“Yida, your career focus should be more on companies like Ruixiang and Huimin Travel.

The pet market is exhausted, and at most a company worth tens of billions of dollars will be born.”

Zhang Sanshi continued to advise Zhang Yida, "A person's energy is always limited. You should put your limited energy on things of greater significance."

"Then how about we make a three-year agreement. After three years, the two parties will merge. The share will depend on the pet industry assets controlled by each party and the company's valuation."

Zhang Yida and Zhang Sanshi were both very controlling. Seeing that Zhang Yida could not convince the latter, he came up with a new plan.

"Yida, are you sure?"

Zhang Sanshi feels that this plan clearly has the upper hand. He does not believe that Ruixiang or Patenet will integrate the industry faster than Gaoling Capital.

Because Gaoling Capital specializes in PE, it has also prepared a pet industry investment and acquisition fund of more than US$1 billion internally.

Although Ruixiang Phase III Industrial Fund has raised US$2.5 billion, it can invest only a staggering US$2.3 billion in the pet industry.

Compared with funds, Ruixiang cannot compare with Gaoling.

As for the professionalism in the pet market, Pate.com is considered a professional website, but Gaoling also employs experts and scholars in the pet industry.

"Sure!"

Zhang Yida really wants to "bet" with Zhang Sanshi to see who has better investment vision between himself and Zhang Sanshi.

"Okay, then we can start making preparations. It is not limited to pet food and pet e-commerce, hospitals, any pet-related industry can be included.

Taking June 2016 as the starting time and June 2019 as the ending time. Once the three-year period is up, we will ask a third-party agency to do asset evaluation."

After speaking, Zhang Sanshi looked at Zhang Yida, waiting for his answer.

"No problem, let's do it!"

Zhang Sanshi also became interested and said with a smile: "When the time comes, you won't regret it if you lose!"

"There is no problem in signing the agreement."

Zhang Sanshi waved his hand, "That's not necessary. Your character is still trustworthy."

"By the way, we will also add a cap. The total investment within three years will not exceed US$1 billion."

Zhang Yida remembered that there was still such a loophole. If the three-year agreement was approaching, the assets of Petnet would exceed the pet industry controlled by Gao Ling.

At this time, if Gaoling spends billions of dollars on you to buy a bunch of pet companies to recharge, then Pet.com will definitely lose.

"Don't worry! Gaoling won't be that bad. If we invest 1 billion US dollars and lose to Petnet, that only means one problem."

Zhang Sanshi added: "It shows that Pate.com has a higher capital utilization rate and is better at capital operation. In this case, we will abdicate and make way for others."

"Okay, then it's a deal!"

Zhang Yida clearly remembers that in his previous life, Gaoling Capital used three years to acquire and integrate 700 pet hospitals across the country, and then merged more than 400 pet hospitals of Ruipeng Group, directly expanding into a "pet hospital" with thousands of national chain pet hospitals.

"Medical Aircraft Carrier".

This acquisition battle is really a bit scary. Money can be so willful.

This kind of acquisition is not a random acquisition. Even if there is a premium, it is based on China's rapidly growing pet market.

For Petnet, competitors do not come from online, but from the thousands of pet hospitals under the Gaoling Group.

Just like Ali is killing offline retail, offline pet hospitals may be killing online Pate.com.

In addition to treating cats and dogs, these pet hospitals also sell a variety of cat food, dog food, and pet supplies.

After declining Zhang Sanshi's lunch invitation, Zhang Yida came to Patenet Company and also called Ruixiang's Lan Lan.

"What, Mr. Zhang, you...you and Zhang Sanshi made a three-year merger agreement?"

After Lu Fenghai listened to Zhang Yida finish a series of conversations between him and Zhang Sanshi today, his expression was very solemn and he looked very worried.

"Yes, I will come back to discuss it with you."

Only then did Zhang Yida remember that he had forgotten to consult with Lu Fenghai, who was also the co-founder of the company.

"Why should we merge with them? At most, they have a high market share and our market share is small. It's not like we can't survive."

Zhang Yida shook his head, "Your idea is wrong. Their goal is to dominate the entire market.

You open a pet hospital in a certain community in Chengdu, and Gaoling also opens one next to you, and the medical expenses are cheaper than yours."

"What does it matter? Let's just have a price war." Lu Fenghai still looked a little unconvinced.

"For example, there are 1,000 hospitals, 500 of them are in a price war with us, and the other 500 are making money.

We suffered huge losses and others had balanced revenue. We were the first to collapse. This is the benefit of large scale."

Lu Fenghai was still a little unconvinced, "What if we have more hospitals?"

"That would be best! We would annex them."

Zhang Yida explained: "Gao Ling is determined to enter this industry, and sooner or later we will have a conflict with them.

According to the pattern of mergers of unicorn companies in recent years, if we want to enter a healthy and profitable state, we can only merge with them."

"Gaoling has prepared a US$1 billion pet investment fund. How much do we have?"

Zhang Yida looked at Lan Lan, who smiled bitterly and said: "Mr. Zhang, your speed of spending money is really top-notch.

We spent US$500 million to invest in DouShi and invested a little over US$300 million in acquiring and investing in Bilibili.

Tell me, how much should we invest in Pate.com?"

Zhang Yida waved his hand, "Let's not talk about this for now. Let's discuss how to defeat Gao Ling first!"

Turning to look at Lu Fenghai, "Fenghai, tell me what you think!"

"Invest, build a hospital, buy a hospital. Or buy a pet food factory.

Anyway, we will inflate Petnet’s assets or valuation as quickly as possible.”

Lan Lan raised an objection, "With all due respect, blind and disorderly expansion will lead to big troubles."

Zhang Yida commented: "Both of you are right. We need to expand while maintaining internal stability. Therefore, the next task is very heavy and arduous!"

“The two most important segments of the pet market are pet food, which accounts for about 40% of the industry’s total consumption, and pet medical care, which accounts for 25% of the market.

For pet food, we have Dogford, and for pet medical treatment, we have Pet Pet Hospital.

Therefore, next we will continue to invest funds and resources in these two brands.

As for Dogfud, I will convince my dad to let Dogfud join us."

Zhang Yida paused, "This refers to the domestic market.

The largest foreign pet market is the United States, with 184 million pets and an industry size of US$66.7 billion, which is more than three times that of the Chinese market.

Therefore, I decided to invest in American pet companies in the name of Petnet."

"Mr. Zhang, the pet market in the United States is relatively mature, so there is little chance of a high-quality startup company emerging, right?"

Zhang Yida looked at Lan Lan and said, "The truth is exactly the opposite of what you said. Because the market is large, there are more opportunities."

“The penetration rate of pets in American households is as high as 68%. On average, each household has 1.9 cats or 1.6 dogs. I just want to ask you, are they scary?

You know why there are so many zombie dogs in American zombie movies! Because they raise dogs and cats, which is as common as raising poultry in rural households in our country."

Lan Lan was surprised after hearing this. She had never been in the pet-related industry and really didn't understand the relevant data.

The number of cats and dogs reported by Zhang Yida is more than half of the population of the United States.

“During the financial crisis in 2008, despite the economic downturn in the United States, the market growth rate of the pet industry was still ahead of other retail industries.

Do you know why?"

Zhang Yida explained with a smile: "Because the American concept of treating pets as family members has made pet-related products become "necessities."

Even in times of economic downturn, pet owners are more willing to cut down on other personal consumption to ensure their pets' lives.

This cohesive force in the pet emotional economy allows the pet industry to remain relatively strong during the economic downturn.

If you are engaged in the pet-related industry in the United States, it is a "safe haven industry" and is as strong as gold, so you don't have to worry about unemployment."

"Pets are really regarded as treasures. I think our country also has this trend. Some young people treat cats and dogs better than their own parents." Lan Lan commented sharply.

"Haha," Lu Fenghai said with a smile, "I think this has something to do with the increasing pressure in modern society, which puts all the emotions on pets."

"Not entirely," Zhang Yida put forward his own point of view, "It has more to do with family institutions, the aging population, singles and DINK, mainly due to these three major reasons."

“The pet food industry currently has an oligopoly market structure.

According to Euromonitor International, Nestlé and Mars accounted for half of the U.S. pet food market in 2015.

Among them, Nestlé accounts for 30%, Mars accounts for 20%, and the top five companies account for 72%.

From the perspective of the global market structure, Mars ranks first, accounting for 25%, followed by Nestlé with a share of 22%, and the top five companies account for a total of 58%.

So you don’t have to look at pet food, they are all big companies and you can’t afford to invest.”

Lan Lan was aroused by Zhang Yida to invest in the pet market, and asked: "What about pet medical care?"

“There are 26,000 pet hospitals in the United States, and the top four major hospital chains have a number of hospitals ranging from a few hundred to more than a thousand.

And they are all large hospitals, which together account for 40% of the industry."
To be continued...