An Understanding of the offer, Pre-AcquisitionAn Understanding of the offer, Pre-Acquisition

An Understanding of the offer, Pre-Acquisition

I.Brief information of the dealPre-acquisition: Xugong's parent, Xuzhou Structure Machinery Group, owned 51% of the company.Post-acquisition: By having loans from foreign banking institutions and reselling shares of Xugong to additional investors, Carlyle will finance $375mil and obtain 85% of the business. Xuzhou Construction Machinery Group could easily get loans from Citi to get stakes from other state-owned entities and resell the stakes to Carlye, and Xuzhou Construction Machinery Group will own personal 15% of the business after the acquisition.II.What hazards we’ll face from causeing this to be expenditure, and what signposts, shaping, and hedging factors we should considera.Risk 1: The authorities’s disagreement on the price and shareholding framework of the offer •Assumption: the central federal government will approve the offer in due course. (load-bearing and vulnerable assumption)•Signposts: significant delay in approval procedure, debates in the united states on the validity of the buy-out (may be the deal an inexpensive selling of state-owned resources? Will that harm the economy reliability of China?)•Shaping elements: lobbying Chinese government officials you should, e.g. requesting US government officials to greatly help lobbying; maintaining good marriage and understanding with the provider’s parent company, who likewise solicit support from the federal government.•Hedging factors: reevaluating the offer and making necessary, sensible compromise on the acquisition value and post-acquisition shareholding structure b.Risk 2: Rivals (such as for example caterpillar and JP Morgan) win the deal•Assumption: Carlyle may be the applicant most well-liked by Xugong and will probably earn the acquisition (load-bearing and vulnerable assumption)•Signposts: any progress in other competition’ negotiation with Xugong, indicators to reflect the progress include disclosed information, memos and possibly rumors•Shaping factors: carefully monitoring the negotiation between Carlyle and Xugong; assist Carlyle to keep an excellent relationship with Xugong•Hedging elements: switching to other cash/ competitors if they come out to

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