CHINA Vanke Co.’s US$6.9 billion share sale to link with a metro operator faces almost-certain rejection in its current form after two of the developer’s biggest shareholders said they’ll oppose the deal.

    Shenzhen Jushenghua and Foresea Life Insurance, units of little-known Baoneng Group, said late Thursday that they are opposed to the proposal to buy assets from Shenzhen Metro Group by issuing new shares as it will dilute existing shareholders’ interest and Vanke’s profit.

    China Resources (Holdings) Co., which was overtaken by Baoneng last year as Vanke’s largest shareholder, reiterated its opposition to the deal.

    “It seems like the current proposal will definitely be rejected” if it’s submitted for a vote by shareholders without revisions, said David Yang, a Shanghai-based analyst at UOB Kayhian Investment Co.

    “So there must be some changes. We hope there will be a new proposal, a better solution,” he said, citing the possibility of changes to the proposal before a second board meeting expected in about a month.

    Opposition from the two leading stakeholders, which hold a combined 39.5 percent of Vanke, threatens to derail a deal that the management of China’s largest homebuilder said is a “life-or-death” matter as it seeks new ways to expand amid surging land costs.

    Vanke needs approval from two thirds of shareholders in both its A shares and Hong Kong-listed H shares for the deal to pass.

    Vanke said in a statement Friday that it noticed the latest statements from Shenzhen Jushenghua, Foresea Life Insurance and China Resources, and will listen to opinions and suggestions and maintain communication with the relevant parties.

    Vanke has been embroiled in a tussle for control since last year, when an obscure conglomerate called Baoneng replaced China Resources as the developer’s largest shareholder.

    At the time, Vanke’s management labeled it a “hostile takeover” and the Shenzhen Metro transaction was widely viewed by analysts as a way to dilute Baoneng’s ownership.

    Now, a deal between China Resources and Baoneng may be on the table.

    China Resources said at Vanke’s June 17 board meeting that it has reached a consensus with the Shenzhen city government to restore its status as Vanke’s largest holder, according to an article written by Vanke’s independent non-executive director Hua Sheng in Shanghai Securities News.

    China Resources said it has reached out to Baoneng, which wouldn’t be opposed to the State-owned firm becoming Vanke’s largest holder, Hua wrote in the report. Hua was among three independent directors who voted in favor of plan to buy assets from Shenzhen Metro by issuing new shares.

    China Resources, after buying small amounts of Vanke shares from the market initially, also tried to acquire stakes from other shareholders and is still in talks with China Securities Finance Co. and others, according to Hua.

    Vanke had also proposed an “integration” with China Resources’ property unit, China Resources Land Ltd., which was rejected, Hua wrote.

    “A more urgent matter is that Vanke’s A shares will face fairly strong selling pressure after trading is resumed,” UOB Kayhian’s Yang said, citing the shareholding uncertainties.

    Investors should sell Vanke’s Shenzhen-listed A shares amid a “rich” valuation and buy its Hong Kong-traded H shares as negative factors have been factored in, Citigroup Inc. property analyst Oscar Choi wrote in a note.

    Vanke’s A shares have been suspended since Dec. 18 amid the restructuring plan. (SD-Agencies)