Lingyun Acquires GSB (A)

Lingyun, a major state-owned enterprise and diversified conglomerate based in Shenzhen, China, targeted commercial property development and management as a focus of its growth. This case documents the process leading up to Lingyun’s acquisition of GSB, a major five-star hotel, office and retail complex in the neighboring city of Guangzhou during 2005–2006. During this period, the president of Lingyun Group, Mr. ZhangMingli, had to make a series of decisions with regard to the future growth of Lingyun. The case provides the basis for discussing fundamental strategic issues related to mergers & acquisitions —opportunity generation, acquisition rationale, target assessment and deal structuring. It also highlights the complexity of such acquisitions in China, as the process involved multiple branches of the city, provincial and central governments, Lingyun’s own parent and subsidiary companies, and regulations in both China and Hong Kong.