(Yicai) May 14 -- Shares of Shijiazhuang Kelin Electric soared by the exchange-imposed daily trading limit after the Chinese smart power system supplier said Chinese home appliance giant Hisense Group plans to become its new controlling shareholder.

Kelin [SHA: 603050] closed 10 percent up at CNY31.56 (USD4.36) in Shanghai today.

Hisense’s unit Qingdao Hisense Network Energy plans to buy a 20 percent stake in Kelin for CNY33 per share, a premium of about 15 percent from Kelin’s closing price yesterday, for a total of about CNY1.5 billion (USD207.3 million), the Shijiazhuang-based firm announced yesterday.

Hisense Network Energy started buying into Kelin in March. It had a 14.9 percent stake and 24.5 percent of the voting rights as of yesterday. After the purchase, the company will become Kelin’s controller with a nearly 35 percent stake and 45 percent of the voting rights.

“The deal is based on Hisense’s industry development strategy and is a key and long-term decision-making policy of Hisense to do business in the new power grid and new energy fields,” said Shi Wenbo, general manager of Hisense Network Energy.

However, the deal is likely to face strong opposition from Kelin’s founder Zhang Chengsuo, who now owns 27 percent of the company’s voting rights after joining hands with a state-owned enterprise in Shijiazhuang in March to hike its stake in Kelin. 

“Something must be done as soon as possible to end the situation where Kelin’s equity structure is unstable to boost the firm’s steady development,” Shi noted.

The deal is a partial offer and will not terminate Kelin’s publicly traded company status, as its public shareholders will hold at least a cumulative 25 percent stake, Shi added.

After the deal is closed, Hisense Network Energy will nominate new director candidates to the shareholders’ meeting of Kelin, and the latter’s board of directors will appoint the senior managers, Hisense Network Energy said.

Kelin reported CNY299 million (USD41.3 million) in net profit last year, up 161 percent from the previous year, and CNY3.9 billion in operating revenue, up 49 percent in the period.

Editor: Futura Costaglione