(Yicai) May 22 -- Shares in Shang Gong Group soared by the exchange-imposed limit today after the Chinese sewing machine maker and logistics service provider said that it will invest USD13.5 million to buy insolvent US light airplane maker ICON Aircraft and take on its debt.

Shang Gong’s share price [SHA:600843] surged 10 percent to reach CNY8.99 (USD1.24). The stock is now trading at the highest level since March 2020 and its value has increased by more than two-and-a-half fold since the stock markets began to rebound in early February.

Shang Gong has set up a subsidiary in the US as a stalking horse bidder to negotiate an asset purchase agreement with ICON Aircraft to acquire selected assets from the Vacaville, California-based company and its three affiliated firms, the Shanghai-based company said yesterday. 

As the assets will be sold by auction, Shang Gong will bid against any other competitors and the actual transaction cost may be higher than the current offer price, 

ICON Aircraft, whose main production base is in Mexico and which employs 313 people, is owned by a shareholder of Shang Gong, Shanghai Puke Feiren.

The takeover will help Shang Gong branch into the manufacturing of carbon fiber products from the supply of equipment that produces carbon fiber composite structural parts.

ICON Aircraft, established in 2006, uses cutting-edge carbon fiber processing technology to design and produce carbon-fiber light-weight two-seater sports aircraft. When combined with Shang Gong’s world-class technology in the stitching and cutting of carbon fiber composite materials, the Chinese firm will be able to provide a one-stop solution integrating design, development and production.

Although the investment will have a short-term negative impact on the company's performance, in the medium and long-term, it will expand Shang Gong’s product portfolio and cultivate new growth points, the firm said.

Editor: Kim Taylor