China Vanke Welcomes Anbang as Ally in Shareholder Tussle

  • Insurer emerges as a key player after boosting stake to 7%
  • Baoneng Group had earlier become Vanke's top shareholder

China Vanke Co., the developer whose managers are locked in a struggle for control against its largest shareholder, welcomed Anbang Insurance Group Co. as an ally after the insurer boosted its stake in the company.

Anbang raised its holding in Vanke’s Shenzhen-listed shares on Dec. 17 and 18, to 7.01 percent from 5.69 percent, before the A shares of China’s largest publicly traded developer were halted on Friday pending a share sale and an asset restructuring, according to filings on Tuesday to the Hong Kong stock exchange.

In a statement on its website late on Wednesday, Vanke said it conducted “highly effective” communications with Anbang after the insurance group increased its holdings and is willing to work together to explore global opportunities. Anbang, in a separate statement, said that it will “actively” support Vanke’s development and would like to see stability in the company’s management.

The closely held insurer has injected itself into the tussle for control of the developer, which was sparked when the obscure Baoneng Group displaced China Resources Co. as Vanke’s biggest shareholder. That prompted Vanke management to label Baoneng’s move as a “hostile takeover.”

“Anbang is known as a capable investor with resources to leverage” for deals, said Frank Hong, a Beijing-based partner at Dorsey & Whitney LLP who specializes in areas including mergers and acquisitions. “It’s certainly playing a key role here that can affect the outcome of this drama.”

Biggest Investors

Beijing-based Anbang was publicly revealed as a Vanke shareholder for the first time on Dec. 7, when it increased its holding in the developer’s Shenzhen-listed entity to 5 percent, according to a Vanke filing Dec. 8. By that time, Baoneng had already overtaken state-owned China Resources as Vanke’s biggest stakeholder, according to a Dec. 6 filing.

Vanke Chairman Wang Shi took to his Twitter-like Weibo account after Anbang’s latest purchases were revealed Tuesday to make an oblique reference to “parties acting in concert,” without naming any firm. A Vanke public relations manager didn’t reply to a message seeking comment on Wang’s post.

In a statement on Wednesday after Chinese markets closed, Vanke said it had hoped Baoneng would hold back from raising its stake and consider the risks of changing the property company’s culture. An e-mail sent to Anbang’s Beijing-based press office wasn’t immediately answered.

Trading Halt

Vanke’s Shenzhen-traded shares rallied 36 percent in the nine trading days from Dec. 8 before they were halted.

Based on latest disclosures, Baoneng has a 23.52 percent holding in Vanke through units Shenzhen Jushenghua Co. and Foresea Life Insurance Co. China Resources had 15.29 percent of Vanke A shares, according to a Nov. 19 filing.

The suspension of the shares last Friday has temporarily halted changes in those positions. Vanke said that day it’s planning a share sale for a major asset restructuring. While the sale is probably meant to dilute Baoneng’s holding, it may not be enough to prevent Baoneng from keeping its position as biggest shareholder, according to Deng Wenjie, founder of Guangzhou Quantaim Investment Management Co.

“It’s an open market and you don’t know if the other side has allies that already hold tons of Vanke shares,” Deng said by phone.

Forcing Closer

Vanke said Wednesday it remains “open for dialogue,” and that it has yet to receive a satisfactory explanation for why Baoneng has built its stake.

“We only see them forcing closer, step by step,” Vanke said.

Vanke’s restructuring will definitely not be a “poison pill” in defense of a takeover, the developer said on its official WeChat account Wednesday, citing comments made by Shi, its chairman, to Credit Suisse Group AG employees he met earlier the same day. A “poison pill” is designed to make a proposed acquisition more expensive for a potential acquirer.

Baoneng will make its way on to Vanke’s board sooner or later based on its current holding, Wang was cited as saying in the WeChat post, adding that Baoneng is not capable yet of making a significant change to the board.

Enter Anbang. Vanke’s Wang told the Credit Suisse employees that Anbang doesn’t look like a party acting in concert with Baoneng, based on information available to him, the 21st Century Business Herald reported earlier.

Apart from the Waldorf Astoria purchase as part of a global expansion, Anbang has also struck deals to buy an office property from Blackstone Group LP and to acquire Delta Lloyd NV’s Belgian banking unit, while also investing in insurers in South Korea and Belgium. In November, it agreed to buy Fidelity & Guaranty Life in the U.S.

— With assistance by Dingmin Zhang, and Emma Dong

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