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Xinyuan Real Estate Co., Ltd. Message Board

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  • growth.value growth.value Sep 25, 2012 9:35 PM Flag

    We had a discussion after Vanke had their annual

    XIN certainly can be a M&A candidate, but finding a good buyer is not easy.

    Ideal buyers are firms that specialize in geographic areas that XIN does present and that do not have geographic penetration as high as Vanke or Poly. Those companies can buy XIN to create synergy as far as developing efficiency and reduce learning curve in particular geographic areas.

    However, most these ideal buyers currently do not have enough financial luxury to pay a nice price on XIN. Also, XIN's most assets are not attractive to them. Also, most employees including the CEO could be useless after the merger. The most valuable resources are XIN's local top management and local sales teams. Unless the CEO gets a offer too high for him to turn down, I doubt there is any difference between unwinding the business and being acquiring by somebody and getting fired or demoted to a regional head.

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    • A Vanke or a Poly doesn't need an Xin or their properties. BTW that quote is from Evergrande's first 6 mos. But your Growth's and Xin's comments lead me in another direction. I have a real problem with Xin just waltzing into the US as a Chinese company and
      just being able to buy up property in Nevada, California and NY. And Hmmm you being a
      lawyer, though a non practicing one, probably has friends in real estate law to answer my
      half dozen questions on the legality of this whole US purchase spree. Starting off with
      did Wells Fargo Bank sell the properties in Nevada to Xin, or after seeing the video that
      Star posted on IV was the sale to West Haven Development's Lou Borrego who also flips lots to other developers (per Lou's website)? BTW that
      article and video have the spelling of his last name as Berrego, but his site shows differently.
      Why is Lou Borrego speaking on behalf of Xin when they have Tom Gurnee a 'Northern
      Nevadan' not speaking for the company. And why would Lou who is the CEO of his own company in Northern Nevada be looking at 100 properties across the US? The reason I ask
      these questions is about 6 to 9 mos. ago, I was reading an article about a much larger China developer who went through the trouble of buying a basically defunct company, who
      was listed on a US exchange for the sole purpose of trying to enter the US market. Why
      does a US listing have anything to do with the ability to purchase and develop land in the US? What kind of entitlement is that? Why hasn't Xin gone into details on this buying of
      Reno properties and flipping in their 6k of August 2012. Just a quick mention that they bought. We see what they are apparently doing on a Nevada news station article/video and
      Chinese websites, (those are actually more like, let us teach you how to get a visa into the
      US to purchase property), but no mention in a PR. Is that because it also gets filed with the
      SEC? Just the beginning of my questions.

      And that now leads me to my new thought and direction with their comments on 'unwinding
      their business' and M&A. As I said 99.9% of other developers would not need to buy Xin except in one VERY LARGE INSTANCE. After that little story I gave you on the much larger
      developer, is Xin trying to set themselves up as an M&A target because they found a way to get into the US and this is what many large China developers want, a way into the US market? What better way than a Chinese company buying a China company who's been able to penetrate the US market.

      I'm not a lawyer so my question could have a very short and quick answer. It is legal for any
      Chinese Developer to purchase and develop land as a 'developer' in the US. Who would
      I ask that question? of The Justice Department, the SEC the Governor of Nevada? Wells
      Fargo Property Division? Who?

    • Casey, you got exactly what I am saying. Nobody would pay something near book value for XIN.

    • Let's see what is XIN cash per share? $ 9? After you pay off all the debt and finish the projects it might still be $ 9. I can buy a company for $ 3 a share and immediately get $ 9 a share in cash. Do I really need all the sophisticated sector analysis to find a M&A partner? Wouldn';t the company fight vigorously fight a tender at the current valuation?

      A tender would immediately shoot up the valuations to 10 to 15 a share and it would be a dog fight. China does not consolidate because of strategic fit consideration as it is a target rich environment. China needs to learn to crawl before it starts jogging activities.

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