Scott is buying into Teknatool International Ltd's Qingdao-based subsidiary and manufacturing company, Qingdao Teknatool Machinery Manufacturing Co Ltd, which specialises in lathe technology and energy-efficient motor manufacturing, for $975,000.
After the announcement late yesterday afternoon, Scott shares were unchanged at $1.40.
This is Scott's fourth recent "bolt-on" acquisition of niche market companies, outside its mainstay work manufacturing assembly lines in Christchurch and its meat industry robotics developments, based in Dunedin.
Managing director Chris Hopkins said the Qingdao-based and registered company would complement Scott's Qingdao office and be assisted by staff from its Shanghai office, which was set up about six years ago.
"We see the potential for plenty of customer growth in China, but aren't able to satisfy that demand," Mr Hopkins said.
The small energy-efficient motors, with low rpm but high torque, have applications in lathes and are being developed for combine harvesters. Most sales are to the United States and Europe.
Mr Hopkins said there may be uses for the motors in Scott's other divisions, in new "local projects" yet to be unveiled, and may possibly have applications in its superconductor division.
"This acquisition will let us expand our [Chinese] base, but with benefits for the whole company," he said yesterday.
The $9.5 million being sought was to pay off about $8 million in debt arising from the acquisition of New Zealand-based mining sector supplier Rocklabs, superconductor company HTS-110 Ltd and Malcolm Smith Reference Materials.
Aside from the rights issue, Scott has access to $24 million from a mixture of bank facilities, which it said earlier in the week it could draw on for any acquisition.
• The subsidiary company being bought into, Teknatool Machinery Manufacturing, was established in 2006 and has won two New Zealand China Trade Association awards. It was named Supreme Winner in the Cathay Pacific trade awards in 2009 and Best Investor in China this year.
