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Blackstone in talks to buy plastics firm

By George Chen and Alison Tudor (Reuters)
Updated: 2007-04-05 11:03

U.S.private equityfirm Blackstone Group is in talks to buy into China's Guofeng Group, the country's biggest plastics products manufacturer, two sources familiar with the situation said on Wednesday.

New York-based Blackstone has been in talks with Guofeng Group, based in the eastern Chinese province ofAnhuifor several months, though no deal has been signed yet, the sources said.

If successful, the deal would be Blackstone's first major investment in the world's fourth largest economy, where rivals such as Carlyle Group and Bear Stearns Cos, have collectedly invested billions of dollars.

Guofeng Plastic, the flagship domestically listed arm of Guofeng Group, confirmed a Reuters report in a filing with theShenzhen Stock Exchangethat its parent company Guofeng Group was in talks with Blackstone about a potential cooperation.

"In order to make the company stronger and bigger, Guofeng Group has the intention to gain suitable strategic investors," Guofeng Plastic said in the statement.

Blackstone's Antony Leung was recently invited by the Hefei city government in Anhui to visit Guofeng Group, it said.

"So far, Guofeng Group hasn't talked to any other institutions and it is not sure whether Blackstone and Guofeng will move on to further discussion and cooperation," it added.

Blackstone became active in China after it opened itsHong Kongoffice in January and hired Leung, who was financial secretary of Hong Kong from 2001 to 2003, as a senior managing director and chairman of Blackstone Greater China.

One source said Leung was the chief negotiator on behalf of Blackstone in the potential deal, which could be finalized soon.

"Blackstone may be little-known to Chinese but officials in the provincial government of Anhui know Antony Leung very well," said a Chinese fund source with knowledge of the talks.

"Private equity deals depend on relationships" in China, said the source, adding that the Anhui government has a positive view on the potential investment from Blackstone.