Vying for Vanke
- By Zhang Lulu
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E-mail China.org.cn, June 28, 2016
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Vanke. [File photo] |
The Vanke drama keeps growing.
In the company's annual shareholders meeting Monday afternoon, Wang Shi, chairman and founder of the company, said some shareholders have "violated minority shareholders' interests and violated Vanke's widely-recognized transparency principles."
This is apparently directed at Baoneng Group, Vanke's current largest shareholder, with whom the charismatic entrepreneur has exchanged spats for several months.
This followed an ousting move late Sunday, when Baoneng filed a statement with the Shenzhen Stock Exchange (where both Baoneng and Vanke are listed), calling for an extraordinary general meeting to fire Wang and all the other board directors. Vanke has ten days to respond.
'Hostile takeover'
Vanke has been embroiled in a high-profile takeover battle since last year.
Baoneng, a property and insurance conglomerate comprising Shenzhen Jushenghua Co. and Foresea Life Insurance Co., has been increasing its stake in Vanke since August and became its largest shareholder late last year. China Resource, the previous largest shareholder and Vanke's erstwhile quiet guardian, was edged out to become the second largest shareholder.
Wang Shi reportedly denounced Baoneng as "barbarian," borrowing the name from the famous book "Barbarians at the Gate." He denied saying so at Monday's meeting, but defined Baoneng's move as a "hostile takeover." Baoneng, a name known to few before the takeover, raised some eyebrows as it reportedly has a questionably high leverage and is said to have borrowed heavily to finance its stake in Vanke.
Vanke is indeed prone to hostile takeover due to its long-standing highly dispersed equity structure. China Resources used to be Vanke's largest shareholder with only about a 15% stake, while Wang gave up most of his stake in 1988 when the company reformed its shareholder structure.
The spats over controlling stakes came to an apparent turning point this March, when Vanke signed a cooperation agreement with Shenzhen Metro, indicating a possibility of introducing this stakeholder. Vanke issued a restructuring plan on June 17, announcing it would acquire a unit of the Shenzhen Metro for 45.6 billlon yuan (about US$6.9 billion) by selling shares to the state-owned subway operator. The bid, however, was opposed by both Baoneng and China Resources, as the plan would dilute their shareholdings in Vanke to 19% and 12% respectively, making Shenzhen Metro the largest shareholder.
In a statement issued with Shenzhen Stock Exchange, Baoneng said Vanke "has virtually become an insider-controller company" and accused Wang Shi of collecting 50 million yuan in salary while he was mostly studying in the United States and Britain from 2011 to2014.
Mounting pressure
Following the ousting move on Sunday, Vanke has faced more pressure.
Yu Liang, vice president of Vanke, said at the general meeting Monday that "some of our signed and sold projects face the risk of cancellation, banks are reconsidering their rating of Vanke, our collaborators are adjusting business terms and head hunters are approaching our employees."
Adding to this is the pressure of Vanke's stocks. Vanke is listed in both Shenzhen and Hong Kong. The Shenzhen shares, which are larger, have been suspended for more than six months due to its pending restructuring plan since late December.
Of the many issues raised at Monday's meeting, one was when the Shenzhen trading will be resumed, as shareholders have not gained anything for more than half a year. Despite pledging "as soon as possible," Vanke admitted that the stocks might face a price tumble when it actually resumes.
Its Hong Kong share, the lesser one, fell to HK$16.06 Monday, down 3.83% from Sunday. About 25% of its value has evaporated since late last year.
Vanke's vice president said on Monday's meeting that there is another "potential counterparty" that may work with Vanke, but "the negotiations will take more time." He did not elaborate.
As to whether or not Wang Shi and his fellow board members will leave, Wang seemed to suggest on Monday he would leave while letting his aide Yu Liang stay, but that is up to the Vanke's shareholders to decide.
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