Aug 3 (Reuters) - U.S. retailer Party City Holdco Inc rejected an acquisition proposal earlier this year from Meisheng Cultural & Creative Corp, a Chinese manufacturer of toys and apparel, people familiar with the matter said on Friday.
Meisheng Cultural's unsuccessful acquisition attempt illustrates how some Chinese companies see opportunities in marrying their low-cost manufacturing base with U.S. retailers looking for an edge in their fierce competition over prices with e-commerce sites such as Amazon.com Inc.
Chinese companies are exploring U.S. acquisitions despite trade tensions between the two countries. On Friday, China unveiled plans for tariffs on $60 billion worth of U.S. goods in response to the United States proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.
Party City is not exploring a sale and is no longer in talks with Meisheng Cultural after deeming its unsolicited proposal to be inadequate, the sources said, requesting anonymity to discuss the confidential matter.
"Per company policy, Party City does not comment on rumors or speculation," a spokesperson for the company said by email. "However, we want to make it clear that there are no active discussions in regard to an acquisition or transaction of any kind. We are focused on creating value for our shareholders and the best experience for our customers ahead of the Halloween season."
Meisheng Cultural did not respond to a request for comment.
Party City, with a market capitalization of roughly $1.5 billion, has 950 locations selling decorated party goods such as balloons and costumes in the United States and Canada, including franchised stores. Private equity firm Thomas H. Lee Partners owns about 47 percent of the company's shares.
The Elmsford, New York-based retailer, founded in 1986, mainly sources its supplies from a small handful of Asian vendors, which it has worked with for decades because of volume discounts.
Meisheng Cultural, based in Hangzhou in southern China, was established in 2002 and designs and develops animation, games and movies, and has more than 3,000 employees, according to its website.
Acquisitions of U.S. companies by Chinese acquirers have dropped dramatically in the last 12 months, as the Committee on Foreign Investment in the United States (CFIUS), a government panel that reviews deals for potential national security risks, has subjected transactions to more scrutiny. Deals in the retail sector, however, have not been heavily scrutinized by CFIUS.
U.S. gadget and gift chain Brookstone, which was picked from bankruptcy from a consortium of Chinese investors in 2014, filed again for bankruptcy protection for a second time earlier this week.
Meisheng Cultural, led by its Chairman Zhao Xiaoqiang, has shown interest in U.S. companies in the past. One of its subsidiaries is a shareholder in toy designer JAKKS Pacific Inc , and has made and distributed JAKKS products in China for several years.
Another subsidiary of Meisheng Cultural made a non-binding proposal to acquire shares of JAKKS earlier this year that would give it ownership of 51 percent of the company. A committee of JAKKS's independent board directors is evaluating that proposal. (Reporting by Liana B. Baker and Greg Roumeliotis in New York Additional reporting by Harry Brumpton and Koh Gui Qing in New York and Meg Shen in Hong Kong; Editing by Richard Chang)