Shandong Haihua Co (山東海化), a Chinese maker of soda ash and other chemicals, said a planned venture with Carlyle Group was called off because the firms failed to reach an agreement by the deadline yesterday. Haihua said it will keep seeking strategic investors.
An initial memorandum had been signed by the Chinese company's parent -- the Weifang city State-owned Assets Supervision and Administration Commission, the group's controlling shareholder -- and by Washington-based Carlyle.
"To date, discussions have yielded no substantial agreements on cooperation," Shandong Haihua said in a statement to the Shenzhen stock exchange yesterday, citing a notice from the Weifang city commission.
"Large uncertainties still exist as to whether cooperation with Carlyle would be successful," it said.
Carlyle's expansion in China has been set back before as the government tightens rules on foreign investments. The US buyout company had to scale back plans to buy shares in a construction machinery maker and was rejected from acquiring part of a bank.
Soda ash, one of Haihua Group's main products, is used to make glass. The company, located near northern China's Bohai Sea, uses ocean water to make about 40 chemicals, including raw salt and bromide, which is used as an antiseptic in public baths, according to its Web site.
China issued new rules in January that tightened control over sales of state assets to overseas buyers, saying the government should retain absolute control in "key industries," the official Xinhua news agency said.
Carlyle was turned down for a 7.99 percent, 326 million yuan (US$43-million) stake in Chongqing City Commercial Bank (重慶商銀) because it "didn't meet existing regulations," the bank said in its annual report.
The buyout company is still waiting for government approval to invest in Xugong Group Construction Machinery Co (徐工築路機械) after it scaled back its planned investment in the company to 45 percent from an earlier plan to take a more than 50 percent stake.
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