Carlyle Group could reduce the size of its proposed stake in Chinese construction equipment maker Xugong in order to secure government approval for the deal, the Financial Times reported. Sources told the newspaper that the company and the Chinese authorities were "discussing a range of options about how best to break the impasse". Should Carlyle agree to drop its stake to below 50%, thereby enabling state-controlled investors to retain overall control, its possible that the company's year-long wait – which began with an agreement to pay US$375 million for 85% of Xugong – may finally come to an end. The delay in granting approval has been put down to pressure from conservative hardliners to stop foreign investors taking possession of key state assets. Meanwhile, a unit of Swedish carmaker Volvo announced that it had agreed to buy a 70% stake in Shandong-based Lingong Construction Machinery. Volvo's move for Lingong, which operates in a similar field to Xugong, is awaiting regulatory approval.
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