HONG KONG (Reuters) - Shares in China Vanke (HK:2202)<000002.SZ>, at the centre of a high-profile corporate power tussle, surged on Friday after its No. 2 shareholder said would sell its stake to state-owned Shenzhen Metro Group, a Vanke ally, for $5.4 billion.
The sale of the 15.3 percent holding by China Resources Group, however, falls short of a previous Vanke plan to make the subway operator its biggest shareholder through an asset swap - one that had to be abandoned after Vanke could not get major shareholders to agree.
It remains to be seen if the sale will help Vanke fend off its biggest shareholder, financial conglomerate Baoneng, which owns 25 percent of Vanke and has sought to oust management.
Vanke shares in Shenzhen climbed 7 percent in early trade, while those in Hong Kong gained over 5 percent. The stock was suspended from trade on Thursday ahead of the announcement.
State-owned China Resources Group said in a statement late on Thursday that it had decided to sell the stake after looking at its own development strategy and industry portfolio allocation.
"Transferring shares this time is beneficial to Vanke's healthy and stable development," said China Resources, calling it a "a win-win for all".
Vanke's third largest shareholder China Evergrande Group (HK:3333), which quickly built up its stake late last year, said in a statement on Friday it has no intention to acquire further shares in its rival at this point in time.
Shares in Evergrande edged up 0.8 percent. The benchmark Hang Seng Index (HSI) climbed 0.4 percent.