December 12, 2006


China approves Goldman's purchase of Shineway Group



China's Ministry of Commerce has given  the nod of approval for the sale of China's biggest meat processor, Shineway Group to a unit of Goldman Sachs Group Inc., the Chinese company said Tuesday.


Rotary Vortex Ltd., which is 51 percent owned by Goldman Sachs, would buy Shineway and a stake in its publicly traded unit, Henan Shineway Investment and Development Co., for a total of RMB 2.57 billion yuan (US$325 million), Shineway said in an announcement.


The acquisition, approved by the agency in charge of state assets, received Ministry of Commerce approval earlier this month, state media reports said Tuesday.


Rotary Vortex's plan to buy Shineway was among several widely-publicised foreign acquisitions in China.


The state assets agency in central China's Henan province is selling its 100 percent stake in Shineway Group to Rotary Vortex for RMB 2 billion (US$257 million). Rotary Vortex is buying a 25 percent stake in Henan Shineway Investment for RMB 562 million (US$72 million) from Luohe Haiyu Investment.

Since Rotary bought Shineway Group, which owns 35 percent of Henan Shineway Investment and later bought the 25 percent share of Henan Shineway Investment from Haiyu, it meant Rotary now owns 60 percent of Shineway Investment. 

Although approval has yet to be received from China's Securities Regulatory Commission, industry insiders says it would only be a matter of time. Yu Kai from Xin Lande (Wu Han) Investment Co. Ltd said, the sale of shares of Shineway Group to the same strategic investor made clear its objectives.

Even as Shineway is bought in the name of a foreign company, it would still be run and owned by the same management. Control of the company is likely to be switched back to Shineway's senior in a management buyout once the company is listed abroad, traders said.

Although Shineway accounts for less than 5 percent of total market share, it holds more than 40 percent share of the high-temperature processed meat products market.

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