China's Evergrande Group said one of its units will acquire a controlling stake in developer Shenzhen Special Economic Zone Real Estate & Properties (Shenzhen Real Estate) by swapping assets.

Evergrande's subsidiary Kailong Real Estate is selling unit Hengda Real Estate to Shenzhen Real Estate in exchange for shares. The deal will make Kailong Real Estate a major shareholder of Shenzhen Real Estate, Bloomberg reported citing a statement to the Hong Kong Stock Exchange.

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The company said that under a preliminary deal, Shenzhen Real Estate will issue shares or cash or a combination for acquiring 100 percent of the equity interest on its subsidiary unit Hengda Real Estate. The final price Evergrande needs to pay for the Shenzhen Real Estate stake has not been determined yet, according to Reuters.

The transaction will transfer Evergrande's core assets into Shenzhen Real Estate, giving it access to a capital market whose core profit is estimated to reach 88.8 billion yuan ($13.31 billion) over the next three years, according to South China Morning Post.

The Guangzhou-based company said the agreement will provide "an additional fund-raising platform" for Evergrande and will allow the market to assess its value "positively and reasonably," Hui Ka Yan, Evergrande's owner, said in a statement.

Evergrande has been on a debt-funded buying spree. Last August, it bought an additional shares of China Vanke Co Ltd. worth 5.46 billion yuan ($823 million), increasing its stake from 4.68 percent to 6.82 percent.

Meanwhile, after negotiations, Evergrande's preliminary deal with Shenzhen Real Estate will turn into a definitive agreement. However, the transaction is still subject for the board and shareholders approvals for both companies as well as regulatory approvals from the China Securities Regulatory Commission and Shenzhen State-owned Assets Supervision and Administration Commission, which holds Shenzhen Real Estate.

TagsShenzhen Real Estate, Evergrande, China Property, A shares, real estate, Hengda Real Estate, Kailong Real Estate, merger and acquisition