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Guests are seen during the Magna International annual general meeting in Toronto on Thursday, May 10, 2012.Aaron Vincent Elkaim/The Canadian Press

Magna International Inc. is dipping into its $1.4-billion (U.S.) cash hoard to expand its engine and transmissions-pump business in a market the auto parts giant expects will grow substantially during the next five years.

The $6-billion market for pumps will grow based on advances in technology, Magna's chief financial officer Vince Galifi said Monday, which means the purchase of Ixetic Verwaltungs GmbH fits the company's strategy of investing in companies with advanced technology.

"Ixetic is an innovation and technology leader in fuel-efficient pumps, with a strong engineering base," Mr. Galifi said. "Further investing in pumps in order to expand on Magna's position in this area is a priority for us."

The acquisition of Ixetic for €308-million ($396-million) will boost Magna's engine-parts business in Germany, where Ixetic has two manufacturing plants.

The pump maker also one plant in each of Bulgaria and China, which will increase Magna's manufacturing footprint in the growing automotive production centres of eastern Europe and China.

Ixetic generated revenue of about €300-million in 2011 and was sold to Magna by Motion Equity Partners, a Europe-based hedge fund.

The key customers for Ixetic's pumps are Bayerische Motoren Werke AG (BMW), Daimler AG, Volkswagen AG, Toyota Motor Corp. and Land Rover, Mr. Galifi said, all of which are pushing hard to improve fuel efficiency.

Magna also said Monday it is buying out its joint venture partner in STT Technologies Inc. The purchase price for that acquisition was not disclosed.

"We consider the acquisitions to be a good strategic fit for Magna, as there is substantial growth in the area of engine and transmission (and in particular for 'on demand pumps') as a result of the technological changes that are required to meet the more stringent fuel economy standards," analyst Peter Sklar, who follows Magna for BMO Nesbitt Burns Inc. said in a note to clients Monday.

Magna chief executive officer Don Walker said during the company's second-quarter financial results conference call in August that there may be more acquisition opportunities in Europe if the downturn in vehicle sales continues.