(Yicai Global) Dec. 22 -- Shares of Dajiaweikang Pharmaceutical Industry rose after the Chinese distributer of drugs, biological products, and medical devices unveiled a plan to acquire a majority stake in a proprietary maker of traditional Chinese medicines.

Dajiaweikang Pharma [SHE: 301126] closed up 2 percent at CNY15.99 (USD2.29) a share today, having surged by as much as 7.1 percent in the early afternoon.

The Changsha-based company announced at noon today that it will spend CNY341 million (USD48.9 million) buying about 85.7 percent of Tianjicaotang Pharmaceutical from that company’s chairman and general manager. Weng Xiaotao and Xiang Zhongyou own 64.3 percent and 21.4 percent of the target firm.

The acquisition will help Dajiaweikang Pharma expand into upstream pharmaceutical production and complement its existing businesses, it said, adding that the deal will also help boost profitability and improve its operating conditions.

Tianjicaotang Pharma was set up in 1992 and has 20 traditional Chinese medicine products covering the fever, cardiovascular, cerebrovascular, and urology fields. In the first nine months of this year, it had net profit of CNY21.7 million (USD3.11 million) on revenue of CNY236.2 million (USD33.8 million).

Founded in 2004, Dajiaweikang Pharma is a major pharmaceutical retailer in central Hunan province, dealing with nearly 10,000 types of drugs, according to its website. From January to September this year, the firm’s net profit rose 5.3 percent from a year ago to CNY52.9 million, while revenue jumped almost 19 percent to CNY2.2 billion (USD315 million).

Editor: Peter Thomas