(Yicai) Dec. 27 -- Shares of Shareate Tools fell after the Chinese manufacturer of precision rock drilling tools and cemented carbide products said it plans to invest USD42 million to acquire Chilean peer Drillco Cutting Tools.

Shares of Shareate [SHA: 688257] fell 2.9 percent to CNY17.97 (USD2.46) apiece as of 2.05 p.m. in Shanghai today.

Shareate will buy Drillco via a unit to enhance its global business and boost its products' competitiveness in South America, the Suzhou-based parent company announced late yesterday. The all-cash deal is still subject to approval by regulators in China and Chile, it added.

Drillco makes, researches, develops, and sells rock drilling tools mainly to miners and exploiters, with stronger brand influence in South America, Shareate noted, adding that its two biggest clients are Sociedad Minera Cerro Verde and National Copper Corporation of Chile.

Drillco's net profit reached USD2.5 million last year on revenue of USD41 million, according to Shareate. The profit was USD400,000 in the eight months ended Aug. 31, while revenue topped USD25.4 million, with the target firm pledging that its audited net assets will be at least USD15 million by the end of this year, or it will make up the difference.

The acquisition will help Shareate form a complete product and brand blend for sintered carbide rock drilling tools, creating synergy between products, brands, and markets while lowering production and sales costs and optimizing its overall business capability, the firm said.

Shareate saw its overseas revenue reach CNY737 million (USD101 million) in the first half of this year, accounting for about 48 percent of its total. It counts BHP Group, Rio Tinto Group, Fortescue, and other iron ore giants among its direct clients, while its products have also entered the supply chains of mining giants, including Vale and National Copper Corporation of Chile, via dealers, according to its 2023 annual earnings report.

Editor: Martin Kadiev