[Chapter 156: Acquiring Miramax]
Right after returning to Los Angeles, Robert came to report on the acquisition negotiation status of Miramax Films. Just as anticipated, due to many companies involved in the bidding, the Weinstein brothers raised their price, triggering everyone to increase their offers.
Now, all the smaller companies were out. The remaining contenders were Disney, 20th Century Fox, and Linton Films.
"Disney's latest bid reached $22 million, with a premium over 75%. Should we continue bidding?"
With the debts included, the acquisition cost rose to $42.5 million, which was indeed quite high. However, compared to the already mature and solid distribution network, it was still very cost-effective. In a few years, it would require at least $100 million, not to mention the 130 movie copyrights.
"We should proceed. Miramax under our hands could create far more value than Disney or 20th Century Fox. They just want to supplement their distribution network and value independent films. But for us, it's a complete distribution network. Just think about the profits from distributing Step Up and The Shallows; one blockbuster alone can recoup our investment."
"True, but what's our bottom line?"
"$30 million. Above $30 million, we can discuss again."
"Okay. Hopefully, we won't need $30 million. I think $22 million is close to the bottom line for Disney and 20th Century Fox."
At the Sherman Golf Club, Hoff-Del skillfully sunk his ball into the hole, and Linton matched him by sinking his ball quickly and neatly.
Linton had invited LAPD Deputy Chief Hoff-Del. With the previous cooperation on Speed, the two naturally admired each other.
One was a powerful LAPD executive and member of the five-person committee; the other was a movie company owner, a new multi-millionaire, a great director, and a star.
Both had resources the other needed, so they quickly became good friends.
After a round, they rested in the clubhouse loungers. Golf courses really were ideal for discussions -- no reporters or nosy people to disturb or eavesdrop, no surveillance. The exercise was mild, the air fresh, and the scenery lush green, all soothing.
Because of its high price, golf was considered an elite sport and an important venue for American elite cooperation talks.
Linton first briefed Hoff on the progress of Speed, scheduled for July 9, and invited him to the premiere. Speed had become LAPD's image promotional film, receiving great support during filming. LAPD hoped to use Speed's release to change public perception and restore citizen trust. Hoff readily agreed.
Hearing that Linton promised a donation to LAPD after the film's release, Hoff couldn't hide his smile.
With the mood set, Linton brought up the request to open a security company. Hoff agreed without hesitation. It was a minor matter for him, and he gave Linton a subordinate's contact to submit application materials.
The next day, Linton had Goodman prepare the documents and submit them to LAPD. With Hoff's support, the security company license was quickly obtained.
Then, Goodman and David registered Thunder Security Company, with David Reid as the legal representative. Linton also selected a new bodyguard named Carter Finn as his personal guard.
With official security company credentials, they could order various weapons -- except those restricted by the Pentagon.
David also convinced Sandy, Hayden, and two other new bodyguards to join Thunder Security.
Linton invested $10 million initially into Thunder Security for building a training ground, weapon purchases, and staffing. The only requirement: form combat capability quickly while ensuring loyalty.
Linton also quickly drew the detailed blueprint of the Thunderstorm Protection Array, including material specifications. The public name was changed to Farm Lightning Protection System.
He handed it to Winnie to find professionals to calculate workload and materials to prepare for negotiations with construction companies.
By the end of April, tax season arrived again. Linton spent a day calculating last year's tax with Henry and Goodman.
His personal tax was easy. Though his income was high, most was d to charity. Plus, having just bought a big farm, he ended up owing zero in taxes.
But Linton Films owed much more due to Step Up's huge profits. Despite investments in three new films and maximum charitable donations, plus Henry's tax avoidance maneuvers, the company still owed $16.35 million, causing Linton considerable pain.
The charity fund mostly did long-term stock investments. Stock appreciation did not count, and dividends were under $5 million. A 1% federal tax was negligible. Other properties and copyright studios had minimal tax burdens. The charity fund's major expense was charitable donations -- $7.5 million spent last year.
With increasing income, Linton expected to expand the charity fund and charitable spending. Aunt Kelly had already told Linton to allocate $3 million this year for charity in their grandmother's hometown. Linton wholeheartedly supported this and said he'd accompany her to visit and pay respects when she finalized the location.
Regarding the Miramax acquisition, after multiple rounds of bids and clashes, 20th Century Fox withdrew at $24 million.
Only Disney and Linton Films remained. Disney then proposed a joint acquisition with Linton.
Robert was tempted, but Disney required a majority 51% stake, making Miramax a Disney subsidiary. Linton declined after much thought. He refused to being a worker for Disney. His bottom line was at least 51% ownership.
After several rounds without compromise, the joint bid fell apart, and they returned to price competition.
Finally, Disney withdrew at $27 million. After nearly a month of negotiations, the acquisition succeeded.
On April 30, just before month-end, both parties signed the acquisition contract in front of lawyers.
Linton Films acquired all shares of Miramax Films for $27 million cash and assumed $20.5 million debts.
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