(Yicai) Sept. 5 -- Shares of Guosen Securities plunged after the Chinese brokerage announced that it intends to nearly double the size of the stake it planned to buy in Vanho Securities.

Guosen [SHE: 002736] finished 5 percent down at CNY8.59 (USD1.21) a share in Shenzhen today. Trading in the stock had been halted since Aug. 22, the day after the firm revealed the takeover plan.

Guosen will acquire 96 percent of Vanho from seven shareholders for CNY8.60 a share, the Shenzhen-based buyer said yesterday. Under the original plan, Guosen would have issued new shares to Shenzhen Capital Holdings, Vanho’s biggest shareholder, in exchange for its entire 53 percent stake in the target company.

Guosen and Vanho are technically affiliates because both Shenzhen Capital and Shenzhen Investment Holdings, Guosen’s largest shareholder at 33.5 percent, are wholly owned by the Shenzhen State-owned Assets Supervision and Administration Commission.

Guosen’s first-half net profit dropped 13 percent to CNY3.1 billion (USD436.6 million) from a year earlier on a 5 percent slide in revenue to CNY7.8 billion, mainly because of tighter regulatory oversight of initial public offerings in the Chinese mainland. By profit, it ranked eighth among mainland-listed brokers, and 13th by revenue.

Shenzhen-based Vanho is much smaller and more financially challenged. In the first half, it had a net loss of CNY17.4 million (USD2.5 million) on revenue of CNY180 million (USD25.4 million).

Chinese brokerages have unveiled a number of takeovers since the start of the year. Notably, Guolian Securities revealed plans to acquire Minsheng Securities, while Zheshang Securities set out its intention to gain control of Guodu Securities by purchasing a 34 percent interest. But most have involved small and mid-sized firms, not big concerns such as Guosen.

Editor: Futura Costaglione