Date
23 January 2017
Wang Shi questioned the adequacy of the financing behind the share purchases by the group of three firms. Photo: Bloomberg
Wang Shi questioned the adequacy of the financing behind the share purchases by the group of three firms. Photo: Bloomberg

Vanke using poison pill to fend off potential takeover bid

The world’s largest property developer is trying to fend off a potential attempt by three firms to take control of the company.

China Vanke Co. Ltd. (02202.HK) halted trading in its shares Friday. The firm said it plans to issue an undisclosed number of new shares, without releasing details.

Analysts said the announcement signals that Vanke has adopted a poison pill, an antitakeover defense that can make buying up more shares prohibitively expensive.

In recent weeks, a group of three mainland Chinese investors has become Vanke’s largest shareholder, with a combined stake of 22 percent.

Speculation about their intentions has sent the Vanke shares that trade in Shenzhen up two-thirds over the past month alone while the rest of China’s property sector remains in a slump.

On Thursday, Vanke chairman Wang Shi criticized the group in front of other company executives, a transcript of the meeting seen by The Wall Street Journal showed.

He singled out a Chinese businessman named Yao Zhenhua, who Wang said was behind the group, and questioned the adequacy of the financing behind the group’s share purchases.

“The reason for not being welcoming is simple: he lacks credibility,” Wang said in the transcript.

Yao chairs Shenzhen Baoneng Investment Group Ltd., a closely held property developer and one of the three companies holding the stake in Vanke. 

In a statement published on its website Friday, Baoneng said it is a 23-year-old Shenzhen-based property developer and financial services group that “legally operates its business, has created huge value for society and its customers, and has a good name in the market”.

The other two companies are Shenzhen Jushenghua Co. Ltd. and Foresea Life Insurance Co. Ltd.

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