(Yicai) Feb. 18 -- Shares in Suochen Information Technology surged as much as 19.7 percent today after the Chinese industrial software developer said it plans to take over its industry peer ForceControl Yuantong Technology to enrich the firm’s business portfolio, enhance industrial synergy, and improve core competitiveness.

Despite the strong start to the day, Suochen’s share price [SHA:688507] closed up 6 percent at CNY75.20 (USD10.33), after investors cashed in. This was despite the Shanghai Stock Exchange’s Star Market Composite Index, on which Suochen is listed, tumbling 2.3 percent.

Suochen will pay cash for a 51 percent stake in ForceControl and it will become a company subsidiary that will be included in Suochen’s consolidated financial statements, the Shanghai-based company said yesterday.

The equity valuation of ForceControl, which specializes in industrial automation control software and information security products, is between CNY360 million (USD49 million) and CNY410 million, though the final transaction price will be confirmed later, it added.

Suochen did not disclose details of ForceControl's financial performance, but it has set performance targets and is requiring the Beijing-based firm, whose products are widely applied in industries such as oil and gas, petrochemicals, mining and metallurgy, to achieve a total net profit of CNY101 million (USD14 million) over the next three years, starting this year.

Suochen, which was listed on Shanghai’s Nasdaq-like Star Market in April 2023, focuses on Computer-Aided Engineering software development. The company’s losses widened 90 percent in the first three quarters last year from the same period in 2023 to CNY70.6 million (USD9.7 million). However, revenue jumped 58 percent to CNY82.9 million.

Editor: Kim Taylor