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China Vanke

China Vanke says its Shenzhen shares to remain suspended for another two months

Trading suspension seen as defensive tactic to ward off hostile takeover by Baoneng Group

PUBLISHED : Friday, 15 January, 2016, 8:59pm
UPDATED : Friday, 15 July, 2016, 10:32am

China Vanke says its China-listed shares will be suspended from trading for another two months, in a move that could be a route by Vanke chairman and his management to fend off a hostile takeover by major shareholder Baoneng Group.

The mainland’s biggest home builder announced on Friday evening that it had requested a two-month extension to the suspension of trading in its shares pending an important asset restructuring. The company said they would announce the asset restructuring before March 18.

Vanke on December 18 requested a suspension in trade of its shares listed in Hong Kong and Shenzhen amid a suspected hostile takeover by its largest shareholder Baoneng Group, a Shenzhen-based property and finance firm, saying it planned to restructure its assets.

The company’s Hong Kong shares resumed trading on January 6. The shares closed the week on Friday at HK$17.48, 24 per cent below their closing level prior to the December 18 suspension.

Alfred Lau, a property analyst at BOCOM International, said a continued share suspension would increase pressure on Baoneng, which purchased its Vanke shares with borrowed money.

“Share suspension for a long time will ramp up the funding pressure on Baoneng, which relied on margin financing to fund its stake in Vanke,” said another mainland-based analyst who requested to be unnamed.

The takeover battle has heated up since December 4, when property and insurance conglomerate Baoneng, controlled by Yao Zhenhua, became Vanke’s biggest shareholder after its subsidiary Shenzhen Jushenghua and affiliate Foresea Life Insurance bought a combined 20 per cent stake in the country’s biggest homebuilder, which has since been raised to 24.26 per cent.

Vanke chairman Wang Shi and his management team have cited concerns over Baoneng’s credibility and the suitability of the group to fit with Vanke’s corporate culture as reasons to block it from taking control of the company

Anbang Insurance Group, a significant shareholder of Vanke, expressed its support for Wang and his team in December.

Alex Wong Kwok-ying, asset management director of Ample Capital, said Vanke’s Hong Kong shares will likely continue to fall in value.