Shanghai Electric Group is to buy German aviation equipment manufacturer Broetje-Automation GmbH for 170 million euros ($190 million), a move the company says will help it to tap into the aviation equipment automation and manufacturing sector's technologies.

On Aug 14, Shanghai Electric said it will also assume 12 million euros of unpaid BAW debt under the terms of the acquisition.

The deal is subject to approval from overseas and Chinese authorities, the company said in a statement.

The company's shares listed in Shanghai rose 1.85 percent to 8.26 yuan ($1.24; 1.11 euros) on Aug 15, while the share price of the company's Hong Kong-listed subsidiary surged 7.03 percent to HK$3.50 (45 US cents; 40 euro cents).

BAW is a supplier to aircraft makers, and its products and services portfolio include components, assembling and systematic solutions. Its top clients include Airbus SAS and Boeing Co.

The company reported sales revenue of 143.6 million euros for the past financial year to the end of September, the announcement adds.

Shanghai Electric says the deal will help it acquire knowledge, expertise, talent and international distribution channels in the field of aviation automation.

The announcement also says there were risks to the acquisition, including that the authorities may not approve the deal.

Analysts say that in the long run, the aviation industry in China will retain great potential to expand, and sectors involved in the entire aviation supply chain will benefit.

Pan Yili, an analyst at Sinolink Securities Co, says it was estimated the market size of the aviation sector - including manufacturing and services - could exceed 1 trillion yuan in the coming decade, giving players in the sector great opportunities to grow.

Huang Dinan, the president of Shanghai Electric, said in a question and answer session with investors in early July that his group will include automation as one of its core areas for future development.

He says the proposed development of its automation side was in alignment with the Made in China 2025 initiative, which was unveiled by the State Council last year in a bid to transform China from a manufacturing giant into a world manufacturing power.

Huang says the company will accelerate the pace of its mergers and acquisitions in order to sharpen the company's competitive edge in automation and smart manufacturing.

This year, Shanghai Electric also bought a major stake in Manz AG, a German high-tech equipment manufacturer and a leader in automated manufacturing.

wuyiyao@chinadaily.com.cn