SOHO China's acquisition of a major stake in a premium plot on the Bund from Shanghai Zendai Property Ltd and Greentown China Holdings was ruled invalid this morning by the Shanghai No.1 intermediate People's Court.
SOHO, Zendai and Greentown announced early this afternoon that they will appeal against the decision at the Shanghai Higher People's Court. This appeal must be lodged within 15 days.
The Shanghai No.1 intermediate People's Court ruling said the agreement between SOHO and the sellers breached the rights of Fosun Group, the other major stakeholder of the plot, causing "direct harm" to Fosun's interest.
Fosun, headed by billionaire Guo Guangchang, filed a lawsuit in May 2012 against SOHO, a major commercial real estate developer based in Beijing, and fellow developers Zendai and Greentown.
SOHO had reached an agreement to pay 4 billion yuan (US$642 million) in late 2011 for a combined 50 percent stake of the plot owned by Zendai and Greentown.
Zendai first acquired the land piece through a public auction in 2010 for 9.22 billion yuan, the most expensive plot on the Bund at that time.
Fosun then bought a 50 percent stake, with the balance shared by Zendai and Greentown, which held 40 percent and 10 percent, respectively, through affiliates.
The dispute was mainly about whether the affiliates of Zendai and Greentown could sell their stake to another party without Fosun's consent.
The court said today that the ownership structure of the land parcel should be recovered to its original status within 15 days of the ruling.
Pan Shiyi, chairman of SOHO, said on the company's microblog after the ruling was announced that the three parties (SOHO, Zendai and Greentown) have a strong belief in the justice of law.
Construction work in ongoing on the site.