In December, 2015, the chairman of Vanke’s board of directors publicly called Baoneng Yao Zhenhua, saying that he was not welcome to become a major shareholder of Vanke, which officially opened the equity battle between the management headed by Wang Shi and Baoneng.
Going back to 1994, Junan Securities, the stock underwriter of Vanke, and a group of shareholders of Vanke, including a new generation of Hainan Securities, demanded the reorganization of Vanke’s board of directors.
The two equity competitions have been worse for more than 20 years, but Vanke’s tactics to stop barbarians are strikingly similar.
First of all, let’s briefly review the battle between Jun and Wan more than 20 years ago.
Jun ‘an camp
Lord:Zhang Guoqing, general manager of Junwan Securities.
Allied forces:Shenzhen New Generation Enterprise Co., Ltd., Hainan Securities, Hong Kong Junshan Investment Co., Ltd., Chuangyi Investment Co., Ltd.
Firepower configuration:It holds 10.73% of Vanke’s total shares.
Purpose of sending troops:Jun ‘an underwritten Vanke B shares, with 10 million shares in hand. The cost price was 12 yuan per share, and the market price was 9 yuan at that time, with a book floating loss of 30 million. The intention is to stimulate the stock price and control the board of Vanke through this acquisition.
Vanke camp
Lord:Wang Shi, Chairman of Vanke Group
Allied forces:Liu Yuansheng, Zhao Xiaofeng and Ma Gongyuan.
Firepower configuration:Actual control right of Vanke’s board of directors
Defense purpose:Repel Junan’s acquisition and protect the stability of Vanke’s existing board of directors.
What happened:On March 30, 1994, according to Wang Shi’s book Road and Dream, Zhang Guoqing, general manager of Junan, entered his office and told him that he would hold a press conference and reorganize in the afternoon, which was only two and a half hours before his official announcement. Wang Shi said that this is a plot for Junwan to take over Vanke in an all-round way.
In response to Jun Wanfang’s aggressiveness, on March 31st, Wang Shi resolutely decided to apply to Shenzhen Stock Exchange for suspension of trading, which was approved-this was the first time that the China stock market was suspended. At that time, there was no suspension restriction on the rise and fall of stocks, and Vanke set a precedent. Wang Shi won time by suspending trading, blocking the "mouse warehouse" of Jun ‘an and others. At the same time, the other shareholders who were wooed by Junan were disintegrated, and the alliance that attempted to reorganize Vanke was disintegrated. Within five days of Jun ‘an’s equity dispute, the war was successfully won.
At that time, in addition to Wang Shi’s strategy, the contacts of Shenzhen government and CSRC were the key to Vanke’s success.
In Wang Shi’s autobiography Road and Dream, there is a description like this:
A week later, Zhang Ziping, director of the Market Supervision Department of China Securities Regulatory Commission, came to Shenzhen to investigate the "March 30 incident".
In a hotel room, Director Zhang met with me.
Zhang Ziping said: "Your report has been approved by President Liu Hongru: Strictly investigate and deal with it. I’m here to deal with this. Ning Zhixiang is my classmate in graduate department, the People’s Bank of China, Wudaokou, and I can’t cut it with my knife raised. When you come to Shenzhen, you must investigate, but you know, this investigation is like a ship leaving the dock. The destination of the ship is very clear: cross the river and dock;But when the boat reaches the middle of the river, it’s not up to you or me to sail.Do you understand what I mean? "
I nodded.
"How to investigate, first look at your attitude of Wang Shi."
"Be kind to others."
……
More than 20 years later, Vanke was involved in the equity dispute again. This time, the rival Baoneng Department was obviously more difficult than Junan Securities. In that year, Vanke defeated its opponent in just a few days, but this time, it took more than 200 days for both parties.
And combing Vanke’s moves so far is similar to that of that year.
First, the suspension-preemptive
Vanke set a precedent of suspension in 1994, and this time, this move was also used to resist the strong acquisition of Baoneng.
On December 18, 2015, Vanke A issued a temporary suspension notice, saying that it was planning to issue shares for major asset restructuring and acquisition of assets. At that time, Baoneng had continuously increased its holdings of Vanke through the secondary market, holding a total of 22.45% of the latter. Vanke’s suspension lasted for six months, and the restructuring target was always confusing. It was not until four months after the suspension that the reorganization target Shenzhen Metro was announced for the first time.
In the eyes of many people in the industry, Vanke’s emergency suspension is more to stop the crazy shareholding of Baoneng Department, fearing that the continuous increase of the latter will affect Vanke’s management and the latter’s right to speak. It is not excluded that Vanke chose to suspend trading first, and then find a reorganization object to win time for itself to fight back.
In the dispute between Jun and Wan, Vanke set a precedent for the suspension of A shares. After more than 20 years, this move has won Vanke six months of preparation time.
Second, restructuring-looking for a backer
In 2000, Wang Shi took the initiative to introduce China Resources Group, a central enterprise, after Vanke went through the dispute between Jun ‘an and An ‘an, hoping to adjust its shareholding structure, attract powerful consortia and become a strategic major shareholder. In the following more than 10 years, Wang Shi and Yu Liang publicly stated for many times that China Resources is the best major shareholder of Vanke, and the latter provided Vanke with lawyers and accounting professionals, which played a vital role in the organizational construction of Vanke and the entire management structure of Vanke.
When Vanke met Baoneng’s shareholding in 2015, it once turned to the major shareholder, but China Resources did not intervene.
Therefore, Vanke turned to Shenzhen Metro, another state-owned enterprise, to solve its own crisis.
According to the announcement of the trading plan issued by Vanke, Vanke intends to purchase 100% equity of Qianhai International held by Shenzhen Metro by issuing shares, with an initial transaction price of 45.613 billion yuan. Vanke will pay all the transaction consideration by issuing shares.
Out of this move, Vanke’s plan is to dilute the shares of Baoneng Department by issuing shares. But to Vanke’s surprise, this move also diluted the shares of China Resources, which directly led to the fierce opposition of China Resources. At the board meeting on June 17th, three directors of China Resources Department directly voted against the reorganization plan, showing a clear attitude.
Since the reorganization plan needs to hold the second board meeting and shareholders’ meeting, Baoneng Department and China Resources now hold 40% of the shares, and they can veto any proposal put forward by Vanke.
In the face of China Resources’ face, Wang Shi admitted frankly in Weibo that the last fig leaf had been removed.
The war between Vanke and Baoneng suddenly entered China Resources, making the prospect of this management dispute more complicated and unpredictable.
After the dispute between Jun and Wan, Vanke introduced China Resources, once the best major shareholder, but this move is obviously not omnipotent.
Third, public opinion-employees and shareholders go into battle together
In July, Baoneng Department demanded the removal of Vanke’s existing management, which directly aroused Vanke’s strong opposition.
Vanke Trade Union Committee sued Baoneng for harming shareholders’ interests, and the People’s Court of Luohu District of Shenzhen has accepted the case. According to the "Civil Complaint", there are five main claims of Vanke Trade Union, including the request to order five defendants to continue to increase their holdings of Vanke A shares when they hold 5% of Vanke A shares and thereafter, which is an invalid civil act; There are three main reasons for Vanke’s trade union’s lawsuit: Ju Shenghua, Qianhai Life Insurance, etc. involved in failing to fulfill their obligation to report in writing to the securities regulatory authority in the State Council, failing to fulfill their obligation of information disclosure in strict accordance with the requirements of the Securities Law and the Measures for Acquisition, and holding more shares is an invalid civil act.
In addition, more and more third parties have joined the camp.
Vanke’s largest natural person shareholder reported the real names of China Resources and Baoneng to seven regulatory authorities, including China Securities Regulatory Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission, and questioned the relationship between them. Including questioning how many significant interests there are between China Resources and Baoneng Department; When did China Resources and Baoneng start negotiations and transactions on the status of Vanke’s largest shareholder? The reasons why the two sides jointly opposed the reorganization of Shenzhen Railway; Whether the secret agreement reached by the two parties on the change of ownership of the largest shareholder has been suspected of insider information trading and market manipulation, and whether the source of funds used by Baoneng for acquisition is legal or not.
In addition, Dong Huasheng, the independent director of Vanke, also disclosed the relationship between one of China Resources and Baoneng acting in concert in Weibo.
Compared with the last time, Vanke’s allied lineup is obviously stronger.
Fourth, uncover the bottom treasure-looking for Achilles’ heel?
On July 19th, Vanke issued a Report on Investigating and Punishing the Violations of Laws and Regulations of Ju Shenghua and Related Asset Management Plans under its control. In this report, Vanke revealed the number of shares held by Baoneng Department, the cost of holding shares, and even the details of the amount of nine asset management plans.
These nine asset management plans, that is, the sources of funds announced by Baoneng for the acquisition of Vanke A after the placard with a shareholding of 25%, said that these nine asset management plans are concerted actions.
According to the report, the interest rate range of the nine asset management plans is 6.5%-7.2%, and the average price of Vanke A shares purchased by Baoneng is 18.89 yuan/share. Based on the average interest rate and the existing period of 8 months, the average share price after considering the financing cost is about 19.83 yuan/share. This is the first time that Vanke is prepared to disclose the cost of Baoneng’s position.
Some analysts said that since the resumption of trading on July 4, Vanke’s share price has fallen by 30%. Vanke announced the cost of Baoneng’s position at this time, which undoubtedly kept the share price under pressure.
In addition, it is reported that due to the continuous decline in stock prices, some asset management plans plan to cancel the concerted action.
If the news is true, this is exactly the same as Vanke’s tactic of disintegrating the alliance more than 20 years ago.
While Vanke unveiled Baoneng’s card, Vanke listed a series of problems such as unclear disclosure of Baoneng’s asset management plan, illegal asset management plan, illegal transfer of voting rights and infringement on the interests of minority shareholders.
Some market participants believe that the timing of Vanke’s report is accurate. After Vanke A’s share price plummeted for a few days, this report accelerated the market’s concern about Vanke’s share price, because if the share price continues to fall, Baoneng’s nine asset management plans will have the risk of liquidation, which will undoubtedly accelerate the stock price decline, thus putting pressure on the regulatory authorities.
In the dispute between Jun and Wan, Vanke once directly cracked the crisis by learning that Ning Zhixiang colluded with Jun ‘an’s top management and obtained the evidence of "rat warehouse" in one fell swoop.
This time, Vanke clung to nine asset management plans, and the channel business was in a vague area of supervision. All the problems of how to judge were transferred to the regulatory authorities. Vanke chose to disclose it to the regulatory authorities when the stock price plummeted, with deep intentions, the above-mentioned market participants added.
The battle for Wanbao is still going on, but this time the Baoneng Department is not as vulnerable as Jun ‘an more than 20 years ago. At the same time, the whole regulatory environment is also changing. Vanke’s tactics have more progress and the brand of the times while maintaining its excellent tradition.
Can Wang Shi win this battle?
