At the eastern tip of Long Island in East Hampton, a black Mercedes sedan drove into a seaside estate. As the driver opened the door, Warren Buffett placed the Eaglet company prospectus, which he had been reading throughout the journey, back into his briefcase.
Upon stepping out, he was greeted by a woman in a black business suit, an A-girl, who welcomed him with a polite greeting and gesture to proceed.
The two entered the villa and walked to a reception room on the eastern side of the house.
As soon as he entered, despite the distance and the floor-to-ceiling windows, Buffett could hear the sound of women laughing outside. Glancing toward the source, he saw a pool packed with an overwhelming number of young women surrounding it, filling the 20-meter-long, 10-meter-wide space completely.
Even though Buffett had never indulged in such pleasures, he couldn't help but feel a ripple of emotion at the sight. And there, just getting out of the pool, being fussed over and dried by a group of attentive young women, was the young man in question—clearly living an extravagant and decadent life.
Simon did not come directly to the reception room but went to the adjacent one instead.
After a moment, while the A-girl served Buffett coffee, Simon entered the room, now dressed in a more formal shirt and pants. If not for his still slightly damp hair and the sandals on his feet, one wouldn't have guessed he'd just come from the pool.
Shaking hands with Buffett, Simon gestured for him to remain seated. Sitting down on a nearby sofa, Simon smiled and asked, "Warren, how have you been?"
Buffett nodded, "Not bad."
He didn't bother asking how Westeros was doing—one look outside told him all he needed to know. Besides, Buffett himself wasn't exactly doing great.
As usual, Berkshire Hathaway had held its annual shareholders' meeting in early May. Compared to the enthusiasm of previous years, this time Buffett faced a barrage of difficult questions, mostly centered around his refusal to invest in the tech sector.
Buffett was a resolute man and didn't let external pressure sway his decisions easily. However, with the weight of decades of hard work behind him, he couldn't ignore Berkshire Hathaway's fluctuating stock price. Since reaffirming at last month's shareholder meeting that he wouldn't invest in tech stocks without fully understanding them, Berkshire Hathaway's stock had declined—despite the broader market's positive performance.
The stock had experienced many ups and downs over the years, but typically, any declines were due to overall market downturns. Now, the broader market was booming while Berkshire Hathaway was falling. Buffett feared that, left unchecked, this situation could lead to unforeseen consequences.
Throughout his drive from Manhattan to Long Island, Buffett had been mulling over this issue.
Simon noticed the weight on Buffett's mind. Sipping the coffee the A-girl had brought him, Simon didn't waste time on small talk and said, "So, Warren, let's talk about ABC."
It was Saturday, June 17.
Just yesterday, Daenerys Entertainment's acquisition team had another secret three-hour negotiation with senior executives from Metropolis ABC Group, reaching preliminary agreements on restructuring, management changes, debt consolidation, and other matters after the merger.
Even the acquisition terms were mostly settled: Daenerys Entertainment would offer a combination of cash and stock, with generous flexibility allowing ABC shareholders to choose their preferred mix of cash and stock, even opting for full payment in either.
The only remaining point of contention was the price.
At yesterday's close, Metropolis ABC Group's stock was priced at around $145 per share, with a total of 122 million shares, giving the company a market cap of $17.6 billion.
ABC wanted $180 per share, valuing the deal at $21.9 billion.
However, Daenerys Entertainment's top offer was $172 per share, valuing ABC at $20.9 billion.
The two sides were $1 billion apart.
Daenerys' offer of $172 represented an 18% premium over the current stock price. This might seem low, but it was due to the recent surge in ABC's stock price following news of Daenerys' interest in acquiring a network.
Daenerys' offer was based on ABC's stock price of around $130 when the acquisition talks began. At that price, $172 represented a 32% premium—a very generous offer.
ABC's demand of $180 per share, nearly a 40% premium, was something Simon was unwilling to accept.
It wasn't that Daenerys couldn't afford the price, but there had to be limits. Television networks were no longer growth industries, and this was not a hostile takeover. A premium of around 30% was the most Simon was willing to offer. If Daenerys overpaid this time, it would set a dangerous precedent for the entire Westeros system, marking it as an easy target for future deals.
After Simon laid out the situation, Buffett didn't mince words either. "Simon, I think $180 is reasonable. It's only a 24% premium. Besides, with a cash-and-stock deal, given Daenerys' price-to-earnings ratio, you're getting a very good deal."
Ignoring Buffett's alternative valuation method, Simon leaned back on the sofa, rubbing his coffee cup. "Warren, let's imagine for a moment: what happens if Daenerys Entertainment walks away from acquiring ABC?"
The outcome was obvious.
Historically, Disney had acquired Metropolis ABC for a total of $19 billion, with $3 billion of that in debt, meaning the network itself was valued at only $16 billion. Now, even Daenerys' offer placed ABC's value at $20.9 billion, with the total deal rising to $24 billion including debt.
That was a $5 billion difference.
ABC's development hadn't diverged much from its real-world counterpart, or perhaps it was even worse off, as Simon had previously assigned hit shows like Friends and ER to other networks. In terms of ratings, among the big three traditional networks (ignoring FOX), ABC was at the bottom.
If the deal fell through, ABC's stock would undoubtedly plummet.
The television industry was a zero-sum game, with the four major networks competing for the same North American audience while facing growing competition from cable and the internet.
If the deal collapsed, ABC's market cap could easily fall below $10 billion. After all, Daenerys had already proven it could reshape the media landscape in Hollywood with a series of hit TV shows.
Buffett quickly understood the ramifications of Simon's scenario. However, in this negotiation, the veteran investor wasn't about to admit it out loud.
After a moment of thought, Buffett looked at the young man across from him and said, "Alright, Simon, how about we compromise at $176 per share?"
Simon shook his head without hesitation. "Warren, I won't increase my offer by a single penny—$172 is my final price. I think you understand that today is the final round of negotiations. We need a conclusion. By the way, I got a call from Jack Welch while I was in Europe recently. He's eager to discuss NBC again. You already know I'm more interested in ABC, but I won't offer more than I'm willing to pay."
Buffett countered, "Simon, $176 is hardly difficult for Daenerys to handle."
"I know you think Daenerys Entertainment is overvalued, Warren. If I were focused on profits, hitting $4 billion in net income this fiscal year wouldn't be hard. At yesterday's close, with a market cap of $156.2 billion, Daenerys is trading at 39 times earnings. What's ABC's P/E ratio? 41 times. We'd be taking a loss in a stock swap."
"Simon, you're comparing hypothetical numbers to reality."
Simon shrugged. "Not hypothetical. Daenerys' net income for the first two quarters of 1995 was $1.73 billion, and the current P/E ratio is only 45. And Daenerys is still growing rapidly, while ABC has no growth potential left."
Buffett was momentarily at a loss for words.
Business negotiations ultimately came down to strength.
Buffett had often been the one issuing ultimatums in the past, but this time, both Metropolis ABC Group and Berkshire Hathaway were in weaker positions.
They were now on a precarious edge.
Walking away from this deal would be disastrous for both Metropolis ABC and Berkshire Hathaway, leading to outcomes neither could afford.
Buffett, who had never been one to haggle over every detail, fell silent for a moment before finally saying, "Alright, Simon, $175 is my final offer. I can't go any lower."
"$172 is my final offer," Simon said firmly, rubbing his coffee cup again. "But Warren, I'll add another chip—consider it a gesture of support for Berkshire Hathaway. You know, over the past few years, I've quietly acquired 4.9% of Berkshire's stock. I could easily cross the 5% reporting threshold."
Buffett, caught off guard, studied Simon carefully before replying, "I seem to recall your wife isn't exactly a fan of my company."
He smiled, recalling an old grudge.
Years ago, Janet had humiliated Buffett during one of his university lectures, and just a few years ago, at a Hearst family party, she'd mockingly described Buffett's investment style as "Scrooge hoarding coins." Buffett, born in 1930, had spent almost his entire life meticulously accumulating wealth, investing every penny, which had led to his current fortune. The comparison to Scrooge was fitting.
Simon smiled too. "Janet may be a bit sharp-tongued, but both of us admire your investment skills, Warren
. That's why we've been quietly buying in. If we close this deal, I could increase my stake in Berkshire Hathaway above 5% at the right time. I believe this would boost shareholders' confidence in Berkshire and ease the pressure on you to invest in tech stocks."
Even though Buffett understood Simon's intention, he quickly responded, "But that wouldn't be fair to ABC's shareholders, Simon. I can't agree to that."
Ignoring Buffett's hesitation, Simon continued, "Or, we could time it for early next year. By then, the ABC deal will be finalized, and no one will connect the two events. And Warren, this isn't an exchange—it's support for Berkshire Hathaway. My offer remains $172. Of course, if the deal falls through, I may sell my Berkshire shares. With your heavy investment in ABC, I wouldn't want to risk losses when ABC's stock plummets."
Buffett found himself speechless.
It was clear there was no room for negotiation on the $172 offer.
After deliberating for a moment, Buffett said, "April next year would be best."
Simon agreed. "No problem."
Berkshire Hathaway's annual meeting was held in May. If, by April, the Westeros Company became a 5%+ shareholder, media buzz and a stock price boost would ease the pressure on Buffett at next year's meeting.
Seeing Simon agree, Buffett stood and extended his hand. "Well, then, we have a deal."
Simon set down his coffee cup, stood, and shook hands with Buffett. "Deal."
The pool outside was still full of enticing young women waiting.
Now that the deal was done, Simon felt like wrapping things up. Unfortunately, Buffett, oblivious to the situation, sat back down. "Simon, I reviewed Eaglet's prospectus on the way here. There are a few details I'm curious about."
Simon sat back down, asking, "Warren, have you changed your mind? Are you thinking of buying into Eaglet?"
Buffett shook his head. "No, I'm still not interested in buying tech stocks, but I'd like to understand more."
Alright, then.
Simon patiently indulged Buffett for another half hour before finally seeing him off.
Afterward, he called Robert Iger in Manhattan, informing him that the deal was done and they could proceed further. Only then did Simon step out through the glass doors of the reception room toward the pool outside.
It was now past four in the afternoon, and the sunlight had lost its harshness, but the pool party was still in full swing.
Recently, a new batch of Victoria's Secret Angels was being selected, and Simon always kept the final decision on the Angel lineup in his hands.
For the competitive world of supermodels, this power was life-changing.
After visiting Sophia in Italy the previous Friday, Simon had taken a trip through Ukraine, Russia, and Finland, returning only yesterday. Noticing the paperwork from Victoria's Secret, he had decided on a whim to relax with a party.
The pool at the estate now hosted over sixty models, all carefully selected from agency lists, and none of whom had ever walked the Victoria's Secret runway.
Men are naturally drawn to novelty.
And Simon was no exception.
After lunch, two custom Black Hawk helicopters, identical to Marine One, had made two trips to transport the entire crowd of models to the estate. After concluding his meeting with Buffett, Simon spent the night enjoying the festivities at the seaside mansion, which continued well into the early hours.
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