By Wan Zhihong (China Daily)
Updated: 2007-11-06 13:54

The securities regulator has blocked a bid from US investment bank Goldman Sachs for a stake in Fuyao Group, the country's largest auto glass maker.

The China Securities Regulatory Commission rejected Goldman Sachs' offer to buy a 9.98 percent stake in Fuyao, the auto glass firm told the Shanghai exchange yesterday.

Last November Goldman Sachs agreed to buy 111.28 million shares, or a 9.98 percent stake, in Fuyao at 8 yuan per share - far cheaper than Fuyao's last market close of 30.5 yuan. The deal was approved by the Ministry of Commerce in August.

Analysts said the deal price was undervalued and Chinese investors might oppose it.

"The regulator doesn't encourage investment deals like this," said Zhang Xin, an analyst with Guotai Junan Securities Co Ltd in Beijing.

Several foreign investment deals have been derailed by the stock market's bull run, which has lifted companies' share prices far beyond the levels that foreign buyers originally agreed to pay.

Shares in Fuyao were about 10 percent higher when the commerce ministry approved the deal in August.

In August, the securities regulator also blocked a separate plan by Goldman Sachs to buy a 10.7 percent stake in Midea, one of China's top home appliance makers, for about $96 million.

The selling price was the main reason the deal was rejected, according to analysts.

Based in Fuqing in East China's Fujian Province, Fuyao is the world's fourth largest maker of vehicle glass. The company posted sales of 3.67 billion yuan for the first three quarters of this year.

The overseas market has contributed around 35 percent of the company's sales revenue. Now it has opened offices in the United States, Europe, Japan, South Korea and Australia.

Cao Tok-wong, president of Fuyao, earlier told China Daily that it would open an overseas manufacturing base in the next three to five years in a bid to further expand its business growth on the overseas market.

Fuyao has vehicle glass manufacturing plants in Changchun, Shanghai, Chongqing, Beijing and Guangzhou, and modern float glass facilities in Fujian, Jilin, Inner Mongolia and Hainan.

Shares in Fuyao closed at 30.5 yuan on the Shanghai exchange yesterday, down 0.62 percent.