BEIJING, August 11 -- A fund led by Wall Street giant Goldman Sachs has hit regulatory hurdles in its deal to acquire China's largest meat company as the government plans new rules on foreign takeovers, people familiar with the situation said Thursday.

    A consortium led by Goldman Sachs, called Rotary Vortex, has been waiting for the green light from Chinese regulators after winning the bidding for China's biggest meat-processing firm Shuanghui, also known as Shineway Group, for approximately 2 billion yuan (US$251 million) in May.

    Yet, as the Ministry of Commerce is poised to launch new rules on foreign acquisitions next month, the Goldman-led fund could suffer a similar fate as U.S. buyout firm Carlyle.

    Carlyle has been waiting since October for regulators to approve its US$375 million bid for 85 percent of China's leading heavy machinery maker, Xugong Construction Machinery.

    According to domestic media, a foreign investment that alters the control of a prominent Chinese brand or a firm with more than 2,000 staff would need government approval under the new rules.

    China is also considering forming a committee similar to that of the Committee on Foreign Investments in the United States to act as a gatekeeper for foreign takeovers.

    Debate in China about selling strategic stakes in key industries to foreigners began to gain traction after CNOOC Ltd., China's third-ranked oil firm, withdrew a US$18.5 billion bid for American oil producer Unocal last year amid protests in the U.S. Congress.

    Lawyers and bankers said the government's blueprint for foreign investment should not be seen as an end to foreign merger and acquisition activities.

    "These are ongoing developments," said a Beijing-based merger and acquisition lawyer. "In the past, most foreign investments were greenfield investments. As more foreign money is buying established business, it's natural for Chinese regulators to spell out the legal framework."

    Headquartered in the central city of Luohe, Henan Province, Shuanghui is a leading player in the meat processing industry in China, with more than 20 billion yuan in sales and about 30,000 staff. It controls 35.7 percent of Henan Shuanghui Investment & Development Co.

    Goldman also holds a 6 percent stake in China Yurun Food Group Ltd., the country's second-largest meat processor, and a further 4 percent on behalf of clients. The investment bank helped Yurun to float on the Hong Kong stock exchange last October. A Goldman spokesman in Hong Kong declined to comment.

    Another deal that has met objections is a 1.1 billion yuan bid by Germany's Schaeffler Group to buy Luoyang Bearing Group, one of China's three largest bearing producers.

    Industry officials said in July a government-backed agency was trying to block the bid on economic security grounds.

    The Financial Times reported Thursday that the State Council, or Cabinet, had ordered five ministries to examine the issue.

(Source: Shenzhen Daily/Agencies)