China Vanke's Yu Says Company Faces Hostile Takeover From Holder

  • Vanke's Wang says he doesn't welcome Baoneng as biggest holder
  • Baoneng became biggest holder of Vanke shares on Dec. 4

China Vanke Co.’s President Yu Liang said China’s biggest homebuilder faces a hostile takeover from a consortium backed by Baoneng Group, which became its biggest shareholder this month.

Yu commented Friday at a media briefing in Chengdu city, according to a public relations manager who asked not to be named, citing company policy. Chairman Wang Shi said the property developer doesn’t welcome Baoneng Group and its affiliates, who lack sufficient credibility and may have a negative impact on Vanke’s credit ratings and reputation, according to a transcript from an internal meeting obtained by Bloomberg News, the contents of which were confirmed by the company. Vanke, the world’s largest listed property company by market value, suspended trading Friday pending a share sale.

“What we face today is the same as a hostile takeover,” Yu said during the Friday briefing. “Vanke welcomes shareholders which will not intervene with the business of the company,” he said, citing China Resources Co. as an example of such a holder.

Vanke, which develops residential properties in Shenzhen, Shanghai, Beijing and other big Chinese cities, has a market capitalization of more than $40 billion. Baoneng Group replaced China Resources Co. as Vanke’s largest shareholder this month, prompting the rare public spat. The planned share sale prompted speculation that Vanke is seeking to dilute the ownership of Baoneng Group.

“This could potentially be a counterattack by Vanke to Baoneng,” said David Hong, a Hong Kong-based director of China Real Estate Information Corp. “Vanke may try to introduce a third-party investor.”

Vanke’s shares rose by the 10 percent daily limit in Shenzhen for a second straight day Friday before they were halted. The shares have advanced 76 percent this year.

China Resources played a very important role in Vanke’s corporate governance when it was the company’s biggest shareholder, including providing shareholder structure stability, helping business management and internationalization, according to the transcript.

Baoneng Group said in a statement on its website that it has a “good” reputation, follows the law and believes in the power of the market. Established in 1992, Shenzhen-based Baoneng Group is an investor with its main businesses in property development, logistics and finance, according to its website. It has about 40 projects in construction in 23 Chinese cities.

Baoneng Group’s consortium, composed of two entities called Shenzhen Jushenghua Co. and Foresea Life Insurance Co., increased their stake in Vanke to 22.45 percent as of Dec. 11, from less than 5 percent, within five months.

“Whether the old shareholders, led by China Resources, will team up with Vanke, will become an important swing factor,” Chen Shen, a Shanghai-based property analyst at China Securities Co., wrote in a note Thursday.

— With assistance by Sree Vidya Bhaktavatsalam, and Emma Dong

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