(Yicai) Nov. 19 -- Shares of Shengbang Seals rose after the Chinese producer of automotive, electrical, and aerospace sealing insulation said it plans to buy a controlling stake in the local subsidiary of Woco Franz Josef Wolf Holding, a German manufacturer of high-quality parts for the auto and industrial sectors, to boost its sustainable profitability.

Shengbang [SHE: 301233] closed up 3.7 percent at CNY55.57 (USD7.82) a share in Shenzhen today, after earlier surging by as much as 12 percent.

Shengbang will buy a 60 percent stake in Wuxi Woco Motor Acoustic System for cash, turning the target company into a joint venture with Woco Franz Josef, the Chengdu-based firm announced late yesterday. The parties have a tentative agreement that, subject to certain necessary preconditions being met, the asset valuation of the unit would be CNY430 million (USD60.5 million), it added.

Wuxi Woco focuses on producing rubber and plastic auto interior and exterior products, engine assembly, and integrated E-Drive assembly, Shengbang noted. It reported a net profit of CNY38 million (USD5.3 million) last year on operating revenue of CNY533 million, with its clients mainly including European and US carmakers and their Chinese JVs, it added.

Shengbang's products are mainly used by Chinese automakers in fuel vehicle engines, gearboxes, axles, as well as battery packs, motors, and electronic control systems of new energy vehicles, complementing those of Wuxi Woco, it pointed out.

In addition, Wuxi Woco's mature overseas sales channels can help Shengbang expand its overseas market after the deal is completed, the buyer said.

Woco Franz Josef is a global family business based in Bad Soden-Salmünster, with multiple plants, production facilities, and partners in Europe, the North American Free Trade Agreement states, and Asia, according to its website. Its sales topped EUR590 million (USD683.6 million) last year.

Editor: Martin Kadiev