(Yicai) Nov. 26 -- Shares in DBG Technology surged as much as 14.5 percent today after the Chinese electronic manufacturing services provider said it intends to buy All Circuits, a loss-making French automotive electronics manufacturer that has been put up for sale by Chinese transportation equipment maker Aerospace Hi-Tech Holding Group.

DBG Tech’s share price [SHE:300735] was trading up 7.6 percent at CNY36.04 (USD5) as of 1.15 p.m. today. Earlier in the day it hit CNY38.35.

DGB Tech will pay cash for 100 percent of the All Circuits' assets that are currently listed for sale on the Beijing Equity Exchange, which include some overseas factories, the Huizhou-based firm said yesterday.

The acquisition will form synergies with DGB Tech’s main businesses, enrich the company’s technology and product portfolio in the vehicle electronics field, broaden sales channels and expand its global footprint, it said.

DBG Tech will raise up to CNY1.03 billion (USD142 million) through a private placement of new shares to specific investors to fund the purchase, it said. Of this, CNY733 million will be used to acquire All Circuits and the remainder will be used to supplement the firm's working capital.

Although DGB Tech earns most of its income from consumer electronics, since the company became a supplier to French car parts maker Valeo in 2021, its revenue from vehicle electronics has been growing. Last year, 13 percent of revenue was generated from this business, according to its latest annual report.

All Circuits, which mainly makes electronic control modules for cars, had assets of CNY2.3 billion (USD323 million) and liabilities of CNY1.7 billion (USD238.8 million) as of June 30, Aerospace Hi-Tech said. In the first half it racked up losses of CNY18.8 million (USD2.6 million) and generated revenue of CNY1.6 billion (USD229 million).

In January 2016, Aerospace Hi-Tech paid CNY1.7 billion to buy the two parent companies of All Circuits. At the time, the Meung-Sur-Loire-based firm ran two factories in France and one in Tunisia and counted automobile manufacturers such as BMW, Audi and Volkswagen, as well as parts suppliers including Bosch, Continental and Valeo, among its clients.

The acquisition was to expand Aerospace Hi-Tech’s overseas footprint and improve its technology and production capacity in automotive electronics, the Beijing-based firm said at the time. In 2017, Aerospace Hi-Tech invested in the construction of a fourth All Circuits factory in Mexico.

Editor: Kim Taylor