(Yicai) Sept. 30 -- Shares in Jiangtian Chemical soared as much as 19.4 percent today after the Chinese fine chemicals manufacturer said that it will acquire the Chinese unit of Japanese chemical producer Sanyo Chemical Industries for CNY285 million (USD40.6 million) to branch into superabsorbent polymers, which have a high-water uptake capacity.

Jiangtian Chemical’s share price [SHE: 300927] was trading up 12.9 percent at CNY19.61 (USD2.80) as of 1 p.m. today. Earlier in the day it hit CNY20.75.

Jiangtian Chemical will purchase 100 percent equity in San-Dia Polymers (Nantong), which is the biggest superabsorbent polymer factory in China, for CNY285 million in cash, the  company said on Sept. 27. The factory, which was set up by Sanyo Chemical in 2003, mainly makes personal hygiene items such as diapers and sanitary napkins.

The acquisition will pave the way for Jiangtian Chemical to enter the consumer-grade chemicals market, the Nantong-based firm said. This will increase the variety of fine chemical products in its portfolio and enhance risk resilience. It will also significantly boost the company's total assets, net assets, and revenue.

Sanyo Chemical has also agreed to sell all intangible assets of its superabsorbent polymer production technology and commercial trademarks to Jiangtian Chemical, but the price for the exclusive intellectual property rights to the factory’s patents, trademarks and company name has not yet been determined, Jiangtian Chemical said. The price will be negotiated by both parties depending on the asset evaluation results.

Sanyo Chemical was the first company to commercialize superabsorbent polymer materials. But despite being a leader in this niche industry, the Kyoto-based company said in March that it had decided to exit this field. Jiangtian Chemical said it would make an offer immediately after the announcement.

San-Dia Polymers (Nantong) raked in net profit of CNY3.5 million (USD510,000) in the three months ended March 31 on revenue of CNY210 million (USD30 million), Jiangtian Chemical said. But last year it racked up losses of CNY42.5 million (USD6 million) on revenue of CNY956 million (USD136.3 million).

Editor: Kim Taylor