Analysis Shenzhen’s shield around Vanke should ward off hostile takeovers
The developer at the centre of China’s most controversial takeover tussle is now a state-owned business under Shenzhen’s local government
Property giant China Vanke, the target of the most contentious takeover attempt in the country’s corporate history, has been declared a state-owned business directly controlled by the government of Shenzhen, elevating it to a status that could deter future raids.
The invitation sends a clear signal to the market that Vanke is now under the control of the local government.
As a state-owned enterprise, any future takeover attempt would be extra troublesome, or almost impossible, as the necessary approvals would have to go through SASAC.
“While the shareholder dispute hasn’t yet been resolved and the biggest shareholder remains a private company, this looks very much like a Chinese-style arrangement,” said Dong Dengxin, a finance professor at Wuhan University of Science and Technology.
The decision makes sense because it helps maintain the management stability of a national brand, he added, although it is “contrary to” the principle of developing a market-oriented economy.