Fosun ‘Surprised’ by Soho, Greentown Announcement on Shanghai Land Deal
Fosun International Ltd. (656) said it may take legal action after not being offered to buy the stake of partners in a land venture on Shanghai’s historic Bund.
Fosun is “surprised” by the planned stake transfer of the site to Soho China Ltd. (410) and it’s “of the view” it has the pre- emptive right to buy the remaining share, it said in a statement to the Hong Kong stock exchange today. Fosun will indirectly own 50 percent in the site after Soho agreed to pay 4 billion yuan ($633 million) for the other half from Greentown China Holdings Ltd. (3900) and Shanghai Zendai Property Ltd. (755), according to a statement yesterday.
Greentown and other Chinese developers are considering selling land and other assets for cash as government curbs to damp escalating home prices restrict sales. The government intensified measures this year, including home-purchase restrictions in 40 cities and higher mortgage requirements.
“If such interest cannot be protected, the company shall take all appropriate legal actions to defend its interest,” Fosun said in the statement.
Zendai has considered offers by other potential buyers, including Fosun, for its stake in the plot, the company said in a statement to Hong Kong’s stock exchange today.
“The company considers it has complied with all applicable laws and regulations in entering into the proposed disposal,” Zendai said. The deal with Soho China is “made in the best interest of the shareholders.”
Greentown hasn’t breached any agreement with the planned sale, Chief Financial Officer Simon Fung said by phone earlier today. He declined to comment further.
Greentown’s shares fell 0.3 percent to HK$3.37 at the 4 p.m. close in Hong Kong, while Soho China, the biggest developer in Beijing’s central business district, rose 1 percent to HK$5.17. Fosun gained 0.3 percent to HK$4.06. Zendai shares were suspended.
Fosun declined to say when the company will start taking legal actions in an e-mailed reply to Bloomberg’s query. Soho China’s Chairman Pan Shiyi didn’t return calls from Bloomberg seeking comment.
The proposed sale of the Shanghai land, which involves three listed companies, sent a clearer signal that industry consolidation has begun, Kris Li, a Shanghai-based analyst at SWS Securities Co. said yesterday.
The site at the Bund has about 45,472 square meters (489,456 square feet) for mixed office, retail, financial, art and culture development, according to the statement yesterday.
Greentown owns 10 percent of the site and will receive 1.04 billion yuan from the sale, which it will use to replenish its working capital, the company said in a separate statement.
Greentown is in discussions to sell more of its projects to raise cash, Fung said in a phone interview yesterday, adding that he is “satisfied” with the selling price of the Bund site.
Shanghai undertook a three-year renovation of the Bund, the city’s colonial-era waterfront boulevard, lined with historic buildings, ahead of the World Expo the city hosted in 2010.
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