China Blocks Goldman Investment in Fuyao Glass
China's securities regulator has blocked a $119 million deal by Fuyao Group Glass Industries to sell a nearly 10 percent stake to an investment arm of Wall Street bank Goldman Sachs, Fuyao said on Monday.
Fuyao, China's top automotive glass maker, said in a statement that it had not won approval from the China Securities Regulatory Commission for a proposal to issue shares to Goldman in a private placement.
Goldman agreed in late 2006 to buy 111.28 million shares or a 9.98 percent stake in Fuyao at a price of 8 yuan per share, far cheaper than Fuyao's last market close of 30.69 yuan.
The deal won Ministry of Commerce approval in August, but the securities regulator blocked it, mainly because the government did not want Fuyao to sell the stake too cheaply to foreign investors, which could have prompted protests by Chinese investors, the official China Securities Journal said.
Fuyao's board secretary Chen Yuedan declined to say whether the firm would try to renegotiate the price with Goldman or whether it would raise money in other ways. "We will make an announcement if we make a decision on a future move," Chen told Reuters by telephone.
Several foreign investment deals have been derailed by the bull run in China's stock market, which has lifted companies' share prices far beyond the levels that foreign buyers originally agreed to pay.
In August, the securities regulator blocked a separate plan by Goldman to buy a 10.7 percent stake in Midea, one of China's top home appliance makers, for about $96 million. Official media said the problem appeared to be the selling price.