China Vanke Co. Ltd. and Banyan Tree Holdings Ltd. have executed and completed a 50/50 joint venture aimed at consolidating Vanke's ownership of Banyan Tree-branded hotels and assets in China.
Banyan Tree Assets (China), or BTAC, has invested in and owns a 40% stake each in Banyan Tree Hotel Management (China) and Banyan Tree Services (China), Banyan Tree's operating companies incorporated in Singapore, Banyan Tree said in a release.
Under the agreement, Vanke will inject about S$72 million in return for newly issued shares equivalent to a 50% stake in BTAC, and invest a further S$18 million in aggregate to the operating companies for an effective stake in both.
The new company will have net tangible assets worth about S$100 million, with plans to acquire or develop Banyan Tree-branded hotels and resorts in China.
The transaction's financial effect on net profits attributable to shareholders of Banyan Tree will be about S$39 million, according to the same release.
Additionally, Banyan Tree will allot and issue about S$24 million worth of new shares, equivalent to approximately 4.99% of its equity stake, to Vanke, along with options for the latter to acquire an aggregate 10% equity stake in the former.
As of Aug. 10, US$1 was equivalent to S$1.36.