China Vanke Co (萬科) and its largest shareholder, a group backed by Baoneng Group (寶能集團), look set for a showdown after Vanke chairman Wang Shi (王石) wrote: “See you on Monday” on Weibo — a Chinese Twitter equivalent — and Baoneng defended its reputation in an exchange filing.
Vanke, China’s biggest home builder, faces a hostile takeover bid by the Baoneng-backed group, Vanke president Yu Liang (郁亮) said on Friday.
Wang said the company does not welcome Baoneng Group and its affiliates, who lack credibility and might have a negative impact on Vanke’s credit ratings and reputation, according to a transcript of an internal meeting obtained by Bloomberg News, the contents of which were confirmed by the company.
Baoneng Group said in a statement on its Web site on Friday that it has a “good” reputation, follows the law and believes in the power of the market.
Vanke, which develops residential properties in Shenzhen, Shanghai, Beijing and other big Chinese cities, has a market capitalization of more than US$40 billion. Baoneng Group replaced China Resources Co (華潤置地) as its largest shareholder this month, prompting the rare public spat.
Vanke, the world’s largest listed property company by market value, suspended trading on Friday pending a share sale, sparking speculation it is seeking to dilute the Baoneng Group’s ownership.
“This could potentially be a counterattack by Vanke to Baoneng,” China Real Estate Information Corp (中國房產信息集團) director David Hong said. “Vanke may try to introduce a third-party investor.”
Wang removed the Weibo post 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,” he said in a later posting. “When making business decisions, a company not only must consider the interests of its shareholders, but also those of related stakeholders.”
A hostile takeover “disregards the related interests of society,” he said.
Established in 1992, Shenzhen-based Baoneng Group is an investor with its main businesses in property development, logistics and finance, according to its Web site. It has about 40 projects in construction in 23 Chinese cities.
Baoneng increased its stake in Vanke to 22.45 percent as of Dec. 11, from less than 5 percent, within five months.
“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 as an example of such a holder.
China Resources played an important role in Vanke’s corporate governance when it was the company’s biggest investor, including providing shareholder structure stability, helping business management and internationalization, according to the transcript.
“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 (中信建投證券), wrote in a note on Thursday last week.
Vanke’s shares rose by the 10 percent daily limit in Shenzhen for a second straight day on Friday before they were halted. The shares have advanced 76 percent this year.
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