Shareholders block Vanke equity plan

China Vanke Co’s restructuring plan, involving a 45.61 billion yuan ($6.9 billion) stock for units deal with the State-owned Shenzhen Metro Group Co, encountered opposition from its two major shareholders, which experts said on Friday means almost certain failure for the plan and will jeopardize the future of the real estate giant.

Shenzhen Jushenghua and Foresea Life Insurance, two units of Baoneng Group, released a joint announcement late on Thursday, saying that they explicitly opposed Vanke’s plan to buy assets from Shenzhen Metro.

Another major shareholder, the State-owned China Resources, on Thursday also released a separate statement, reiterating its opposition.

“The united opposition from major shareholders Baoneng and China Resources makes it impossible for Vanke’s restructuring plan to pass at the shareholders’ meeting,” Liu Shengjun, deputy executive director of the CEIBS Lujiazui International Finance Research Center, told the Global Times on Friday.

Baoneng and China Resources hold about 39.6 percent of Vanke. According to Vanke’s corporate constitution, a 66 percent majority is needed to pass the plan.

Vanke’s plan, revealed on June 17, envisages offering Shenzhen Metro 45.6 billion yuan worth of Vanke shares in return for one of its units, viewed as a way to avoid a takeover by Baoneng, which became Vanke’s largest shareholder in 2015.