Carlyle Group in China

I.Brief description of the deal Pre- scholarship: Xugongs parent, Xuzhou Construction Machinery stem, owned 51% of the company. Post-acquisition: By getting loans from foreign banks and reselling shares of Xugong to other investors, Carlyle will finance $375mil and reach out 85% of the company. Xuzhou Construction Machinery Group might get loans from Citi to secure stakes from other state-owned entities and resell the stakes to Carlye, and Xuzhou Construction Machinery Group will own 15% of the company after the acquisition. II.What risks well side from making this investment, and what signposts, shaping, and hedging factors we should consider a.Risk 1: The governments variant on the price and shareholding structure of the deal ?Assumption: the primordial government will approve the deal in collectable course. (load-bearing and undefendable assumption) ?Signposts: significant delay in approval process, debates in the country on the validity of the buy-out (is the deal a forte selling of state-owned assets? Will that harm the economy security of china?) ?Shaping factors: lobbying Chinese government officials by all means, e.g.

communicate US government officials to help lobbying; maintaining good relationship and disposition with the companys parent company, who would also solicit support from the government. ? hedge factors: reevaluating the deal and making necessary, reasonable compromise on the acquisition price and post-acquisition shareholding structure b.Risk 2: Competitors (such as cat-o-nine-tails and JP Morgan) win the deal ?Assumption: Carlyle is the candidate most favored by Xugong and will most likely win the acquisition (load-bearing and vulnerable assumption) ?Signposts: any progress in other competitors negotiation with Xugong, signals to mull the progress include disclosed news, memos and even rumors ?Shaping factors: virtually monitoring the negotiation between Carlyle and Xugong; assist Carlyle to maintain a good relationship with... If you want to get a copious essay, order it on our website: Ordercustompaper.com

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