Rebirth of England

On October 13, the U.S. Department of the Treasury announced that it would help major financial institutions establish a $100 billion fund (Super Fund) to purchase distressed mortgage-backed securities.

At this time, the United States has realized that if the collapse of CDO bonds continues, their investment banks will continue to lose blood, which may eventually have a greater impact.

On October 23, the American Bankruptcy Institute announced that the number of consumers filing for bankruptcy in September increased by 23% year-on-year, to nearly 69,000!

As soon as this data was released, the securities market responded immediately, with the Dow Jones Industrial Index and the Nasdaq Index both falling.

The next day, October 24, the world's top brokerage firm, Merrill Lynch, announced that due to the impact of the subprime mortgage crisis, they lost US$7.9 billion in the third quarter of this year!

The day before, Nomura Securities, Japan's largest brokerage, also announced a loss of US$620 million for the quarter.

On October 30, Swiss Bank, the largest bank in Europe by assets, announced that due to losses on subprime-related assets, its first quarterly loss in the past five years reached 830 million Swiss francs in the third quarter!

On the same day, Merrill Lynch announced on October 30 that current CEO Stan O'Neill "decided to retire immediately." Obviously, his resignation was due to Merrill Lynch's failure in subprime mortgage-related fields in the third quarter of this year. Asset impairments amounted to US$7.9 billion, and quarterly losses reached US$2.24 billion. This was Merrill Lynch's first quarterly loss in six years and the worst performance in the company's 93-year history.

What makes Merrill Lynch's shareholders angry, and what makes Barron very happy, is that Merrill Lynch's stock price has shrunk by 30% this year - which means that they have made huge profits from short selling the company's stock.

Of course, it was not just Merrill Lynch but also Thomson Group whose stock prices fell sharply.

Since mid-October, when IE Fund began to increase its short position on Thomson Group, the company's market value has fallen by more than 20% from its previous high, and its stock price has begun to hover around the $37 level.

Initially, the Thomson family thought the company's share price was the result of a correction in the overall stock market after the Dow Jones Industrial Average reached its all-time high.

But soon, they discovered that something was wrong. It was obvious that someone was selling Thomson Group's shares in large quantities, causing their stock price to fall much faster than other companies in the same industry.

Thomson Group itself is engaged in the sales of financial information, so after investigation, they quickly learned that the drop in their stock price was deliberately caused by someone.

Now, they are faced with a choice - in fact, they don't have to choose at all. The acquisition of Reuters Group is their most important thing at the moment. Therefore, at this time, Thomson Group certainly does not want to be affected by its own stock being shorted. acquisition.

So Thomson Group quickly issued an announcement, stating that the company's operations were normal and there was no undisclosed news. It also announced that they would use US$500 million in funds to repurchase its shares, and did not rule out additional purchases in the future. The possibility of more funds to stabilize the stock price.

You know, Thomson Group has successively sold their education-related industries and obtained more than 8 billion US dollars in funds.

But the Thomson family will also have concerns when using these funds.

Because first of all, these funds belong to the Thomson Group. If these funds are used to repurchase stocks, these stocks will ultimately only belong to the Thomson Group, not the Thomson family. Often, such companies will repurchase stocks. Destroy to reduce the total share capital of the group. Correspondingly, the value of the reputable Thomson stocks will also increase, which will naturally give the market confidence and stabilize the stock price.

But in this case, not only the Thomson family will benefit, but all shareholders.

On the other hand, these funds were prepared by the Thomson Group to acquire the Reuters Group. If they are used too much and cannot be replenished, it will inevitably affect the acquisition of the Reuters Group.

If the Thomson family buys back shares, they won't be able to come up with so much money at the moment...

Still very confused.

But as the situation continued, the Thomson family no longer had any room to hesitate - you must know that at the beginning, IE Fund had already bought US$1 billion of Thomson Group shares in advance, and before that, it had taken advantage of the overall stock market decline. , all sold out.

Next, IE Fund used the funds obtained from selling stocks to begin to intervene in Thomson Group's stocks from the market and continued to sell them, causing Thomson Group's stock price to continue to fall, and the magnitude of the decline was much greater than those who were optimistic about it. Stocks that appear to have been unaffected by the subprime mortgage crisis...

Similarly, the decline in the share price of Thomson Group has also affected Reuters Group, making the merger between the two parties once again thrown into doubt.

Because Reuters Group was not spared, its stock price also fell by more than 10% during this period. Although its decline was far less severe than that of Thomson Group, it had a negative impact on the cooperation between the two parties.

Many shareholders of Thomson Group, after the stock price of Reuters Group fell sharply, asked Thomson Group to increase its acquisition bid for Reuters Group. After all, the stock price of Reuters Group has fallen sharply, which is equivalent to a cash acquisition. During the stock exchange, the equity they gained suffered a loss.

Similarly, within the Thomson Group, although the Thomson family's holding company holds more than 70% of the shares of the Thomson Group, other shareholders have also proposed to reconsider the acquisition of the Reuters Group, because the current group's stock price is unstable, and the Reuters Group's stock price is also falling. Forcing the merger of the two parties may even be implicated, thus affecting the operating conditions of the Thomson Group.

In addition, the market regulators in the United States and the United Kingdom have been slow to make a final antitrust ruling on the acquisition, which has also required the Thomson Group to focus most of its energy on the acquisition.

So even if the Thomson family used part of their own funds to buy Thomson Group's shares, and later used $500 million of group funds to repurchase the shares, it still did not stop the trend of stock decline. After a slight rebound, it continued to enter the downward channel.

After all, with the overall downturn in the stock market, investors have become more cautious, and many people have also realized the risks, so not many funds are willing to come in and follow the Thomson family to "support the bottom" - after all, before this, the Thomson Group's stock price was already at a high level, who would not worry about becoming a high-level takeover?

On the contrary, many Thomson Group stockholders have even started to sell their stocks to "lock in profits", which has resulted in Thomson Group's stock price falling by more than 20% from its high point 20 days ago by the end of October.

But the matter did not end here. On October 31, Halloween, the British Competition and Markets Authority (CMA) announced that considering that Thomson Group's acquisition of Reuters Group would affect fair competition in the industry, they decided to veto the acquisition deal.