Date
26 March 2017
Vanke has struck a deal with Shenzhen Metro Group as the former tries to ward off a potential hostile takeover bid from Baoneng. Photo: Bloomberg
Vanke has struck a deal with Shenzhen Metro Group as the former tries to ward off a potential hostile takeover bid from Baoneng. Photo: Bloomberg

Vanke buys Shenzhen Metro unit in US$6.9 bln deal

China Vanke Co., the mainland’s biggest property developer by sales, has announced that it will acquire a unit of Shenzhen Metro Group for 45.6 billion yuan (US$6.9 billion).

The acquisition will be undertaken via the issuance of new shares to Shenzhen Metro, which will end up becoming Vanke’s largest shareholder.

The final purchase price was at the lower end of the 40-60 billion yuan guidance under a preliminary accord in March, Reuters noted.

The deal comes as Vanke’s management has been waging a battle with its major shareholder, financial conglomerate Baoneng, for control of the real estate firm.

According to a regulatory filing late Friday, Shenzhen Metro will hold 20.65 percent of Vanke’s enlarged issued share capital upon deal completion, surpassing Baoneng’s 19.27 percent after dilution.

Under the deal, Shenzhen Metro will be issued close to 2.9 billion A shares at 15.88 yuan each, representing a 35 percent discount to Vanke’s last trading price of 24.43 yuan on Dec. 18.

In return, Vanke will get to control SZMC Qianhai International Development Co, which owns large-scale projects atop metro facilities in Shenzhen.

The deal with Shenzhen Metro did not have unanimous support from Vanke’s board, as there were three ‘no’ votes from its current second largest shareholder, state-owned China Resources Group.

China Resources’ directors were opposed to paying for the deal through a new share issue, rather than cash, according to the report.

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