August 11, 2006

Goldman Sach awaits approval to buy China's largest meat-processor
 

Plans for Wall Street giant Goldman Sachs to acquire China's largest meat company seems to have stalled as it awaits governmental approval and new rules, sources said Thursday (Aug 10).

A consortium led by Goldman Sachs, called Rotary Vortex, has been waiting for approval from Chinese regulators since winning the bid for meat-processing firm Shuanghui, also known as Shineway Group, for RMB 2 billion (US$251 million) in May, according to a Reuters report.

Headquartered in the central city of Luohe, Henan province, Shuanghui has more than US$20 billion in sales annually.

Goldman already owns a 6-percent stake in China's Yurun Food Group Ltd, the country's second-largest meat processor, and a further 4 percent on behalf of its clients.

Goldman is not the only company waiting in the queue to have their purchases approved, however. Carlyle, another US firm, has been waiting since October for approval of its US$375 million bid for 85 percent of China's leading heavy machinery maker, Xugong Construction Machinery.

The Ministry of Commerce gave hints it would lay down the new rules on foreign acquisitions next month. Those new rules may reflect repercussions from a failed US$18.5 billion bid by China's CNOOC Ltd to buy American oil producer Unocal, withdrawn due to protests in the US Congress.

According to state media, a foreign company that alters the control of a prominent Chinese brand or a firm with more than 2,000 staff would need government approval under the new rules.

Shuanghui has about 30,000 staff.

China is also considering forming a committee to oversee foreign takeovers.

Lawyers and bankers said the latest development should not be interpreted as a clampdown on foreign merger and acquisition activities. As more foreign money is buying established business, Chinese regulators would naturally set up a legal framework for such activities, an M&A lawyer said.