(Yicai) Nov. 3 -- Canmax Technologies’ shares surged after the Chinese supplier of battery materials said it had agreed to major client Contemporary Amperex Technology raising its stake in the firm.

Canmax [SHE: 300390] closed 12 percent higher at CNY34.07 (USD4.79) per share in Shenzhen today, after earlier jumping by as much as 18.3 percent to CNY36, the highest since June 2023. CATL [SHE: 300750] fell 0.5 percent to end at CNY386.86 (USD54.34).

Canmax's actual controllers, Pei Zhenhua and his wife Rong Jianfen, signed an agreement to transfer nearly 107.6 million of their unrestricted tradeable shares in the company to the Ningde-based battery giant for CNY24.49 apiece, or CNY2.6 billion (USD370 million) in total, Canmax announced late on Oct. 31.

The transaction price represents a 23 percent discount over Canmax's closing price of CNY31.67 on Oct. 31. However, given that the company's shares surged nearly 36 percent over the past week, the transaction price represents a 5 percent premium over its closing price of CNY23.33 on Oct. 22.

Once the deal is completed, Pei and Rong’s stake will fall to 18.9 percent from 31.8 percent, though they will remain Canmax's actual controllers, while CATL's holding will jump to 13 percent from 0.6 percent.

Pei has a 6.2 percent indirect stake in CATL through investment platforms. CATL owns a 25 percent stake in two of Canmax's lithium battery material subsidiaries.

Canmax is a leading supplier of lithium carbonate and lithium hydroxide, two key lithium battery materials. It has an annual production capacity of 135,000 tons of battery-grade pure lithium hydroxide and 30,000 tons of battery-grade pure lithium carbonate.

Moreover, Canmax has lithium mining rights in China, Nigeria, and the Democratic Republic of the Congo, executives told investors in June.

The deal marks the second time in the past month that CATL has increased its stake in a lithium materials supplier. On Sept. 30, the firm announced a plan to gain control of Jiangxi Shenghua New Material, a supplier of high-quality lithium iron phosphate cathode materials, for CNY2.1 billion.

Over the past few years, falling lithium battery material prices have created an opportunity for CATL to acquire upstream assets. During the 2021 lithium boom, Tianhua New Energy’s share price reached about CNY103 (USD14.47).

Editor: Futura Costaglione