Aug. 30 (Bloomberg) -- Goldman Sachs Group Inc.'s plan to buy 10.7 percent of China's Guangdong Midea Electric Appliances Co., after awaiting regulatory approval for nine months, was blocked following a surge in Midea's stock since it was announced.

The China Securities Regulatory Commission rejected Goldman's proposed purchase, Midea, China's largest appliance maker by market value, said in a statement today. The proposed deal, announced Nov. 25, had been approved by the Commerce Ministry. Midea's shares fell 3.6 percent today.

Private-equity purchases in China have slowed after the government imposed regulatory hurdles a year ago, and as gains in the nation's stock markets and a lengthy approvals process make transactions more difficult. Before today, Midea's shares had rallied almost sixfold since the deal was made public, and the stock was trading at almost four times Goldman's offer price.

``The price was too low, that's why the deal didn't pass,'' said Fu Juan, an analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai.

New York-based Goldman agreed to pay 716.6 million yuan ($95 million) for 75.6 million new shares at 9.48 yuan each, Midea said in November. In June, China's Commerce Ministry approved the transaction.

Midea's shares fell to 34.50 yuan at the 3 p.m. close in Shenzhen after earlier plunging by the 10 percent daily limit.

Deals in Limbo

Edward Naylor, a Hong Kong-based spokesman at Goldman, declined to comment. Midea spokesman Xiang Chunjiang was unavailable for comment.

Liu Fuhua, a Beijing-based spokesman at CSRC, declined to comment on the Goldman transaction. He said that based on private share-placement rules in China, companies can revise the terms of the agreement and then resubmit for approval.

Completed private-equity buyouts in China totaled $480 million this year, down from $834 million in 2005, according to data compiled by Bloomberg.

Other private equity investors are also hitting obstacles in China. Carlyle Group's proposed purchase of Xugong Group Construction Machinery Co. is stuck in regulatory limbo, and the Washington-based buyout company's plan to acquire Chongqing City Commercial Bank was rejected in April.

Windfall Prices

MS Asia Investment Ltd., a private equity unit of Morgan Stanley, and International Finance Corp. agreed in April 2006 to pay 1.27 billion yuan for 14.3 percent of Anhui Conch Cement Co., China's biggest cement maker. The deal is still pending approval from the government, Anhui Conch said this month.

Goldman got approval from China's Commerce Ministry to buy 10 percent of Fuyao Group Glass Industries Co., the Chinese maker of automobile glass said this month. The purchase is awaiting approval from the CSRC.

Delegates to the National People's Congress last year called for stricter controls on the sale of assets to overseas investors after allegations that international banks were buying the nation's lenders at windfall prices.

Goldman in 2006 paid $2.6 billion for 4.9 percent of Industrial & Commercial Bank of China Ltd., the nation's biggest bank and the world's largest by market value. The value of the stake has since quadrupled.

Midea also today forecast profit may more than double in the nine months through September from a year earlier, citing higher sales and margins. The company had net income of 407 million yuan in the first nine months of 2006.

To contact the reporter on this story: Jiang Jianguo in Shanghai at jjiang@bloomberg.net; Cathy Chan in Hong Kong at kchan14@bloomberg.net

Last Updated: August 30, 2007 03:54 EDT