Beijing holds up Japanese takeover of Lucite
April 13, 2009
The Financial Times reports that Chinese competition authorities are holding up the acquisition of Lucite, a UK acrylics maker, by a Japanese materials group in the latest example of Beijing flexing its muscles over an international deal. The Japanese group, Mitsubishi Rayon, had agreed to the $1.6 billion takeover late last year and originally said it expected to complete the deal by January. Several people involved told the Financial Times that China’s Ministry of Commerce had withheld its approval-the sole anti-trust regulator worldwide to do so. China drew widespread criticism last month by rejecting a planned $2.4 billion takeover by Coca-Cola of Huiyuan, the largest Chinese juice producer, Neither party in the Mitsubishi Rayon-Lucite deal is based in China. But both companies have sales and manufacturing operations in the country and require Ministry of Commerce approval to combine them. Foreign observers said a decision by the Chinese government to block or impose conditions on the Mitsubishi deal would give rise to fresh concerns about protectionism as a force in Beijing’s anti-monopoly regime. A new Chinese anti-trust law that came into effect last August gives Ministry of Commerce wide latitude to block deals on economic and national security grounds. If the takeover were completed, Mitsubishi Rayon would control roughly 40 percent of the global production capacity for methyl methacrylates, an acrylic product used to make resins and plastics. Lucite, a specialist in the material, has 25 percent of the market. China’s ability to put its stamp on international business deals has roots in its rapid economic rise, but has been amplified by the global recession, which has left it one of the few growing sources of demand for goods and capital.