(Yicai) March 6 -- Shares in Haiqi Transportation Group surged by the exchange-imposed limit today after the Chinese passenger transport firm said that it will buy duty-free mall operator Hainan Tourism Duty-Free, which performed poorly last year, for half the price that it previously offered.

Haiqi’s share price [SHA:603069] closed up 10 percent at CNY18.58 (USD2.58). It is the first day of trading since trading was suspended on Feb. 28.

Haiqi will purchase a 100 percent stake in Hainan Tourism Duty Free from oner Hainan Tourism Investment Development, the Haikou-based company said yesterday. And it is lowering its offer price to CNY2 billion (USD278 million) from the CNY4.1 billion (USD569.5 million) that it offered in August last year.

Eighty-five percent of the revised price will be paid through a new share issuance to Hainan Tourism Investment and the rest will be paid in cash, as had been previously agreed, Haiqi said. The latest price of the share issuance is CNY12.86 (USD1.79) each, an increase of 16 percent from the previous price.

Haiqi will also raise a maximum of CNY738 million (USD102.5 million) through a private placement of shares to cover transaction costs and replenish liquidity, nearly half what it previously said it would raise.

Haiqi, in which Hainan Tourism Investment holds a 38 percent stake, first announced plans to acquire Hainan Tourism Duty-Free in May 2022, as part of the road transport company’s plan to shift focus to tourism.

But the target company is struggling from stiff competition and in the fourth quarter last year, Hainan Tourism Duty-Free’s sales slumped, resulting in its net profit for the year only meeting 70 percent of the target and that of its revenue only meeting 79 percent.

China has allowed tourists who visit the island getaway of Hainan to enjoy duty-free concessions since 2011, even if they leave the province but stay in the country. There are 12 duty-free shops on the island, of which six are operated by industry giant China Tourism Group Duty-Free.

Editor: Kim Taylor