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Strategies & Market Trends : True face of China -- A Modern Kaleidoscope -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2273)	10/12/2007 7:01:10 PM
From: RealMuLan	Respond to of 12464

[What would the US reaction if China were controlling the large meat processing company in the US???]-- Goldman cedes control in China ft.com By Sundeep Tucker in Hong Kong Published: October 9 2007 22:18 \| Last updated: October 10 2007 05:40 Goldman Sachs is to cede control of the consortium that owns China’s largest meat processor, just weeks after it secured final approval for the takeover. The unexpected move will raise eyebrows among dealmakers in China, who are sensitive to signs that Beijing is restricting foreign ownership of high-profile domestic assets. The US bank’s principal investment arm last year teamed up with CDH Investments, an overseas-registered Chinese private equity firm, to set up a takeover vehicle called Rotary Vortex, in which Goldman holds a 51 per cent stake. Rotary Vortex acquired full control of Shineway Group, owner of the meat processor, from state-backed interests this summer following a year of intense regulatory scrutiny. However, in a statement on Tuesday, Henan Shuanghui Investment & Development, a listed unit of Shineway Group, said Goldman plans to become the minority partner in the consortium. The statement said Goldman would sell a 5 per cent stake in Rotary Vortex to CDH, meaning its stake will fall to 46 per cent and that of CDH will rise to 54 per cent. The statement did not disclose the timing of the stake sale, the price involved or the reasoning behind Goldman’s move. Goldman and CDH declined to comment. However, people familiar with the consortium’s thinking said the US bank had agreed to the sale “to help CDH manage relations with their investors”. One person added: “The move will not have any significant financial or structural implications because the sides have equal voting rights when it comes to running the business.” Achieving de facto control of the consortium will make it easier for CDH to convince its investors it is in the driving seat, although it remains unclear why that would be necessary in this case. Private equity consortiums rarely disclose information about internal share transfers, and the Goldman revelation was forced by Chinese securities laws governing changes in ownership. The lack of transparency surrounding the move will fuel speculation that Goldman has fallen victim to a domestic backlash against the high-profile US bank owning a Chinese asset. In August this year, Chinese regulators blocked an investment arm of Goldman from acquiring a 10.7 per cent in Midea Group, a domestic appliance maker, without giving a reason. Goldman and its affiliates have made a string of lucrative investments in China in recent years, including a paper profit of several billion dollars on the acquisition of a 5 per cent stake in Industrial and Commercial Bank of China, the mainland’s largest lender. Additional reporting by Richard McGregor in Beijing. Copyright The Financial Times Limited 2007