A high-stakes battle for control of China’s largest homebuilder, China Vanke Co. Ltd. (02202.HK), heated up as its biggest shareholder moved to oust most of the company’s board, including its celebrity chairman, Wang Shi.
Vanke had aimed to stave off an unsolicited takeover bid from rival property developer Baoneng Group with an asset-swap deal that would make subway operator Shenzhen Metro Group Co. Ltd. its largest shareholder and give Vanke valuable land atop Shenzhen subway stations.
But the plan angered shareholders, The Wall Street Journal reports.
Baoneng, which owns a 24 percent stake in Vanke, requested late Sunday an extraordinary shareholder meeting to challenge Vanke’s managers, saying they had been negligent and that Wang’s compensation has been excessive.
The power struggle at Vanke marks the first time a blue-chip Chinese firm faces an aggressive challenge for control from an activist shareholder.
Vanke faced a hostile takeover attempt in 1994, but that was resolved within days.
The firm’s Hong Kong-listed shares fell 3.8 percent Monday.
Analysts said that Baoneng might have a shot at toppling Vanke’s board, given the possibility that the second-largest shareholder, state-owned China Resources Group, could also be on its side.
China Resources last week questioned the validity of the Shenzhen land deal, noting that Vanke might be overpaying for land potentially subject to hefty government intervention.
Wang, an outspoken Chinese entrepreneur who has also become a lifestyle icon given his enthusiasm for rowing and mountaineering, took a conciliatory approach during the annual general meeting Monday.
He and Vanke’s president, Yu Liang, said they had considered the possibility that others would run Vanke.
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