Top Biz News
Carlyle likely to reduce Xugong stake
By Wan Zhihong (China Daily)
Updated: 2006-09-26 14:05
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"China encourages the restructuring of such companies, on the basis that the country maintains the controlling power."
According to the statement China will speed up research and manufacturing of large-scale engineering machinery to meet the needs of railway, water, transportation and other construction projects.
In June, Chinese heavy machinery manufacturer Sany Corp said it aimed to pay 30 per cent more than the Carlyle Group to buy Xugong.
The price that the Carlyle Group agreed to pay for the purchase was undervalued. Sany could pay 30 per cent more or even more, Xiang Wenbo, executive president of Sany Corp said on the company's website.
Xiang said it is not good for China's machinery industry to sell a big and important company like Xugong to a foreign company.
Sany has been planning to buy Xugong for a long time, he added.
But experts don't believe Sany has the capability to take over Xugong. And some analysts speculate Xiang's move was a deliberate attempt to draw media attention.
Commenting on the Xugong deal, the Carlyle spokesperson said: "Carlyle and XCMG have a definitive agreement on the purchase of Xugong that was announced in October 2005."
Since then both companies have continued to develop their strong relationship and commitment to the successful completion of the transaction.
"We are confident that the transaction is in the best long-term interests for the development of China's construction machinery manufacturing industry," she added.