Spreading boardroom battles could threaten real economic development, warn experts
Mid-tier firms with high returns on equity, high dividends, low valuations and dispersed shareholding structure are most likely targets
There are barbarians knocking on Chinese boardroom doors right across the country, and more are likely to follow if the government does not crack down effectively, say analysts.
On Saturday, Liu Shiyu, the chairman of the China Securities Regulatory Commission (CSRC), issued a strongly worded warning to aggressive acquirers – specifically asset managers, that target control of listed companies through leverage and other unfavourable means – saying they would end up in prison if they broke the law.
However, analysts said more real moves should be made to deter aggressive cash-rich companies like insurers from taking over control of China’s industry leaders.
The list of Chinese companies – mainly A-share listed, mid-caps with industry competitiveness – becoming embroiled in hostile takeover battles is growing by the day, which experts are now suggesting may start to put undue pressure on the real economy.
Taking centre stage, of course, is the ongoing battle royale for China Vanke, the country’s former biggest property developer.
Not only has China’s biggest homebuilder been fighting off the unwanted attentions of its two largest shareholders in recent months – the little-known insurance firm Baoneng Group which owns 25.4 per cent of Vanke, and state-owned investment conglomerate China Resources which holds 15.3 per cent – it is now having to contend with industry peer China Evergrande Group, which lifted its own stake in the business to 14 per cent on Tuesday, after splashing out more than 12 billion yuan acquiring more shares.