(Yicai Global) Aug. 2 -- Shuanghuan Driveline, a leading Chinese auto-parts producer, will pay cash for 81 percent of German metallic molds maker Schmiedetechnik Plettenberg to help cut manufacturing costs and expand its sales channels in Europe.

The purchase will allow Shuanghuan to trim the cost of making mechanical transmission gears, one of its main products, the Hangzhou-based company said in a statement today. Schmiedetechnick's technologies will also allow it to expand production lines, improve its automated manufacturing and grow its retail network to high-end European clients.

The transaction price has not yet been determined, the statement added. The letter of intent was signed with Schmiedetechnick's sole shareholder Vermögensverwaltung Plettenberg on July 31.

Plettenberg-based Schmiedetechnik makes precision molded parts and counts Volkswagen Daimler, Audi, BMW, ZF Friedrichshafen and Schaeffler Technologies among its customers. Founded in 1840, it specializes in the research and development, design and manufacturing of metallic molds for cars and construction machinery.

Shuanghuan's share price [SHE:002472] closed 1 percent higher at CNY5.43 (USD0.78), giving it a market capitalization of CNY3.7 billion (USD536.3 million). The benchmark Shanghai Composite Index lost 1.4 percent.