Developer strikes $2.3b deal to end partnership with Hangzhou builder

The Chinese mainland property developer Sunac China Holdings Ltd has launched a 15.5-billion-yuan ($2.3-billion) acquisition, taking over two 50:50 joint ventures with its peer, Hangzhou-based Greentown China Holdings Ltd, terminating their cooperation of two-and-a-half years.

In a filing with the Hong Kong Stock Exchange on Wednesday, Sunac said it plans to pay 6.4 billion yuan and 9.1 billion yuan, respectively, for the entire equity interest in the offshore target company held by Sunac Greentown and the onshore target company held by Shanghai Sunac Greentown.

Sunac Greentown's buyout covers a mixed-use project in Shanghai and a luxury buildings project in Suzhou, Jiangsu province, accumulating a net asset of 2.4 billion yuan at the end of November 2014. The acquisition amounts to 5.7 billion yuan, with 725 million yuan in debt.

Sunac will also pay 5.6 billion yuan with 3.5 billion yuan in debt for the entire stake of Shanghai Sunac Greentown to take over its 15 projects, eight of which are located in Shanghai, three in Suzhou, two in Wuxi, and one each in Changzhou and Tianjin.

The acquisition follows a breakdown in early December between the Tianjin-based luxury home builder and its fellow developer Greentown, in which Sunac signed an agreement in May to buy the 24.3-percent equity from Greentown chairman Song Weipin, his wife Xia Yibo and chief executive Shou Bainian, for HK$6.3 billion ($0.8 billion), or HK$12 a share.

Song later called off the deal in December, citing "considerable differences" on "the target company's business philosophy" between the two parties.

Sunac said on Monday it had received an aggregate amount of HK$6.2 billion for both the consideration and interest occurred in termination of the agreement. The share charge has also been released.

Sunac's share price closed at HK$7.9 on Wednesday - up HK$0.2, or 2.5 percent. Greentown shares gained 3.1 percent to close at HK$7.7.

agnes@chinadailyhk.com

(HK Edition 01/01/2015 page11)