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Vanke defends handling of Shenzhen Metro deal, pledges more communication
[BEIJING] China Vanke Co defended its handling of a deal with Shenzhen Metro Group Co and said it will improve communications with investors, following media reports that one of the developer's biggest shareholders complained about not being consulted on the transaction.
Vanke said in an e-mailed statement on Friday that it had informed China Resources Co about its preliminary agreement with Shenzhen Metro, which includes the acquisition of a stake in a Shenzhen Metro unit and a potential share sale.
The signing of the non-binding agreement didn't need approvals from the board or shareholders, Vanke said.
China Resources, Vanke's second-largest shareholder, said the plan wasn't discussed or voted on by the board, according to China Business News.
The 21st Century Business Herald said China Resources representatives on Vanke's board have reported the matter to regulators in Shenzhen and Hong Kong. A press official at China Resources in Hong Kong said the company didn't have any immediate comment.
Vanke on March 13 signed a memorandum of understanding with Shenzhen Metro to acquire a stake in a unit valued at an estimated at 40 billion yuan (S$8.3 billion) to 60 billion yuan.
The move could potentially make the southern Chinese city's urban transit company Vanke's largest shareholder, some analysts said. Vanke plans to fund the acquisition mainly by issuing new shares to Shenzhen Metro, and pay cash to make up for any shortfall.
China's largest publicly traded developer has been trying to fend off little-known Baoneng Group, which emerged as its largest shareholder in December. The developer's management questioned the credibility of Baoneng and labeled its approach an attempted hostile takeover.
Shenzhen-based Vanke said in December it was planning a share sale, prompting speculation the move was designed to dilute Baoneng's ownership.
Vanke said in Friday's statement that final terms of the asset purchase and the stake sale have not been decided.
The shares fell as much as 0.9 per cent to HK$19.72 in Hong Kong trading, and were trading 0.1 per cent lower before the midday break.