China developer Vanke
buys Shenzhen Metro unit for $6.9 billion
Send a link to a friend
[June 18, 2016]
HONG KONG (Reuters) - China Vanke,
the mainland's biggest property company by sales, said it will acquire a
unit of Shenzhen Metro Group for 45.6 billion yuan ($6.9 billion) via a
new share issue, making the state-owned subway operator its largest
The final purchase price came at the lower end of the 40 billion
yuan to 60 billion yuan guidance under a preliminary accord in March
as Vanke's management fought to retain control of the company in a
battle with its major shareholder, financial conglomerate Baoneng.
Vanke said in a statement to the Shenzhen Stock Exchange late on
Friday that Shenzhen Metro will hold 20.65 percent of its enlarged
issued share capital upon deal completion, surpassing Baoneng's
19.27 percent after dilution.
According to the deal, Vanke will issue Shenzhen Metro close to 2.9
billion A shares at 15.88 yuan each, representing a 35 percent
discount to its last trading price of 24.43 yuan on Dec. 18, in
exchange for SZMC Qianhai International Development Co, which owns
large-scale projects atop metro facilities in Shenzhen.
"Provision of integrated services surrounding metro facilities will
become the most important development direction of Vanke," said
company secretary to the board Zhu Xu.
The deal with Shenzhen Metro did not have unanimous support from
Vanke's board, however, with three 'no' votes from its current
second largest shareholder, state-owned China Resources Group, out
of 10 total board seats.
China Resources' directors opposed to pay for the deal through a new
share issue, rather than cash, according to Vanke's statement.
[to top of second column]
An employee walks past a logo of Vanke at its headquarters in
Shenzhen, south China's Guangdong province, November 2, 2015.
China Resources, which currently owns a 15.3 percent stake in Vanke before
dilution, criticized the manner in which the property developer struck the deal
soon after it was announced in March. Chairman Fu Yuning said the agreement had
not been discussed by the property developer's board, calling it "unfortunate".
Vanke's shares have been suspended on the Shenzhen bourse since Dec. 18. Its
shares in Hong Kong closed up 3.4 percent at HK$17.52 on Friday.
(Reporting by Clare Jim; Editing by Kim Coghill)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.