Vanke ends re­struc­tur­ing ne­go­ti­a­tions with SZMG

Move marks al­le­vi­a­tion of ten­sion in the long bat­tle for con­trol of the gi­ant real es­tate firm

China Daily (Hong Kong) - - BUSINESS - By CHAI HUA in Shen­zhen grace@chi­nadai­lyhk.com

China Vanke Co’s shares de­clined sharply on Mon­day af­ter it an­nounced that it will ter­mi­nate an as­set-re­struc­tur­ing plan with Shen­zhen Metro Group, mark­ing an al­le­vi­a­tion of the ten­sion in its year-and-a-half-long bat­tle for con­trol, ex­perts said.

Vanke’s A-shares on Mon­day dropped 6.06 per­cent to 21.10 yuan ($3.05), the low­est in about four months. Its H-shares also fell, by 3.21 per­cent.

Yan Yue­jin, se­nior re­searcher with E-house China R&D In­sti­tute, said stop­ping the deal with SZMG will re­duce the ten­sion be­tween Vanke and Bao­neng, thus re­liev­ing the pres­sure brought about by the bat­tle of con­trol.

Chi­nese fi­nan­cial con­glom­er­ate Bao­neng Group in 2015 started to buy Vanke’s shares and soon be­came its largest share­holder.

Vanke fought back, in June 2016, with a sur­prise as­set-re­struc­tur­ing plan worth 45.6 bil­lion yuan in which SZMG would have re­placed Bao­neng as the largest share­holder.

Its two largest share­hold­ers, Bao­neng Group and China Re­sources, strongly op­posed the plan to buy the en­tire eq­uity in­ter­est in SZMG’s sub­sidiary Shen­zhen Metro Qian­hai In­ter­na­tional De­vel­op­ment Co Ltd — push­ing the throne­fight to a cli­max.

Af­ter fail­ing to reach a con­sen­sus on the ac­qui­si­tion for six months, Vanke called it off in an agree­ment with SZMG on Dec 16, but the firm noted it will still ac­tively seize op­por­tu­ni­ties for prop­erty de­vel­op­ment above rail tran­sit fa­cil­i­ties. The ter­mi­na­tion was ap­proved by all mem­bers of the board, in­clud­ing Vanke Chair­man Wang Shi, who also said on Sun­day at a fo­rum in Bei­jing that the bat­tle has not yet ended.

Hu Huaru, an­a­lyst at Si­no­link Se­cu­ri­ties Co Ltd, wrote in a re­port that the su­per­vi­sion depart­ment’s at­ti­tude to­ward Vanke’s bat­tle of con- trol has be­come clear, given the on­go­ing in­ten­si­fied scru­tiny of in­sur­ance cap­i­tal buy­ing in the eq­uity mar­ket.

Fore­sea Life In­sur­ance Co, the in­sur­ance unit of Bao­neng Group, was banned from trad­ing in stocks ear­lier this month. Hu es­ti­mated the de­vel­op­ment of Vanke’s share­holder struc­ture will be­come clear soon af­ter the ter­mi­na­tion of the as­set-re­struc­tur­ing.

Me­dia re­ported on Mon­day af­ter­noon that a new re­struc­tur­ing plan will be pro­posed a month later, but Vanke told China Daily that this is sub­ject to an­nounce­ment in the fu­ture. Mean­while, Hu warned in­vestors that the pos­si­bil­ity of Vanke’s core share­hold­ers cut­ting their stock hold­ings in­creased and its val­u­a­tion is still high com­pared to other com­pa­nies in the same in­dus­try.

the de­cline in Vanke’s A-shares on Mon­day

YAN BO / FOR CHINA DAILY

Visi­tors seek in­for­ma­tion at a China Vanke booth at a prop­erty fair in Shenyang, Liaon­ing prov­ince.

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