Bi-weekly report on billionaires: Stealthy merger negotiations, beauty apps and newspaper publishing

Kumar Mangalam Birla stood alone against six investment banks in merger negotiations for India’s telecoms industry. Dibyangshu Sarkar / AFP

For secrecy’s sake, Kumar Mangalam Birla kept a tight circle as he hammered out a merger in meetings in Abu Dhabi and Dubai. This and more in our biweekly look at the world of billionaires.

Kumar Mangalam Birla

The Indian billionaire Kumar Mangalam Birla just pulled off the biggest deal of his career. There won’t be any investment banks sharing in the glory.

His mobile arm, Idea Cellular, said on Monday it will merge with Vodafone’s Indian operations to create the largest Indian wireless carrier with a US$23 billion enterprise value. Mr Birla, who will be chairman of the combined business, personally led talks with Vittorio Colao, Vodafone’s chief executive, people with knowledge of the matter said.

While Vodafone was assisted by six investment banks, Idea Cellular didn’t list any financial advisers in the deal announcement. Birla turned instead to a pool of former bankers he’s brought on to the payroll at his conglomerate, the people said, asking not to be identified because the information is private.

Mr Birla shunned investment banks because he wanted to avoid any leaks, according to the people. The billionaire’s internal deal team has been working for the past two months to get an agreement, one of the people said. Idea Cellular met Vodafone officials in London, Dubai, Abu Dhabi and Mumbai to hash out the deal terms, the people said.

When visiting London, Mr Birla’s team stayed away from larger, more prominent hotels to avoid being spotted, according to one of the people. In Dubai and Abu Dhabi, Mr Birla officials stayed in different hotels from the Vodafone executives so they wouldn’t be seen together too often, the person said.

Mr Birla is 49 and Bloomberg estimates his net worth at $7.8bn. He has been running the family business, founded in 1857, since he was 28, when his father died.

Wu Xinhong

On March 15 Wu Xinhong, co-founder and chief executive of Meitu, became the second billionaire at the Chinese beauty-enhancing selfie app developer after the stock rose for nine straight sessions.

The shares on that day extended their gains since being added to an equity-trading link between China’s Shenzhen exchange and Hong Kong on March 6. That gave Mr Wu a net worth of $1bn, according to Bloomberg. (At the close yesterday, the shares had risen a further 5.3 per cent.)

The link offers foreign investors more access to mainland China-listed technology shares and gives mainland investors access to Hong Kong-traded stocks such as Meitu. The company became a household name in China by tapping a generation’s growing desire to look attractive online. Its apps, with more than 456 million monthly active users, help people slim their faces, lengthen their limbs and even apply virtual make-up in photos.

Mr Wu joins, Cai Wensheng, the company’s co-founder and chairman, in the billionaire ranks.

Meitu generates 95 per cent of its revenue from selling its branded mobile phones and has yet to turn a profit. Meitu is set to announce 2016 earnings today.

Mr Wu started his first company at 18, forgoing university. His first business failed but he tried again with Meitu, which is less than a decade old. A Washington Post article last year said the app was meant for simple photo editing, such as cropping a skyline shot. But after people started using the app primarily to glam up their selfies, Meitu adapted.

Ferdinand Piech and Wolfgang Porsche

They could hardly be more different. Ferdinand Piech is a wiry and driven engineer who has dedicated his life to automobiles. The soft-spoken Wolfgang Porsche, by contrast, seems more comfortable stalking deer in the forest. What has long bound the billionaire cousins together is their grandfather’s legacy: their family’s namesake automaker, and for the past decade control of Volkswagen.

Their uneasy association is near an end. Last Friday, Porsche Automobil Holding, the family investment vehicle, said Mr Piech is in talks to sell “the major part” of his stake – valued at about 1.1bn euros (Dh4.36bn) – to other family members. Mr Piech owns about 15 per cent of Porsche Holding, which holds 52 per cent of VW’s voting shares.

The move is vintage Piech. He takes an uncompromising approach to conflict. Until recently, Mr Piech was the family’s undisputed patriarch, calling the shots first as Volkswagen chief executive and later as its all-powerful chairman. His hold only crumbled in 2015 when Wolfgang Porsche and other members of the board threw their weight behind the VW chief executive, Martin Winterkorn, with whom Piech had fallen out.

Mr Piech has had a lifelong commitment to the auto industry. He made a name for himself through Audi, spearheading the Quattro’s four-wheel drive technology and focusing the brand around its engineering prowess. He later took over the top job at VW, building up the carmaker through a series of acquisitions including Scania and Bugatti. As a manager Mr Piech was ruthless.

Wolfgang Porsche, by contrast, stayed at arm’s length at the namesake brand. Still, his connection runs deep. As the financial crisis devastated markets worldwide, Porsche Holding in 2009 was forced to abandon a bid to take over Volkswagen. VW then turned around and swallowed Porsche. The defeat left Wolfgang Porsche in tears. After losing the bid, he addressed workers in a trembling voice, flanked by the managers who had sought to orchestrate the coup. They did, though, walk away with a mighty consolation prize: the family became VW’s biggest shareholder.

Donald Trump

The president of the United States fell 220 spots on the annual Forbes rich list, which was released on ­Monday.

Donald Trump ranked 544th on the latest list with a net worth estimated at $3.5bn. Forbes attributed Trump's drop to sluggishness in the Manhattan real estate market, which is responsible for a big part of his wealth.

"Forty per cent of Donald Trump's fortune is tied up in Trump Tower and eight buildings within one mile of it," Forbes said. "Lately, the neighbourhood has been struggling (relatively speaking)."

Forbes said the global billionaire population jumped 13 per cent from last year to 2,043, the biggest annual increase in the 31 years since the magazine began compiling the list.

Jeff Bezos

Jeff Bezos scored a double win last week as the Washington Post, the newspaper he bought in 2013, signed its biggest contract to date to sell web-publishing tools mostly hosted by Amazon.com, the company he founded and runs.

The deal, with Los Angeles Times's parent, Tronc, is a boost for the Washington Post as it looks to branch out from its core news business against a backdrop of falling advertising revenue for traditional media.

The newspaper's year-old service, Arc Publishing, now has about a dozen clients and is aiming for $100 million in annual revenue. Mr Bezos bought the Washington Post for $250m four years ago in a private deal not related to Amazon.

"Thanks LA Times for choosing WaPo's Arc Publishing for your digital platform, and kudos to tech team at The Post!" Mr Bezos posted on Twitter when the deal was announced.

The deal indirectly benefits Amazon Web Services (AWS), the world’s biggest cloud-computing business and Amazon’s fastest-growing unit, which posted a 55 per cent jump in sales last year to $12.2 billion.

Despite the Bezos connection, the choice of using AWS is not automatic, said the Washington Post. The company's chief information officer Shailesh Prakash noted that it uses alternative vendors Instart Logic and Akamai Technologies for certain features. The Washington Post pays for AWS, he added.

Analysts said the Post has taken a leaf out of the Bezos playbook, making money out of tools originally built for internal use, as Amazon did with the data centres that now form the backbone of AWS.

Patrick Soon-Shiong

Patrick Soon-Shiong has increased his stake in the newspaper publisher Tronc, owner of the Los Angeles Times and Chicago Tribune, days after other directors decided not to renominate him to the board.

Mr Soon-Shiong boosted his stake in the company to 24 per cent from about 16 per cent, according to a regulatory filing on Tuesday, and is the second-largest stockholder behind the chairman, Michael Ferro, whose Merrick Ventures owns 24.8 per cent.

The share purchases and Mr Soon-Shiong’s exit from the board suggest a growing rift between the Los Angeles-based biotech billionaire and the company, which publishes newspapers in nine of the largest US markets, including San Diego and Baltimore. In a March 9 filing, the Chicago-based company said a board committee chose not to nominate Mr Soon-Shiong for re-election.

One source of the dispute is whether Mr Soon-Shiong violated the company’s trading policies by acquiring shares near the dates of earnings reports, according to people familiar with the matter. Mr Soon-Shiong maintains that he had an agreement that let him acquire shares as long as he wasn’t in possession of material, non-public information, said one of the people. Mr Soon-Shiong had raised concerns about Mr Ferro’s use of corporate assets, one person said. Another person close to Tronc said Mr Soon-Shiong had been disruptive on the board.

Last May, Mr Soon-Shiong’s Nant Capital made a $70.5m investment in the publisher, a move seen back then as an attempt to fend off a hostile takeover by Gannett. Mr Soon-Shiong became vice chairman of the board, and his Nant Capital gained a 13 per cent stake.

Mr Soon-Shiong, a native of South Africa whose father was a herbalist, became a billionaire after selling two drug companies he founded.

The biotech entrepreneur ranks 149th on Bloomberg’s global rich list with a net worth of $8.7bn.

* Agencies and The National

Follow The National's Business section on Twitter