The shares of SOHO China, one of the biggest real estate developers in China, tumbled in the morning session on Monday, as US private equity firm Blackstone scrapped plans for a $3.05 billion takeover.
SOHO China trading in Hong Kong plunged 36.29 percent to HK$2.23 by 10 am on Monday. This follows progress in satisfying the pre-conditions of the offer is insufficient, SOHO China said in a file to the Hong Kong exchange dated Friday. The parties involved agreed the offer should not be made.
In June, Blackstone offered to purchase SOHO China for around HK$23.7 billion ($3.05 billion), as the company hopes to expand its footprint in China with confidence in the country’s long-term potential and economic recovery.
On August 6, SOHO China said that the State Administration for Market Regulation (SAMR) has begun reviewing the case under China’s Anti-Monopoly Law. The review by the anti-trust regulator is one of the pre-conditions that have to be met for the deal to be completed.
Founded in 1995, SOHO China is one of the biggest real estate developers in China, with around 1.3 million square meters of commercial property across the country. Its portfolio of premium mixed-used assets is concentrated in Beijing and Shanghai. One is a newly Zaha Hadid-designed office tower in Lize, a new office submarket in Beijing.
At its peak in 2010, the company reached total sales of 23.8 billion yuan ($3.69 billion) but by 2012 sales plunged to 9.468 billion yuan. Its market valuation has also been falling since its peak of around HK$60 billion.
SOHO China’s largest shareholders Pan Shiyi and his wife Zhang Xin have been selling the company’s assets in China since 2014, while they did not purchase any new assets using sale proceeds, according to domestic news outlet thepaper.cn. Public data showed that SOHO China has sold assets worth 35 billion yuan since then, the report said.