China Vanke ready for showdown with biggest investor over control


China’s largest developer, China Vanke, has been facing a rather hostile takeover bid by its largest shareholder. China Vanke is backed up by Baoneng Group, and both are anticipating a showdown after chairman of Vanke, Wang Shi, said “See you on Monday” via a posting made on his weibo account. Baoneng also was seen defending its reputation in an exchange fling.

Vanke is a large Chinese real estate developer and currently is in the middle of a major conflict with Baoneng Group. Vanke president Yu Liang said the company is facing a hostile takeover bid by the Baoneng backed group, stating further that “the company does not welcome Baoneng Group and its affiliates which lack credibility and may have a negative impact on Vanke’s credit ratings and reputation.”

Baoneng sent a reply via its website, saying, “Our Company has a good reputation, follows the law and believes in the power of the market.” Vanke develops residential properties around Shanghai, Shenzhen, and Beijing, and other major Chinese cities have a total market capitalization of over $40 billion. Baoneng took the place of China Resources Co. In Vanke as its largest shareholder, which started the unique, public bad blood? On Friday, Vanke, the world’s largest listed property company by market worth, suspended its trading services due to a pending share sale, which set off speculation that the company seeks to dissolve the Baoneng Group’s ownership.

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

Wang took down the post made via weibo barely hours after publishing it on Saturday.

“The healthy development of a listed company is inseparable from the support of its employees, customers, suppliers and communities.” Going further, a later posting added, “When making business decisions, a company not only must consider the interests of its shareholders, but also those of related stakeholders … A hostile takeover disregard the related interests of society.”

Baoneng was established in 1992 and is a Shenzhen based company. It is also an investor in property development, finance, and logistics, according to its website. Baoneng’s Group consortium is composed of two entities called Foresea Life Insurance Co. and Shenzhen Jushenghua Co., which increased their stake at Vanke to 22.45 percent as of December 11, moving up from less than 5 percent within the range of five months.

“What we face today is the same as a hostile takeover,” Yu declared during a briefing on Friday. “Vanke welcomes shareholders who will not intervene with the business of the company,” he added. China Resources Co. was cited as one of those intervening shareholders.

China Resources has always played an important role in Vanke’s corporate governance when it reigned as the company’s biggest investor, which included the provision of shareholder structure stability, aiding business management, and internationalization, according to the transcripts.

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