The fight between the management of China Vanke and Baoneng Group over the control of Vanke is becoming increasingly fierce.
Vanke temporarily halted trading in its shares and announced to issue more new shares on Friday last week. Speculations that Vanke Chairman Wang Shi has already raised money and is ready to fight back are spreading like wildfire. Another argument, which claims that the so-called "hostile takeover" and reverse takeover is a game between Vanke and senior officials behind Baoneng, is also making rounds.
However, the complexity and seriousness of the case might have been exaggerated.
If it is not a normal hostile takeover and involves illegal interests, then those illegal factors will definitely be exposed in the confrontation between the two companies, which will become a new turning point in the incident.
As many analysts have pointed out, both sides' actions are justifiable in their own way. Baoneng has the right to purchase Vanke's shares through secondary market, while Wang is sticking to Vanke's vision over the quality of its capital.
If neither side has a malicious intention of violating law or regulations, the final outcome of the conflict will hinge on compromise. It will not be good for the Chinese market economy and Vanke itself if the company becomes an exception to the market rule.
On the other hand, it hurts both sides if Baoneng takes over as the biggest shareholder of Vanke against the wishes of Vanke management and business.
But if the incident involves a secretive, fishy deal, such as illegal intervention by vested interests, it would be another story. The winning side can only be the party that sticks to the law more firmly.
This is a case of two strong companies staging an unprecedented fight over the control of a comany.
Hostile takeover is a phenomenon of the market economy with very low success rate. Vanke's self defense has posed a peculiar deterrant to its investors. It is also a unique reflection of the development of the Chinese market economy, which shows China's overall reform has come a long way.
After growing with the twisted development of the Chinese economy and real estate industry, Vanke has now become one of the most respected private enterprises in China. A continuous good development of such a company is not only in line with the interests of Vanke's investors, but also benefits the Chinese society.
We hope the rules in the country's market economy can support and protect this logic, and guide this fight between Vanke and Baoneng toward an appropriate solution.
