Harbin Electric Inc said it agreed to buy Chinese industrial rotary motors maker Xi'an Simo Motor Inc to increase its customer base.
Shares of Harbin, which makes electric motors, rose as much as 15 percent to $19.01, before paring some gains to trade up $2.16 at $18.68 Tuesday morning on Nasdaq.
The deal values Simo Motor at no less than six times and no more than eight times its 2008 audited net profits, said Harbin.
For the fiscal year ended Dec. 31, 2008, Simo Motor's total unaudited revenues were about $160.9 million and its unaudited net profits were about $14.4 million, Harbin said.
It expects the deal to add to earnings immediately.
Harbin intends to use a portion of the proceeds from the public offering it completed in August to finance the payment of the purchase price, it said.
