Mainland electronics retail giant Gome's proposed acquisition of China Paradise faced a major hurdle Wednesday, as press reports suggested the overture had been reected by the management of the smaller rivel, The Standard reported. Sources said Gome Electrical Appliances, controlled by magnate Wong Kwong-yu, is considering increasing its offer, perhaps a combination of cash and shares. The management of both companies could not be reached for comment Wednesday.   Morgan Stanley is also second largest shareholder of China Paradise, holding a 15.1 percent interest in the retailer through a private equity unit. The US investment bank has a 7.4 percent interest in Gome as well, putting it in a position to become a prime shareholder in the combined company if the deal goes ahead, said the paper.   The acquisition "would be a positive move for Gome and strengthen Gome's No.1 position in the industry by a wide margin. Combined, Gome and China Paradise would be twice the size of No2 Suning, based on 2005 sales," wrote The Standard, citing a Citigroup report.