All questions refer to a proposed takeover of Vanke by Baoneng. You can find background information here https://foreignpolicy.com/2016/07/06/chinas-big-takeover-battle-wang-shi-vanke/
Question 1 (40 Marks)
How much should Baoneng pay for Vanke? The current 10-year Chinese government bond annual rate is 3%. The beta for property stocks is 0.75. The Chinese stock market has fallen 23% since last year, grown 10% the last 5 years and 84% the last 10 years. State any assumptions clearly and discuss how much your answer is sensitive to them?
Question 2 (30 marks)
Why does Baoneng want to acquire Vanke? Why does Vanke not want to be acquired by Baoneng? What do you think will be the outcome of the dispute?
Question 3 (30 marks)
Reflect on Vanke’s corporate governance and its takeover defence. How does the case reflect on the state of corporate governance in China? How can a functioning market for hostile takeovers improve corporate governance in a country?