CHINA Vanke Co.’s Hong Kong-traded shares yesterday jumped the most in almost 16 months after the developer announced a deal that could thwart a hostile takeover bid, easing uncertainty about its future management.

    Vanke signed a memorandum of understanding with Shenzhen Metro Group Co. to acquire a stake in a unit estimated at up to 60 billion yuan (US$9.3 billion), Vanke said in a statement Sunday.

    The move could potentially make Shenzhen’s urban transit company Vanke’s largest shareholder, some analysts said. Vanke plans to fund the acquisition mainly by selling new shares to Shenzhen Metro and pay cash to make up for a potential shortfall.

    Vanke, China’s largest publicly traded developer, has been trying to fend off little-known Baoneng Group, which emerged as its largest shareholder in December. Vanke’s management questioned the credibility of Baoneng and labeled its approach a 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.

    “If this potential asset injection is fully funded by the new share placement, the transaction should make Shenzhen Metro Group Vanke’s largest shareholder,” according to a Credit Suisse Group AG note to investors. Vanke’s “progress in restructuring should be a positive catalyst” for the company’s Hong Kong-listed H shares, Credit Suisse analysts led by Jinsong Du said.

    The shares jumped as much as 14 percent in Hong Kong, the biggest intraday gain since November 2014, and closed up 9.99 percent at HK$20.15 (US$2.60).

    The deal with Shenzhen Metro is “neutral for Vanke, positive for management, relatively negative for minority investors,” said Citigroup Inc.

    It’s a good opportunity to add projects in Shenzhen given the city’s land scarcity, according to Citigroup. (SD-Agencies)