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20:54, 11-Jul-2017
Sunac China shares jump 13.7 percent after $9.3 billion Wanda deal
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Sunac, currently the seventh-largest Chinese property developer, saw its share price jump as much as 13.7 per cent to 16.82 Hong Kong dollars on the Hong Kong Stock Exchange on Tuesday, after sealing a 9.3 billion US dollar deal with Dalian Wanda Group in return for a package of hotels and tourism projects.
On Monday, Sunac, founded by Shanxi tycoon Sun Hongbin, agreed to acquire 76 hotels and a 91 percent stake in 13 cultural and tourism projects from Wang Jianlin's Wanda Group, with the latter in need of cash to repay bank loans. The 9.3 billion US dollar acquisition is China's second biggest ever real estate deal, according to Reuters.
Chinese developer Sunac buys 9.3 billion US dollars' worth of Wanda assets /CFP Photo
Chinese developer Sunac buys 9.3 billion US dollars' worth of Wanda assets /CFP Photo
The purchase of Wanda adds 50 million square meters to the builder's current 73 million square meters of property.
Wang Jianlin, one of China's richest men, told Caixin on Monday that the move could help reduce Wanda's debts. He said Wanda plans to pay off all of its banking loans this year.
Sunac's founder Sun revealed to Caixin that his company is able to pay for the acquisition with its own resources, and that there was still 90 billion yuan (13.23 billion US dollars) in the company accounts as of June 30, 2017.
Sun added that prior to the acquisition, Sunac was expecting a sales volume of 300 billion yuan (44.11 billion US dollars) this year.
One investor who stacked heavily on Sunac stock told Caixin that only Sun Hongbin, a man with no SOE background in China, would make such a quick decision to go ahead with such a large investment.
The sale marks a step back for Wanda from its theme park ambitions, coming after Wang Jianlin vowed to "crush Disney" just over a year ago, ahead of the opening of the US giant's resort in Shanghai.
The sale to Sunac is also expected to help Wanda cut debts and strengthen its case for a mainland listing, after it delisted from Hong Kong last year.
Wang Jianlin, founder and chairman of Dalian Wanda Group, signs a deal to sell 9.3 billion US dollars of assets with Sun Hongbin, founder and chairman of Sunac China Holdings, July 10, 2017. /CFP Photo
Wang Jianlin, founder and chairman of Dalian Wanda Group, signs a deal to sell 9.3 billion US dollars of assets with Sun Hongbin, founder and chairman of Sunac China Holdings, July 10, 2017. /CFP Photo
However, the company was one of the big-spending players in a flood of Chinese overseas acquisitions in 2016, which raised concerns over "irrational" investments and capital outflows.
An anonymous post last month related to Wanda saw its stock prices slump. The post, which Wanda later called a "rumor," said the Industrial and Commercial Bank of China had been asking bond managers to sell off Wanda bonds to avoid risks.
The China Banking Regulatory Commission in mid-June asked some commercial banks to review and report their overseas loans, to companies including Dalian Wanda Group.
To date, Wanda has spent nearly 36 billion US dollars to acquire companies like US-based cinema chain AMC Theaters and Hollywood studio Legendary Entertainment.
In Wanda's mid-year report published last week, Wanda revealed it makes more than half of its income from sectors not related to property.
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