Eaton Corp, a US-based diversified industrial manufacturer, said yesterday it plans to pay up to US$63.6 million to acquire a Chinese electrical company to speed up its expansion in the nation's electrical equipment market.

The US-based company has offered HK$1.49 (19 US cents) per share for Senyuan International Holdings Ltd, a Hong Kong-listed electrical equipment maker.

Eaton also agreed to increase the price to HK$1.62 (21 US cents) per share if it receives approval for 90 per cent or more of Senyuan's outstanding shares.

The higher offer will put Senyuan at a price of US$63.6 million, representing a premium of 20 per cent over the average closing price of its last 30 trading days.

The offer is also 37.3 per cent higher than the Senyuan share issue price of HK$1.18 (15 US cents).

Senyuan International suspended trading in its shares from Monday, pending an announcement in relation to a voluntary conditional cash offer.

Eaton said it had received irrevocable commitments to accept the offer from holders of 75 per cent of the outstanding Senyuan shares.

The offer will be made through financial adviser DBS Asia Capital Ltd.

"The acquisition of Senyuan will strengthen our medium-voltage electrical business by providing us with local channel access to the fast-growing China market and to an important manufacturing base for medium-voltage electrical products," said Randy Carson, senior vice-president of Eaton Corp. 

Senyuan, located in East China's Jiangsu Province, makes vacuum circuit breakers and other electrical switchgear components. It had 374 million yuan (US$47 million) in sales in 2005.

Senyuan is ranked as the third-largest domestic low-voltage equipment maker in the sector in 2005 in terms of total output, the company said on its website.

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