(Yicai) Aug. 9 -- Shares of Guolian Securities rose after the Chinese brokerage said it plans to acquire a controlling stake in peer Minsheng Securities for CNY29.5 billion (USD4.1 billion) through issuing stock.

Guolian Securities [SHA: 601456] rose 4.2 percent to CNY10.24 (USD1.43) a share as of 10.40 a.m. in Shanghai today.

Guolian Securities plans to issue up to 250 million shares to raise no more than CNY2 billion (USD278.7 million) and acquire 99 percent of Minsheng Securities, the Wuxi-based firm announced yesterday. It will buy the stakes from 45 parties, including its controlling shareholder Guolian Development Group and business management firm Shanghai Fengquanyu, it added.

Guolian Securities's combined assets with Minsheng Securities will be worth over CNY160 billion (USD22.3 billion) after merging, it noted.

Substantive due diligence works for the acquisition have wrapped up, according to a person close to Guolian Securities, who noted that a shareholders meeting will be held in due time to review and discuss the progress of state-asset evaluation and approval procedures. Guolian Securities will then wait for relevant approvals from bourses and the China Securities Regulatory Commission, the person said.

"The transaction may become the first successful market-oriented merge and acquisition case among brokers following the central financial work conference and a demonstrative case for Yangtze River Delta's integrated development if concluded smoothly," an expert in M&A and restructuring work said.

The transaction will enhance Guolian Securities' comprehensive capital strength while giving full play to scale effects, lower operating costs, and increase operating efficiency by advancing optimization and integration of its and Minsheng Securities' business channels, clients resources, and products and services, Guolian Securities said. It will also remedy each of the pair's shortcomings with the other's strengths, it added.

Compared to Guolian Securities' initial scheme to fully acquire Minsheng Securities in May, the acquisition ratio was lowered to 99 percent because a 0.74 percent stake held by Oceanwide Holdings withdrew from the transaction due to it being under pledge and judicial freeze, with the situation unable to be resolved in time.

Guolian Development bought Minsheng Securities for CNY9.1 billion in an auction in March last year. According to the CSRC's requirements, a company cannot control multiple brokers, so Guolian Securities and Minsheng Securities began to prepare a merger.

Editors: Xu Wei, Martin Kadiev