China tries to block takeover of Lucite

Chinese competition authorities are holding up the acquisition of Lucite, a UK acrylics maker, by a Japanese materials group in the latest example of Beijing's flexing its muscles over international deals.

Mitsubishi Rayon had agreed to the $1.6bn (£1.09bn) takeover in November and said it expected to complete the deal by January.

Several people involved told the Financial Times that China's ministry of commerce (Mofcom) had withheld its approval – the sole antitrust regulator worldwide to do so.

China drew criticism last month by rejecting a $2.4bn takeover by Coca-Cola of Huiyuan, the largest Chinese juice producer. Last year it extracted concessions from InBev, the Belgian brewer, in return for approving its acquisition of Anheuser-Busch of the US.

Neither party in the Mitsubishi Rayon-Lucite deal is based in China but both have sales and manufacturing operations there and require Mofcom's approval to combine them.

Foreign observers said a move by the Chinese government to block or impose conditions on the Mitsubishi deal would create new concerns over protectionism.

“Following the InBev/Anheuser-Busch and Coke/Huiyuan cases, we have come to assume that the government will watch out for perceived threats to Chinese brands,” said an adviser to a foreign industrial group in China. “But if we are now talking about rayon producers, we get into the much broader field of protecting domestic enterprises against foreign competition no matter what.”

Mofcom was not available for comment.

If the takeover were completed, Mitsubishi Rayon would control about 40 per cent of the global production capacity an acrylic used to make resins and plastics.