China

China Vanke to Acquire Assets of Shenzhen Metro for RMB 40-60 Bln

Summary:

  • China Vanke (000002.SZ) plans to acquire the assets of Shenzhen Metro for RMB 40-60 billion, according to Securities Times.
  • The company also released its 2015 financial results and posted a 15% increase in net profit to RMB 18 billion.
  • Shares of the company continue to be halted from trading.

Why It Matters:

  • Shenzhen Metro will inject real estate assets into China Vanke in return for newly issued stock of China Vanke. After the transaction, the stakes of existing shareholders in China Vanke will be diluted, and the management team will win the fight with Qianhai Life Insurance for control of the company.
  • Since last year, Qianhai Life Insurance has been increasing its stake in China Vanke to the point where it has become the largest shareholder. However, China Vanke’s management team has been strongly against the new investor.
  • So far, China Vanke and Shenzhen Metro have only signed a memorandum of understanding, ¬†and if the two parties fail to reach an agreement and sign an official document, the deal will be terminated.