Soho China shares plunge 40% after Blackstone deal collapses

SOHO China Ltd updates

Shares in Soho China fell as much as 40 per cent on Monday after US private equity group Blackstone pulled its $3bn takeover of the Chinese property company last week.

About $830m was wiped from Soho China’s market value as its Hong Kong-listed shares tumbled when the exchange opened for trading. The share price drop came after the companies said in a joint statement on Friday that they would not be able to receive antitrust approval for the takeover within the agreed timeframe.

That nixed Blackstone’s HK$5-a-share offer made in June, which had valued the property developer at HK$26bn (US$3.3bn) but had been conditional on Beijing’s approval. By late Monday morning in Hong Kong, Soho China shares were trading at HK$2.28, the same level as before the planned purchase was announced.

The failure of the acquisition came against a backdrop of expansive policy overhauls and regulatory clampdowns in China, where authorities have increased scrutiny of foreign investment and cracked down on what they perceive to be monopolistic business practices.

As a result, Wall Street is experiencing a widening divide over investing in China, as the snowballing regulatory review rattles investor confidence in the world’s second-biggest economy.

The failed deal has also returned the spotlight to Soho China founders Pan Shiyi and Zhang Xin. The colourful husband and wife pair has been synonymous with the development of the Beijing and Shanghai skylines and the subject of fierce discussion in Chinese state and social media since the deal was announced.

“You want to flee with your money? You don’t want to stay here and lead us to common prosperity?” asked media personality Zhang Yixuan, writing on Weibo, China’s Twitter-like microblogging platform. 

Chinese media and internet users have been critical of the couple, who have spent more time outside the country recently, after their large donation to Harvard University and US real estate purchases made headlines.

After the Blackstone deal fell through, images of Pan and Zhang attending the US Open tennis tournament in New York over the weekend quickly spread across social media.

“So they’ve already left,” said one social media user.

“They transferred their assets out long ago,” claimed another.

For Blackstone, the failed takeover of Soho’s portfolio of prime real estate in China’s biggest cities marked a blow to co-founder Stephen Schwarzman’s plans to boost his group’s position in the country.

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