China Evergrande Group has agreed to transfer all its shares in China Vanke to Shenzhen Metro Group at a loss, making the state-owned company the largest shareholder of China’s second biggest homebuilder. The Guangdong real estate giant will cash out of its 14.07 per cent stake in Vanke for about 29.2 billion yuan, and expects to use the proceeds to repay debts, according to a statement to the Hong Kong stock exchange on Friday night. The asset sale is poised to make Shenzhen Metro Group the biggest shareholder of Vanke with a 29 per cent stake. Beijing introduced the state-owned metro company as a “white knight” earlier this year after stepping in to lambast the biggest shareholder at the time, corporate raider Baoneng. Evergrande said that the disposal will result in a loss of 7.07 billion yuan because it had splashed out 36.27 billion yuan on Vanke’s shares last year. “Upon regulatory approval...Shenzhen Metro Group is going to be the largest shareholder of the company,” Vanke’s board said in a filing to the Shenzhen stock exchange on Friday night. Vanke had been embroiled in a takeover battle since late 2015, when the Chinese insurance conglomerate Baoneng Group accumulated a 25.4 per cent stake in the company in order to mount a hostile takeover and oust Vanke’s existing management. As the battle heated up, China Evergrande muscled in on the corporate raid, quickly building up a 14.07 stake in its Shenzhen-based peer and becoming the third largest shareholder, behind Baoneng and state-owned conglomerate China Resources. Yet both Baoneng and Evergrande backed off after China’s securities regulators and the Shenzhen government attacked their aggressive tactics while voicing support for Vanke’s management. In January, China Resources transferred its entire holding in Vanke to Shenzhen Metro, which then became the second largest shareholder. Vanke’s Hong Kong-listed stock enjoyed a rally this week on investor expectations that the subway operator would soon knock Baoneng out of the game. That would be seen as a victory for Vanke’s management, who count Shenzhen Metro as their chief ally. On Wednesday, trading in Vanke’s yuan-denominated A shares was halted in Shenzhen after it said Shenzhen Metro was considering increasing its stake. The company’s Hong Kong listed shares climbed to a one-month high of HK$21.3. Evergrande’s exit from the corporate tussle came days after the indebted developer had vowed in a statement to repay all its perpetual bonds by the end of the year. On Tuesday, buoyed investors sent shares of the Guangzhou company to another all-time high. China Evergrande shares lost 0.12 per cent to close at HK$16.64 on Friday, while China Vanke’s Hong Kong traded stock price was little changed to finish the week at HK$21.20.