China looking closely at foreign M&A
(Xinhua)
Updated: 2006-07-07 22:41
The Ministry of Commerce plans to keep a closer eye on foreign mergers and
acquisitions in important sectors to ensure the country's industrial and
economic integrity, an official said in Beijing on Friday.
Song Heping, deputy director of the Ministry's Industrial Damage
Investigation Department, made the remarks on Friday while commenting on the
controversial takeover deal between the Carlyle Group of the United States and
the Xugong Group, China's construction machinery giant.
Under the takeover agreement inked by the two parties last October, Xugong
Group is to sell 85 percent of shares of its subsidiary Xugong Group
Construction Machinery Co. to Carlyle at US$375 million. The Chinese machinery
giant with annual revenues of 17 billion yuan (US$2.1 billion), controls more
than 50 percent of China's crane and road paving equipment market.
Song wouldn't say if the deal had been approved by the Ministry of Commerce
which is responsible for examining and approving major acquisition and merger
deals in China.
Sources close to the deal said that the takeover has been stalled by the
ministry for fear that it might jeopardize China's machinery industry.
The official said foreign acquisitions of the country's leading companies are
"a new problem China has to face while advancing economic reform and opening
up", adding that the ministry was trying to balance the protection of the
country's indigenous industries with the investment enthusiasm of foreign
companies.
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