(Yicai) July 23 -- Chinese engine components maker Tianrun Industrial Technology plans to expand its capabilities into lightweight aluminum products by acquiring Altechno Auto Parts, a Korean-owned car parts maker in Shandong province, for CNY135 million (USD18.8 million).

Tianrun has signed an agreement with a domestic affiliate of South Korea’s Altechno Metal along with Altechno Auto Parts's other shareholders, the Weihai-based buyer said yesterday. The deal is expected to be completed by 2027.

Altechno specializes in high-pressure aluminum castings for engine and transmission housings used in passenger cars. The acquisition will enable Tianrun, whose current offerings mainly include cast iron and forged steel parts, to diversify into lighter components.

Altechno has struggled financially in recent years due to reduced demand from its major South Korean clients in the Chinese market. It posted a net loss of CNY4 million (USD550,000) on revenue of CNY100 million (USD14 million) in the first quarter, with negative operating cash flow, while its accounts receivable had risen to CNY265 million by quarter-end.

Tianrun’s shares [SHE: 002283] closed 0.5 percent lower at CNY6.37 (USD0.90) each in Shenzhen today, after rising by as much as 3.8 percent intraday.

Editor: Emmi Laine