Goldman approved to buy 10 pct of China's Fuyao
SHANGHAI (Reuters) - Goldman Sachs (GS.N) has won Chinese government approval to buy a 10 percent stake in Fuyao Group Glass Industries Co. (600660.SS) for 890 million yuan ($118 million), the Chinese firm said on Friday.
The Ministry of Commerce has given permission for the country's biggest auto glass maker to sell 111.28 million new shares, or a 10th of its expanded share capital, to an investment arm of Goldman Sachs, Fuyao said.
The approval came nine months after Fuyao announced last November that Goldman Sachs would buy its shares at 8 yuan apiece in a placement, becoming the Chinese firm's strategic partner.
Since then Fuyao's shares have soared, closing at 33.70 yuan on Thursday, but the two companies won't renegotiate the purchase price, Fuyao's board secretary Chen Yuedan told Reuters.
Fuyao said it would resubmit its application for the share placement to the China Securities Regulatory Commission next Monday because the previous one was out of date.
Proceeds of the placement will be used to repay bank loans and improve Fuyao's liquidity, the Chinese firm said. Goldman Sachs must hold its Fuyao shares for at least three years.
Fuyao has about half of China's auto glass market. Clients include U.S. auto maker Ford (F.N).
Amid claims by some officials that China has been selling its industrial assets too cheaply, the government has tightened its regulatory scrutiny of foreign companies' purchases of stakes in Chinese firms.
But Goldman has scored several successes since last year. In February this year it won final regulatory approval to buy control of China's top meat processor, Henan Shuanghui Investment & Development Co. (000895.SZ), and it has also bought shares in Chinese air-conditioner maker Midea 000527.SZ.
It is also in advanced talks to buy a quarter of privately Chinese owned cement maker Hongshi Cement for nearly $80 million, a source involved in the negotiations told Reuters on Thursday.
Some other foreign investment deals in China have been bogged down with regulatory issues. U.S. private equity firm Carlyle CYL.UL has been trying since October 2005 to buy a major stake in China's largest machinery maker, Xugong Group Construction Machinery Co., but has not won approval.
($1 = 7.56 yuan)
