The booth of Shanghai Electric Group at a wind power exhibition in Shanghai, April 25, 2008. [PHOTO PROVIDED TO CHINA DAILY]

Automated aviation equipment manufacturer's clients include industry giants Airbus, Boeing

Shanghai Electric Group announced it is buying German aviation equipment manufacturer Broetje-Automation GmbH for 170 million euros ($190 million), a move the company said would help it tap into the aviation equipment automation and manufacturing sector's technologies.

Shanghai Electric said on Sunday it will also assume 12 million euros of unpaid BAW debt under the terms of the acquisition.

The deal is subject to approval of overseas and Chinese authorities, the statement said.

The company's Shanghai-listed shares rose 1.85 percent to 8.26 yuan ($1.24) on Monday, while the share price of the company's Hong Kong-listed subsidiary surged 7.03 percent to HK$3.5 (45 cents) per share.

BAW is a supplier to aircraft makers and its products and services portfolio include components, assembling and systematic solutions. Its top clients include Airbus SAS and Boeing Co.

The company reported sales revenue of 143.6 million euros for the last financial year to end of September, the announcement added.

Shanghai Electric said the deal would help it acquire knowledge, expertise, staff and international distribution channels in the field of aviation automation.

The announcement also said there were risks to the acquisition, including that the deal would not be approved by authorities.

Analysts said that in the long run, the aviation industry in China would retain a great potential to expand and sectors involved in the entire aviation supply chain would benefit.

Pan Yili, an analyst at Sinolink Securities Co, said it was estimated that the market size of the aviation sector－including manufacturing, solution providing and services－could exceed 1 trillion yuan in the coming decade, giving players in the sector great opportunities to grow.

Shanghai Electric President Huang Dinan said in a question and answer session with investors in early July that his group would include automation as one of its core areas for future development.

He said the proposed development of its automation side was in alignment with the Made in China 2025 initiative, which was unveiled by the State Council last year in a bid to transform China from a manufacturing giant into a world manufacturing power.

Huang said that the company would accelerate the pace of its mergers and acquisitions in order to sharpen the company's competitive edge in automation and smart manufacturing.

Earlier this year, Shanghai Electric also bought a major stake of German machine builder Manz AG, a high-tech equipment manufacturer and a leader in automated manufacturing.