Carlyle to pay Xugong US$154m
By Wan Zhihong (China Daily)
Updated: 2006-10-25 11:42 US private equity firm
Carlyle Group will pay 1.217 billion yuan (US$154 million) for a 40.32 per cent
stake in Xugong Construction Machinery Co, according to a statement from
Xugong's Shenzhen-listed unit Xugong Technology yesterday.
Carlyle will channel an additional 584 million yuan (US$73.92 million) into
Xugong to raise its stake to 50 per cent under the deal signed on Monday, said
the statement.
This is the second major concession Carlyle has made in the Xugong deal after
it agreed earlier this month to cut its stake to 50 per cent.
Last October the US firm agreed to buy 85 per cent of Xugong for US$375
million, the biggest foreign acquisition of a controlling stake in a leading
State-owned company in China.
The deal was submitted to the Ministry of Commerce for approval last year,
but was turned down amid concern that foreign control of key Chinese firms could
threaten the country's economic security.
Analysts said industry leader Xugong owns advanced technologies and that the
sale of a number of such companies to foreign firms may result in China losing
its technology to foreign competitors.
They also said that China was selling its strategic companies to foreign
investors too cheaply.
The Xugong deal has drawn attention to other acquisitions such as the
proposed takeover of the Luoyang Bearing Corporation, a leading bearing producer
in China, by Germany-based Schaeffler Group.
The Ministry of Commerce and other authorities issued new rules in August
concerning the acquisition and takeover of Chinese enterprises by foreign
investors. (For more biz stories, please visit Industry Updates)
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