Toyoda Machine Works said on Monday it will pay around 11.25 billion yen for the differential gear operations of Bosch Automotive Systems Corp. that it has agreed to buy, Dow Jones reported.

The final purchase price will be set on August 31, when the operation will be transferred to Toyoda Machine, it reportedly said. Toyoda and Bosch Automotive agreed on the business transfer in late July, the news agency noted.

According to Dow Jones, Bosch Automotive currently generates 7.17 billion yen in annual sales from the production of automotive torque-sensing differential gears – annual sales of the product account for about 2% of Bosch Automotive’s overall sales.

Bosch Automotive is a unit of the German engineering giant Robert Bosch GmbH, the report added.

Toyoda Machine, a machine tool and automotive parts maker affiliated with Toyota Motor Corp., aims to expand the differential gear business it will acquire, targeting annual sales of 11 billion yen in the fiscal year to March 2006, and hopes to further raise that to 20 billion yen in the near future, Dow Jones said.

By purchasing Bosch Automotive’s operation, Toyoda Machine will be able to supply differential gears for a wider range of vehicles – users of the firm’s differential gears include Toyota and Volkswagen, the report said.

According to Dow Jones, Toyoda Machine also said on Monday it will offer 6.14 million of its outstanding shares currently privately held by three banks to the public in September to help increase the shares’ liquidity in the stock market and encourage a wider range of investors to hold its shares – the company has about 130 million shares outstanding.

The offering price will be set by Aug. 29, Dow Jones said.