Sunac China Holdings Ltd (融創中國控股) agreed to buy hotels, land and projects from Dalian Wanda Group Co (萬達集團) for 63.2 billion yuan (US$9.3 billion) in China’s largest property deal, as billionaire chairman Sun Hongbin (孫宏斌) moves to take advantage of competitors shedding assets.
Sunac is to buy 76 hotels from Wanda through a unit and is to purchase a 91 percent stake of 13 cultural and tourism projects, according to a statement posted on Wanda’s Web site.
Sunac yesterday halted trading of its shares in Hong Kong pending an announcement of a “very substantial” acquisition, it said .
The developer had closed 6.9 percent lower on Friday.
The deal marks Sun’s biggest gambit, capping a spree totaling more than US$12 billion in the past year that has seen Sunac stray beyond its core focus on residential real estate.
Sunac invested in companies affiliated with the cash-strapped LeEco (樂視) empire, as Sun has said that he is seeking ways to expand beyond property into areas from healthcare to finance.
“For Sunac, the deal signifies a move into hotels from primarily property development it focused on before,” Bloomberg Intelligence analyst Kristy Hung said. “Sunac could be seeking more exposure outside of just purely property development, as growth of Chinese new home sales will likely slow in the long-run.”
With the latest deal, Sun targeted assets from fellow billionaire Wang Jianlin (王健林), who was among the most acquisitive Chinese tycoons up till last year.
Wanda is among conglomerates including Fosun International Ltd (復星國際), HNA Group Co (海航集團) and Anbang Insurance Group Co (安邦保險集團) whose loans are under government scrutiny after China’s banking regulator asked some lenders to provide information on overseas loans to the companies, people familiar with the matter said last month.
Sunac has emerged as the most acquisitive Chinese developer in the past 12 months and its property holdings have expanded rapidly, from four cities in 2011 to 44 last year.
Sunac’s 15 acquisitions since the start of last year included a deal with technology company Legend Holdings Corp (聯想控股) that spanned 42 property projects across 16 cities, including Beijing, Tianjin, Chongqing and Hangzhou, Bloomberg data showed.
Sunac’s stock has soared almost 130 percent this year.
Sunac said it would use its own funds for the Wanda deal and that it had more than 90 billion yuan in cash as of the end of last month, Caixin reported yesterday, citing an interview with Sun.
Wanda is to use all proceeds from the deal to pay back loans, according to the report, which also cited an interview with Wang.
The transaction is to allow Sunac and Wanda to “fully play” to their advantages, the statement said.
Wanda is to control the construction and operation of the 13 cultural projects and the firms are to cooperate in a number of other areas, including films, the statement said.
Wanda Hotel Development Co (萬達酒店發展有限公司) surged as much as 155 percent in Hong Kong trading before paring some of the gains after a representative said the deal has no direct impact on the Hong Kong-listed company.
Wanda Properties International Co’s (萬達商業地產有限公司) bonds also rose.
The sale also builds on Wang’s push to shed real-estate assets to focus on collecting rent rather than developing properties. The proceeds would help fund Wang’s broader ambitions to move away from his property roots to expand his entertainment empire, which now includes Hollywood producer Legendary Entertainment and AMC Entertainment Holdings Inc.
Wanda has increasingly been recruiting partners for its developments to ease its capital burden. Last year, the group signed a cooperation agreement with Guangzhou R&F Properties Co (廣州富力地產) to build 25 commercial projects across China.
Sunac’s purchase comes amid what Citigroup Inc predicts will be a “mega-consolidation” in the industry. Developers spent a record 96.7 billion yuan in the second quarter of this year on acquiring competitors or their assets, data compiled by Bloomberg shows.
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