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Shares of office developer SOHO China tumble after Blackstone scraps deal

HONG KONG (Reuters) -Shares of Chinese office developer SOHO China tumbled 40% on Monday in their biggest daily drop since listing more than 14 years ago after Blackstone Group Inc scrapped what would have been China’s largest real estate buyout.

The stock fell to as low as HK$2.10, the lowest since Nov. 3, 2020, in its worst day since listing in Oct. 2007.

SOHO China said Blackstone, which had offered HK$5 per share in June to buy all shares in the company, had abandoned the $3 billion deal on Friday as pre-conditions were unable to be satisfied.

The company had said in June the deal was subject to Chinese competition authorities granting clearance.

Two sources with knowledge of the deal told Reuters the State Administration for Market Regulation did not want the takeover to go through, with one of them adding the regulator “just went silent.”

The source said they believed President Xi Jinping's common prosperity campaign here, which seeks to narrow a yawning wealth gap, may have played a part in the regulator's refusal amid concerns over the SOHO owners' plans to invest the proceeds overseas.

Blackstone, SOHO China and China’s market regulator did not immediately respond to requests for comment.

SOHO China is 64% owned by the husband-and-wife founding team of Chairman Pan Shiyi and Chief Executive Zhang Xin, who have been scouting for buyers for its prime commercial property assets as they looked to shift their focus to overseas markets.

In state media CCTV live broadcast on Saturday, one day after the announcement, Pan and Zhang were shown in the spectator stand watching the U.S. Open in which Britain’s tennis player Emma Raducanu won over Canada’s Leylah Fernandez.

The Hang Seng Composite Index tracking properties and construction stocks and the benchmark index both dropped 1.6%.

Reporting by Kane Wu, Julie Zhu, Clare Jim and Donny Kwok; Editing by Shri Navaratnam

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