US-based Carlyle Group has agreed to buy a minority stake in Xugong Group Construction Machinery Co (徐工機械), the Chinese construction company said yesterday, after an earlier bid for a majority share prompted a nationalist outcry.
The deal has been closely watched amid US government warnings about possible Chinese protectionist sentiment.
The agreement would give Carlyle 45 percent of a joint venture formed with Xugong, the company said in a statement released through a Chinese stock exchange in Shenzhen.
It didn't give a price and said the deal still requires Chinese government approval.
This was the second time Carlyle cut the size of the stake it was seeking.
In 2005, it offered US$375 million for 85 percent of Xugong, which said it wanted the investment in order to grow in a market dominated by Caterpillar Inc and Japan's Komatsu Ltd.
But that bid, which was endorsed by local Chinese authorities, sparked complaints in China about asset sales to foreigners -- which in turn prompted Washington to express concern about the handling of such offers.
Carlyle last year reduced the stake it wanted to 50 percent.
Even though China got some US$60 billion in foreign investment last year, the foreign takeover of existing companies is still unusual.
The office of Xugong's president refused to release additional details.
The new deal will give the Washington-based Carlyle four seats on the nine-member board of the new joint venture, said Xugong, which is based in Xuzhou, Jiangsu Province. The Chinese company will get five seats and appoint the chairman.
Carlyle is one of the world's largest private equity funds, with US$44 billion invested around the world in industries ranging from manufacturing and power generation to media and telecoms.
After the uproar over the Carlyle bid, the Chinese government announced that makers of construction equipment must consult Beijing before selling large stakes to foreigners.
Senior Chinese officials reportedly held an unprecedented meeting last year to decide how to proceed on the Xugong deal.
US officials have expressed concern that official Chinese support for foreign participation in the country's economy might be weakening now that China has met its market-opening pledges to the WTO.
In a December report, the US Trade Representative's office said Chinese market liberalization had slowed last year.
Chinese regulators have also held up a bid by European steelmakers Arcelor SA and Mittal Steel Co NV to buy a mid-size Chinese competitor, Laiwu Steel. The companies are offering 2 billion yuan (US$250 million) for a 38 percent share in the company.
A spokesman for Laiwu Steel said last week that Chinese officials want more money and other unspecified conditions "for the sake of protecting China's domestic steel industry."
FALSE DOCUMENTS? Actor William Liao said he was ‘voluntarily cooperating’ with police after a suspect was accused of helping to produce false medical certificates Police yesterday questioned at least six entertainers amid allegations of evasion of compulsory military service, with Lee Chuan (李銓), a member of boy band Choc7 (超克7), and actor Daniel Chen (陳大天) among those summoned. The New Taipei City District Prosecutors’ Office in January launched an investigation into a group that was allegedly helping men dodge compulsory military service using falsified medical documents. Actor Darren Wang (王大陸) has been accused of being one of the group’s clients. As the investigation expanded, investigators at New Taipei City’s Yonghe Precinct said that other entertainers commissioned the group to obtain false documents. The main suspect, a man surnamed
DEMOGRAPHICS: Robotics is the most promising answer to looming labor woes, the long-term care system and national contingency response, an official said Taiwan is to launch a five-year plan to boost the robotics industry in a bid to address labor shortages stemming from a declining and aging population, the Executive Yuan said yesterday. The government approved the initiative, dubbed the Smart Robotics Industry Promotion Plan, via executive order, senior officials told a post-Cabinet meeting news conference in Taipei. Taiwan’s population decline would strain the economy and the nation’s ability to care for vulnerable and elderly people, said Peter Hong (洪樂文), who heads the National Science and Technology Council’s (NSTC) Department of Engineering and Technologies. Projections show that the proportion of Taiwanese 65 or older would
The government is considering polices to increase rental subsidies for people living in social housing who get married and have children, Premier Cho Jung-tai (卓榮泰) said yesterday. During an interview with the Plain Law Movement (法律白話文) podcast, Cho said that housing prices cannot be brought down overnight without affecting banks and mortgages. Therefore, the government is focusing on providing more aid for young people by taking 3 to 5 percent of urban renewal projects and zone expropriations and using that land for social housing, he said. Single people living in social housing who get married and become parents could obtain 50 percent more
Democracies must remain united in the face of a shifting geopolitical landscape, former president Tsai Ing-wen (蔡英文) told the Copenhagen Democracy Summit on Tuesday, while emphasizing the importance of Taiwan’s security to the world. “Taiwan’s security is essential to regional stability and to defending democratic values amid mounting authoritarianism,” Tsai said at the annual forum in the Danish capital. Noting a “new geopolitical landscape” in which global trade and security face “uncertainty and unpredictability,” Tsai said that democracies must remain united and be more committed to building up resilience together in the face of challenges. Resilience “allows us to absorb shocks, adapt under
RSS