China property giant Vanke buys Shenzhen Metro unit for $6.9b

An employee walks past a logo of Vanke at its headquarters in Shenzhen, south China's Guangdong province, November 2, 2015. REUTERS/Tyrone Siu

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 shareholder.

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.

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.

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Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
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