Officials in Beijing held an unprecedented high-level meeting to try to break an impasse over US-based Carlyle Group's controversial proposal to purchase a Chinese construction equipment maker, a newspaper reported yesterday.
The report by the London-based Financial Times didn't say whether officials reached a decision on Carlyle's proposed US$375 million takeover of Xugong Group Construction Machinery Co in China's first leveraged buyout.
The deal, announced in October, prompted a nationalist outcry in China over the sale of assets to foreigners. The government later announced that big construction equipment makers must consult Beijing before selling stakes to foreign investors.
The three-day meeting last month in Beijing included Xugong shareholders, competitors, suppliers and customers, but Carlyle was not invited, the Financial Times said, citing unidentified sources. It said Carlyle declined to comment.
"Everyone and anyone with a view on Carlyle-Xugong were able to have their say. I have never known anything like this in China," a person with knowledge of the meeting was quoted as saying. "I believe it is a sign that Beijing wants an open policy debate before making up its mind on whether to approve the deal."
A US trade official, Undersecretary of Commerce Franklin Lavin, visited Beijing last week and said Washington hoped that such decisions would be based on "business logic."
Lavin expressed concern at what he said was rising nationalist and protectionist sentiment among some Chinese officials.
China receives about US$40 billion a year in foreign investment, but the foreign takeover of established companies is a relatively new phenomenon and has aroused nationalist opposition.
The Carlyle bid for 85 percent of Xugong followed a public, 12-month auction arranged by the government of Jiangsu Province, where Xugong is located in the city of Xuzhou.
Xugong is trying to develop an international brand name in a market dominated by giants like Caterpillar Inc and Japan's Komatsu Ltd.
It has said the Carlyle investment would strengthen the company by bringing in needed international contacts, technological innovation and new investment projects.