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Vanke’s share surges after the brawl comes to an end

SHARES of China Vanke Co surged the most in months today after its second-largest shareholder agreed to sell all of its stakes to Shenzhen Metro Group, a deal that might pave the way to terminate a high-profile tussle of corporate control that Vanke has been embroiled in for over a year.

Vanke shares rose 6.9 percent to 21.81 yuan (US$3.15) today on the Shenzhen Stock Exchange, the largest gain since November 9. In the Hong Kong bourse where the developer is also listed, its shares closed 5.7 percent higher at HK$19.66 (US$2.53), the biggest gain since July 28.

The notable gain in share prices came after an announcement released late Thursday night by China Resources Group saying that it had reached an agreement to sell its entire 15.31 percent stake in Vanke to the state-owned subway operator in Shenzhen for 37.17 billion yuan, or 22 yuan per share on average.

Fearing a hostile takeover by Baoneng Group, which has become its largest shareholder after building a 25.4 percent stake since mid-2015, Vanke's management unveiled in June 2016 a key acquisition plan with white knight Shenzhen Metro. The proposal, under which Vanke would buy Qianhai International Development Co, a unit of Shenzhen Metro, for 45.6 billion yuan via a share sale and thus would have made the latter its biggest shareholder, was halted later as Vanke failed to get the approval from its major shareholders including Baoneng and China Resources.

China Evergrande Group, which surpassed Vanke last year for the first time to become the country's largest developer by sales and currently the third-largest shareholder of Vanke with a 14.07 percent stake, said in a filing to the Hong Kong Stock Exchange earlier today that its acquisition is an investment that will generate sustainable and attractive returns for its shareholders and has no intention to acquire further Vanke shares.


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