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Vanke’s tussle with Baoneng gets new progress

CHINA Evergrande Group, the third-largest shareholder of China Vanke Co with a 14.07 percent stake, has entered into a strategic cooperation framework agreement with Shenzhen Metro Group Co Ltd to irrevocably entrust its voting rights, proposing rights and rights to participate in general meetings to the state-owned metro operator, which was the second-largest shareholder of China Vanke with a 15.31 percent stake, for one year, according to an Evergrande filing to the Hong Kong stock exchange.

During the valid period, Shenzhen Metro will therefore be entitled to exercise a total of 29.38 percent of specific shareholder rights, China Vanke said in a separate filing to the Hong Kong stock exchange. That would allow Shenzhen Metro to surpass Baoneng Group, which became Vanke's largest shareholder after building a 25.4 percent stake since mid 2015.

Earlier in January, China Resources Group, then the second-largest shareholder of Vanke, sold its entire 15.31 percent stake in Vanke to Shenzhen Metro, a major deal that aimed to terminate the high-profile tussle over corporate control that Vanke has embroiled for over a year.

Fearing a hostile takeover by Baoneng Group, Vanke's management unveiled in June 2016 a key acquisition plan with white knight Shenzhen Metro. The proposal, under which Vanke would buy one unit of Shenzhen Metro for 45.6 billion yuan (US$6.6 billion) via a share sale and thus would have made the latter its biggest shareholder, was halted later as Vanke failed to get approval from its major shareholders including Baoneng and China Resources.

Yesterday's framework agreement with China Evergrande will further strengthen Shenzhen Metro's commitment to becoming a cornerstone investor of Vanke and Shenzhen Metro is open to options for further stake increase in Vanke in the future, the metro operator said.


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