(Yicai Global) Jan. 5 -- Zhongyuan Union Cell & Gene Engineering Corp. [SHA:600645] plans to buy a 100-percent stake in Shanghai Aoyuan Investment Management Co. for CNY1.2 billion (USD185 million).

The firm will raise funds for the acquisition by issuing new shares at just over CNY21 (USD3.3) a piece, it said in a statement yesterday evening, after a three-month trading hold. It will also raise CNY500 million to build an intelligent diagnosis center and research facilities to develop diagnostic reagents for tumors.

Shanghai Aoyuan mainly operates via its wholly-owned unit OriGene Technologies Inc., a global leader in biomedicine based in Maryland, US, which is the main target of the deal.

Zhongyuan has had its eye on the American biomedicine firm for several years, it set up a CNY2.1-billion fund in February 2015 and tried to take over OriGene for almost CNY1.9 billion in September that year. However, the deal fell through last July when the parties couldn't agree on terms.

The buyer isn't prepared to stump up as much this time around as last time it valued Origene using American standards, it said. But Chinese biotech firms tend to have lower price-earnings ratios than their US counterparts.

China's precision medical industry has developed quickly in recent years. The government lifted restrictions on gene sequencing and diagnosis businesses, popularizing such companies and pushing up their value on the capital market.

In order to ensure successful integration with its new units, Zhongyuan has adopted a prudent pricing method and lowered the target's valuation to protect the interests of small investors in line with regulatory requirements, China Securities Journal reported, citing a market insider as saying.