
Vanke Claims Backing for $6.9 Billion Shenzhen Deal; China Resources Disagrees
Infighting at China Vanke peaked over the weekend after the Chinese property giant's No. 2 shareholder refuted Vanke's claim to have board backing for a deal to swap a 20% equity stake for properties owned by Shenzhen Metro.
China Resources, which has 15.3% of Vanke's equity and three seats on its 11-person board, said its representatives had voted against the asset swap and noted that another board member had abstained.
That left the deal short of the two-third support needed for approval, China Resources claimed on Saturday. A day earlier Vanke declared that seven out of 10 board members voted in favor of the asset swap. Dismissing the abstention from the count, it declared that the agreement had passed muster with its board.
But China Resources disagreed.
"Over two-thirds of the board should be eight people," it noted on its WeChat social media account. The state-owned group added that it was dismayed by Vanke's announcement that the deal had been approved and said it will vote against the asset swap at subsequent board meetings and in shareholder votes.
China Vanke's Hong Kong-listed shares closed Monday at HK$17 ($2.19), down HK52 cents, or almost 3%.
Vanke struck the deal with Shenzhen Metro in March, claiming the deal would boost growth by securing a massive property portfolio in one of China's wealthiest cities. The deal also served to usher a white knight onto its share register, effectively blocking a potential hostile takeover from Shenzhen-based investment and insurance group Baoneng, which has built a 24.3% stake in Vanke.
Under the terms of the deal with Shenzhen Metro, Vanke will swap 45.6 billion renminbi ($6.9 billion) of new stock in exchange for properties located above metro stations. The deal will dilute both Baoneng's and China Resources' stake in Vanke and leave Shenzhen Metro with 20.65%, making it the largest shareholder.
China Resources said that while it agreed with the strategy to buy the properties from Shenzhen Metro it wanted Vanke to use cash and debt to finance the deal. It also noted that Shenzhen Metro would acquire its 20% stake at a discount of about 24% to the value of Vanke's net assets once the new properties were included.









