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.
(Xinhua News Agency July 8, 2006)
