(Yicai Global) Nov. 9 -- Shares in Shenzhen Original Advanced Compounds rose by over 7 percent this morning after the company announced its plan to invest CNY119 million (USD16 million) to acquire a controlling stake in a supplier of specialized equipment for semiconductor manufactures.

The Shanghai-traded shares of Shenzhen Original Advanced Compounds closed up 5.72 percent at CNY40.14 (USD5.54) today.

The Shenzhen-based provider of polymer composites said in a statement yesterday evening that it had inked an agreement for the purchase of corresponding assets with Samoa-headquartered Success Factors yesterday. The statement said the company plans to offer a total of CNY119 million in cash to gain a 51 percent stake in Suzhou Juyun Technology.

Suzhou Juyun is a developer, producer and seller of specialized equipment for semiconductor manufacturers and also boasts independently developed core technology. It manufactures most of the devices required in semiconductors’ wet cleaning process, and its main products are the cleaning devices and industrial drying ovens, the statement added. 

Shenzhen Original Advanced Compounds noted that the target company has gained purchase orders from leading Chinese companies in the semiconductor sector.

The industrial ovens independently developed by Suzhou Juyun can achieve complete automation during the drying process, and none of the company’s domestic rivals have such a level of operating efficiency, the statement said.

The statement did not specify the background of Success Factors, which is the counterparty in the transaction, only saying that to close the deal, Success Factors promised that the target company’s cumulative net profit in the next three years would not be less than CNY58.86 million (USD8.12 million). The counterparty also pledged the remaining 49 percent stake it holds as the guarantee for this commitment. 

The transaction will help Shenzhen Original Advanced Compounds diversify into equipment for semiconductors, in addition to its current business developing polymer composites for cables and wires, the statement said.

Editor: Tom Litting