Shen­zhen Metro agrees to pay $5.4 bil­lion to be­come No 2 share­holder

China Daily (Hong Kong) - - BUSINESS - By BLOOMBERG

China Ever­grande Group, con­trolled by bil­lion­aire Hui Ka Yan, said it has “no in­ten­tion” of in­creas­ing its stake in ri­val China Vanke Co, af­ter Shen­zhen Metro Group Co struck a deal to be­come the de­vel­oper’s sec­ond-big­gest share­holder.

Shen­zhen Metro agreed to buy China Re­sources Co’s 15.3 per­cent stake in Vanke for 37.2 bil­lion yuan ($5.4 bil­lion), Vanke said in a state­ment to the Shen­zhen Stock Ex­change af­ter the close of trad­ing on Thurs­day. Ever­grande, which has a 14.1 per­cent stake in Vanke, said in a later state­ment it had no in­ten­tion of buy­ing more shares.

Vanke’s main­land-listed A shares jumped as much as 9.8 per­cent to a one-month high. The Hong Kong shares rose 5.9 per­cent to HK$19.70 ($2.54) at 10:05 am lo­cal time, the big­gest in­crease since July 28.

The moves are the lat­est twists in a tug-of-war for con­trol of Vanke, trig­gered more than a year ago when lit­tle­known Bao­neng Group emerged as its largest share­holder. Vanke last month ter­mi­nated a 45.6 bil­lion yuan re­struc­tur­ing plan that would have in­tro­duced Shen­zhen Metro as its largest share­holder, to dis­place Bao­neng, whose ad­vances Vanke la­beled as “hos­tile.”

The own­er­ship tus­sle now

the gain in Vanke’s main­land-listed A shares on Fri­day

has “a large prob­a­bil­ity” to be re­solved, given the Shen­zhen gov­ern­ment’s stronger in­flu­ence on the ma­jor hold­ers, Tu Lilei, a Shang­hai-based prop­erty an­a­lyst at Haitong Se­cu­ri­ties Co, wrote in a Jan 12 note af­ter the an­nounce­ment. Bao­neng and Shen­zhen Metro are both based in Shen­zhen.

The move is “a pos­i­tive” for Vanke in re­in­forc­ing its Sta­te­owned en­ter­prise struc­ture, JPMor­gan Chase & Co Hong Kong-based prop­erty an­a­lyst Ryan Li wrote in a Jan 12 note

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