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After the new foreign acquisition regulations came into effect on September 8, Zhejiang Tianma Bearing Co., Ltd. began to gain a stronger position in its bid to acquire Luoyang Bearing Group, China's largest bearing manufacturer. Recently, the Hangzhou-based private company received a letter from the local government confirming that the "Luoyang Bearing Group" is temporarily off-limits to foreign capital.
Under the Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, any merger or acquisition involving an enterprise with annual turnover exceeding 1.5 billion yuan or a market share of 20% must be reported to the Ministry of Commerce and the State Administration for Industry and Commerce. Additionally, if an acquisition leads to a 25% market share or involves a continuous merger within a year, it also requires regulatory approval.
Furthermore, any foreign investment that results in control over domestic enterprises, especially those operating in key industries or possessing well-known trademarks or traditional Chinese names, must also be reported. These rules have significantly expanded the restricted areas for foreign acquisitions, creating more opportunities for domestic firms.
In early July, Zhejiang Tianma officially informed Luoyang City SASAC of its plan to acquire Luoyang Bearing Group for 1 billion yuan. Meanwhile, Wanxiang Group was also preparing for its own entry into the bidding process.
Besides the Hangzhou-based private company, several foreign players were also involved in the competition, including Timken, the U.S.'s largest bearing manufacturer, and Schaeffler from Germany. Timken’s offer ranged between 400 million and 500 million yuan, while Schaeffler proposed as high as 1.1 billion yuan.
"The letter clarified the situation. Schaeffler is our biggest competitor," said Ma Jinfa, deputy general manager of Zhejiang Tianma. "We’ve already raised our offer to 1.2 billion yuan. We promised better job security and higher sales performance than Schaeffler. The final decision on the acquisition of Luoyang Bearing Group is expected soon."