Xugong Construction Machinery, the takeover target of United States buyout firm Carlyle Group, may sue rival Sany Corp for disrupting the deal, market sources said.
The problem arose last month when Sany's chief executive Xiang Wenbo said on his personal blog that the company would make an unsolicited bid for Xugong that valued the company at 30 per cent more than Carlyle's US$375 million.
While Sany initially distanced itself from the Mr Xiang's remarks which were laced with anti-foreign sentiment, the Shanghai Security News reported on Tuesday that the company hired Guosen Securities as an adviser to bid for Xugong.
'Xugong will reserve the right to legal action - you've got two listed companies involved and there are corporate governance issues raised [by the way the chief executive of rival Sany Corp and the company itself have acted],' a person familiar with Xugong said.
Mainland lawyers said any such move by Xugong was unlikely to find solid legal footing and was more likely a ploy to fend off Sany.
'It is very unusual [for Sany] to be making public claims and announcements rather than going through formal procedures but it is very doubtful you can sue them for this from the legal perspective,' said one lawyer based in Shanghai.