U.S. private equity firm Carlyle Group has agreed to take a reduced stake in China's Xugong Group Construction Machinery Co., in a bid to help speed approval of the deal which has been awaiting government approval for more than a year.

Carlyle Group has signed an agreement to take a 45% stake in Xugong. In October 2005, Carlyle had struck a deal to purchase an 85% stake in the company for $375 million but later reduced its proposed purchase to 50% when approval of the deal seemed unlikely.

The agreement was disclosed by Xugong's listed unit, Xugong Science & Technology Co., in a statement to the Shenzhen Stock Exchange during the weekend. Xugong Construction ranks as the mainland's largest maker of construction equipment.

Under the terms of the deal, the Chinese government will remain the majority shareholder in the firm. Xugong is 55%-owned by Xugong Group, which is owned by the city of Xuzhou. Xugong Group will have five seats on the board of the new entity while Carlyle Group will have four.

Carlyle Group's initial agreement to purchase a majority stake in Xugong Construction encountered resistance after concerns were voiced that foreign companies were snapping up promising domestic firms before they had a chance to establish themselves.

Source:佚名