(Yicai Global) June 21 -- Evergrande Group’s shares surged after the Chinese real estate developer said it will sell part of its stake in China Calxon Group to avoid horizontal competition, in a deal worth about CNY2.5 billion (USD387 million).

Evergrande [HKG: 3333] closed 9 percent higher today at HKD10.80 (USD1.39), after earlier gaining as much as 10 percent. The broader Hang Seng Index fell 1.1 percent.

Evergrande’s holding unit Guangzhou-based Kailong Real Estate signed the deal, which will see it sell a 29.9 percent stake in Calxon, with Shenzhen-based Huajian Holding, Calxon said in a statement today.

On completion of the deal, Kailong will own 27.85 percent of Calxon and will voluntarily waive the voting rights, while Evergrande will give up control of the Shanghai property developer.

Calxon [SHE: 000918] did not disclose the value of the transaction, but based on its June 18 closing price of CNY4.7 (72 US cents), it would be about CNY2.5 billion.

After the deal is completed, Calxon’s controlling shareholder will change to Huajian, which is mainly engaged in equity investment, with Wang Zhongming as its actual controller. Wang has also invested in China Evergrande New Energy Vehicle Group and Evergrande Spring.

When Evergrande acquired Calxon in 2016, it promised to resolve the horizontal competition issue between Calxon and Evergrande Real Estate by September 2019. Then in July 2019, Calxon announced a further two-year extension to settle the issue.

Editor: Peter Thomas