Wednesday, August 30, 2006

CHINA: Carlyle takeover bid stirs new debate

China’s brewing debate over its rulers’ aggressive denationalisation program has recently been bubbling with new heat after a Chinese private firm threatened to launch a hostile takeover in an attempt to stop the US Carlyle Group investment firm from taking over the state-owned Xugong Construction Machinery company.

In October, Carlyle publicly agreed to pay US$375 million for 85% of Xugong, which has annual sales of $2 billion, including being a major supplier of construction machinery to Iran.

Carlyle, formed in 1987, has operated no production facilities directly anywhere in the world but has $42 billion of funds under its management. It is backed by or employs many high profile former Western government leaders, such as former US president George Bush senior, former US secretary of state James Baker and former British PM John Major.

Another worry is that the Carlyle bid for Xugong represents the first attempt by foreign capitalists to gain a controlling stake in a Chinese state firm — moreover, one that is central to setting the pace of technological development in a strategic industry.


Here is my question: Do the major players at Carlyle know that Iran will soon need lots of (re)construction machinery? If so, did Junior tell them that a US attack is imminent?

Backgrounders on the Carlyle Group with links to books, articles, etc.


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