Prop­erty firm blames takeover for tough con­di­tions

The Myanmar Times - - International Business -

CHINA’S big­gest prop­erty firm Vanke yes­ter­day blamed a takeover it is try­ing to fight off for wors­en­ing busi­ness con­di­tions, even as it re­ported higher profits.

Bosses of Vanke, China’s largest res­i­den­tial de­vel­oper by sales, have for months been try­ing to stave off what would be the coun­try’s first hos­tile blue-chip takeover, after pri­vate con­glom­er­ate Bao­neng bought a stake of more than 20 per­cent, be­com­ing its big­gest share­holder.

Chair Wang Shi and his ex­ec­u­tives cur­rently own only around 0.2pc of the 270 bil­lion yuan (around US$40 bil­lion) firm.

But they re­tain a tight grip on it by virtue of their po­si­tions, and have pro­posed a con­tro­ver­sial as­set swap deal with a state-owned sub­way op­er­a­tor that would heav­ily di­lute ex­ist­ing share­hold­ers.

An­a­lysts say that takeovers are cru­cial to ef­fi­cient mar­kets and the al­lo­ca­tion of re­sources.

But in its earn­ings state­ment to the Hong Kong ex­change, where it is listed, the com­pany said the bat­tle had “caused neg­a­tive im­pacts on the nor­mal op­er­a­tion of the Group”.

From June to Au­gust, 31 land ac­qui­si­tion projects and five prop­erty management schemes have been ter­mi­nated or sus­pended due to the fight. The firm also faced “tight­ened credit con­di­tions” from banks.

But surg­ing Chi­nese home prices saw its earn­ings jump 48.8pc in the first half to 74.8 bil­lion yuan, it said.

The com­pany said it “could not rule out the pos­si­bil­ity of fu­ture re­sults be­ing af­fected by the share­hold­ing is­sue”. –

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