits for the next year. Dexin Accounting will simultaneously follow up to confirm the asset valuation and legal procedures."

There was a two-second silence on the other end, then Zhou Mingzhe’s voice sounded with an incredulous gravity: "Mr. Chen... four million? What exactly are you trying to do?"

"Acquisition. I’m acquiring a Thai company." Chen Bingwen gave a vague explanation.

"Pledging 100% equity, two factories, and even pre-advancing a year’s worth of profits? The risk exposure is so high that Wing Lung’s risk control committee would never approve it!" Zhou Mingzhe’s voice sounded distorted over the line.

"Manager Zhou, the net asset value of Chen’s, according to Dexin’s latest assessment, is 1.83 million, and that’s only a static value. The monthly cash flow is nearly one million; the cash flow is healthy and abundant, and the collateral fully covers the risk. This money is to lock in upstream raw material resources and build our own moat." Chen Bingwen explained patiently.

"A moat..." Zhou Mingzhe noted the keyword. "Can you tell me which company specifically?"

"The target is covered by a confidentiality agreement; I cannot reveal the specific name at this stage." His tone was steady and watertight. "But I can confirm that the target is located in a core agricultural production area in Thailand and possesses a stable, high-quality raw material base. The valuation is significantly lower than the replacement cost, and there is a clear margin of safety. After the acquisition, it will create a strong synergy with Chen’s existing business, reducing raw material costs by more than 15% and clearly increasing profit margins."

There was a long silence on the other end, save for the sound of faint breathing. Chen Bingwen knew Zhou Mingzhe was weighing the options.

"I’ll give you an answer after your people send over the valuation report," Zhou Mingzhe’s voice finally returned.

"All right." Chen Bingwen agreed readily.

After hanging up, Chen Bingwen didn’t pause; he immediately dialed Fang Wenshan of Dexin.

"Accountant Fang, it’s me, Chen Bingwen. This is urgent. Two things: First, immediately send the asset valuation report for Chen’s Food and the full ownership documents for the Cheung Sha Wan and Kwun Tong factories to Manager Zhou Mingzhe at Wing Lung Bank; I am preparing to apply for a four-million Hong Kong dollar bridge loan. Second, I need you to register an offshore holding company in the Cayman Islands as quickly as possible to serve as the final holding entity for this Thai acquisition and a platform for future capital operations. The name..." Chen Bingwen pondered for a moment, "...let’s call it Sugar Heart Capital Ltd."

"Understood!" Fang Wenshan didn’t waste words on the other end. "I’ll prepare the documents immediately and send them over within an hour. I’ll apply for expedited processing for the Cayman registration; it should be preliminarily completed within three days. Mr. Chen, are you... planning to play a big game?" He keenly sniffed the scent of a capital hunt.

"It’s not a game, Accountant Fang." Chen Bingwen looked at the Bangkok nightscape outside the window and said word for word, "It’s about cutting off the hand that’s strangling us at the root, and turning the thing behind it into our own foundation!"

"Mr. Chen, is there anything else I need to do?" Once he received confirmation from Chen Bingwen, Fang Wenshan became immediately interested. The commission for acquiring a company was far more lucrative than just managing Chen’s finances.

"Help me find two professional traders. Once the offshore company is registered, bring them to Bangkok. I’ll wait for you here."

On the other end, Fang Wenshan’s voice rose with excitement: "Understood! Don’t worry, Mr. Chen, I’ll scout them immediately! They’ll be professional and know the rules! See you in Bangkok!" He didn’t press for details; an old hound in the capital hunting grounds knows which blade to sharpen as soon as he smells blood.

Hanging up, Chen Bingwen took a deep breath. The plan to acquire Golden Elephant was like a fully drawn bow; the arrow was on the string, and there was no room for error.

On the other side, after receiving the valuation report for Chen’s Food and getting approval from the risk control department, Wing Lung Bank deposited the four-million-dollar loan into Chen Bingwen’s designated account the very next day. The asset status of Chen’s Food and its nearly one-million-dollar monthly turnover were enough to offset the risk of the four-million loan.

Three days later, Fang Wenshan arrived at Bangkok Don Mueang International Airport with two capable middle-aged men. Both wore crisp white short-sleeved shirts and dark slacks, their leather shoes polished to a shine, their eyes sharp.

"Mr. Chen!" Upon seeing Chen Bingwen, Fang Wenshan hurried over and happily introduced them: "This is Xie Jianming, and this is Guo Sen. Both are experts in the Hong Kong trading circle; their reputation and capability are reliable."

Chen Bingwen’s gaze passed over Fang Wenshan and rested briefly on Xie Jianming and Guo Sen. Xie Jianming pushed up his glasses and nodded slightly: "Boss Chen." Guo Sen offered a steady smile, his voice deep and firm: "Mr. Chen."

Without unnecessary small talk, Chen Bingwen cut straight to the point: "Thank you for the trouble. Did you bring the registration documents for 'Sugar Heart Capital' from the Caymans?"

"Brought them all!" Fang Wenshan immediately took a hard-shell folder from his briefcase. "Sugar Heart Capital Ltd. is registered. The shareholders and directors are the specified offshore trust structure; on the surface, there is no link to you or Chen’s."

Chen Bingwen took the documents, his eyes sweeping quickly over the complex English legal clauses and structural charts. The offshore company was like a carefully woven fog, shrouding his true intent and identity, keeping them out of the sight of Thai regulators and Golden Elephant Food. This was the camouflage of a capital hunter.

"Very good." He handed the documents back to Fang Wenshan. "And the funds?"

"The four-million Hong Kong dollar loan from Wing Lung has been wired into the Sugar Heart Capital offshore account we opened at Standard Chartered in Bangkok, as you requested." Fang Wenshan’s voice carried a hint of gravity. "Mr. Chen, this money... is your entire life’s work."

Chen Bingwen smiled. "Don’t worry. I’ve thoroughly investigated the situation at Golden Elephant. This acquisition has at least an 80% chance of success."

Risk? Of course there was. The difficulty of integration, the management inertia of Thai family businesses, the investment required to restore the typhoon-damaged plantations... these were all challenges. But! In his view, to ensure a stable raw material supply chain for Chen’s Sugar Water for the next decade, taking some risks was well worth it. If this acquisition succeeded, it would completely transform Chen’s Sugar Water from a downstream food producer and retailer into an integrated player. It would transform them into a food group with a core raw material supply chain! This would significantly raise their valuation in the capital market.

...

"Golden Elephant Food, current share price 1.2 Baht, total capital of about 11.33 million shares, market value 13.6 million Baht, equivalent to about 5.15 million Hong Kong dollars." Trader Xie Jianming pushed up his glasses while flipping through the report from Narong’s firm. "Small plate, poor liquidity, dominated by retail investors. The advantage is that it’s easy to collect chips; the disadvantage is that sudden large buy orders can easily alert the major players—if the Songchai family counts as a major player. Mr. Chen, what is your target share percentage?"

"Controlling interest!" Chen Bingwen said firmly. "I want to get more than the Songchai family’s 43%. The minimum goal is 50% plus one share! Capital is not a problem; four million Hong Kong dollars have been deposited into the Sugar Heart Capital account, about 10.56 million Baht, enough to swallow 80% of the circulating shares and then some! But the movements must be fast, accurate, and ruthless! We must deliver a fatal blow before the Songchai family realizes what’s happening!"

The other trader, Guo Sen, frowned slightly: "Mr. Chen, the difficulty lies in concealment. Trading on the Bangkok exchange is light, with an average daily turnover of several hundred million Baht. If we sweep with large orders, the share price will skyrocket instantly, alerting the Songchai family and the exchange. If they get suspicious and launch a poison pill defense or find a white knight, we will be in a very passive position."

"That’s why we need a strategy." Chen Bingwen took out a stack of documents and handed them to Fang Wenshan. "This is something I’ve written over the last two days. Over the next few days, these will be anonymously placed in *The Straits Times* in Singapore, the *Hong Kong Economic Journal*, and the *Bangkok Post*. The core message is simple: talk down the Thai coconut milk industry!"