According to Bloomberg Greentown China Holdings Ltd., whose chairman ended a share sale to a rival developer, surged the most in 2 1/2 years in Hong Kong after it agreed to sell 24 percent of the company to a state-owned construction group.
The shares of Greentown, based in Hangzhou in eastern China, rose 22 percent, the most since June 2012, to HK$7.75 as of 10:34 a.m. local time. They resumed trading today after the stock was suspended on Dec. 22. The shares had dropped 10 percent on Dec. 19 when Greentown said the plan to sell a same- sized stake to Sunac China Holdings Ltd. was terminated.
Greentown, founded by chairman Song Weiping, will sell the shares instead to China Communications Construction Group, the parent of the nation’s biggest building firm, for HK$6 billion ($773 million), or HK$11.46 per share, an 81 percent premium to the closing price on Dec. 19. The construction firm will become one of the two largest shareholders and Song’s holding will drop to 10 percent from 22 percent.
China Communications Construction may increase its stake in Greentown in future, said China International Capital Corp. analysts Eric Zhang and Cheng Yang in a note.
“We do not rule out the possibility that it would eventually become Greentown’s largest shareholder and turn Greentown into its real estate platform,” they said, referring to the state-owned company. They have a buy rating on Greentown.
Song had said he was wrong to sell a stake to Sunac as the two firms “don’t blend,” paving the way for the termination of the agreement reached in May.
China Communications Construction will get two out of four executive board seats, with one of them being a co-chairman role, according to an exchange filing today.
Hong Kong’s Wharf Holdings Ltd., which bought shares in Greentown in 2012, will continue to hold 24 percent of the Chinese developer, while Greentown Chief Executive Officer Shou Bainian will have his stake cut by half to 8.1 percent.