CHINA Vanke Co., embroiled in one of the country’s most high-profile corporate power struggles, yesterday said that newly unveiled plans by its largest shareholder to oust its board were already threatening the health of the company.

    Fearing a hostile takeover bid by financial conglomerate Baoneng that has built up a 24.3 percent stake in China’s biggest property firm, Vanke’s management this month announced a US$6.9 billion deal with white knight Shenzhen Metro Group.

    Under that deal, Shenzhen Metro would become Vanke’s biggest shareholder with 20.6 percent of the company, diluting the holdings of Baoneng and as well as those of State-owned China Resources Group, a proposal that has drawn the ire of both shareholders as well as regulatory scrutiny.

    Striking back, two Baoneng firms, Shenzhen Jushenghua Co. and Foresea Life Insurance Co., have called for the ouster of founder and chairman Wang Shi and the rest of the Vanke board, as well as for an extraordinary general meeting.

    Vanke was first notified of Baoneng’s intentions Friday and disclosed the plan Sunday. It said it will respond to the request within 10 days.

    Vanke president Yu Liang told a shareholders meeting in Shenzhen yesterday that the company’s business was already being adversely affected in the wake of Baoneng’s move.

    “Some of our projects now face the risk of cancellation, banks are reconsidering how they rate our credit, partners are looking to adjust business terms and head hunters are eyeing our employees,” he said.

    “Baoneng is trying to increase its bargaining power, seeking to join hands with China Resources and force their common enemy off the board,” said UOB Kay Hian analyst David Yang.

    But Yang said he thought Baoneng’s chances of success with this tactic were low as it requires a two-thirds approval from the board that is currently dominated by Vanke management.

    China Resources did not respond to a request for comment on the Baoneng move.

    China Resources has previously challenged Vanke’s assertion that the deal with Shenzhen Metro has been approved, arguing that the two-third majority of votes requirement was not met since a board member abstained from voting.

    There is also doubt about whether Vanke management’s deal with Shenzhen Metro will sail through smoothly given regulatory concerns. (SD-Agencies)