(Yicai) June 16 -- Shares of Dongshan Precision Manufacturing surged after the Chinese maker of printed circuit boards, optoelectronic displays, and precision components said it plans to acquire Source Photonics Holdings, a global provider of advanced technology solutions for communications and data connectivity.

Dongshan Precision [SHE: 002384] was trading up 9.9 percent at CNY34.56 (USD4.81) as of 2.05 p.m. in Shenzhen today, after earlier soaring by the 10 percent exchange-imposed daily limit.

Dongshan Precision will invest USD687 million to buy 100 percent of Source Photonics to swiftly enter the optical communication component market and complement its established client resources, manufacturing expertise, and supply chain management capabilities in consumer electronics and new energy vehicles, the Suzhou-based company announced after market close on June 13.

Moreover, Source Photonics will issue up to CNY1 billion (USD139 million) in convertible bonds to Dongshan Precision, with the proceeds expected to be used to repay debts and fund daily operations.

The synergy resulting from the acquisition will drive client resource sharing, collaborative research and development, optimized production, and supply chain integration between the two parties, Dongshan Precision noted.

Source Photonics owns key research, development, and manufacturing facilities and sales networks in multiple countries and regions. It has R&D bases and factories in China’s Chengdu, Changzhou, and Taiwan province, with extensive global client resources and high market recognition. Its current shareholders include multiple Chinese and foreign private equity funds.

In the first quarter of the year, Source Photonics reported revenue of CNY975 million (USD136 million) and a net profit of CNY157 million (USD22 million). It had shareholders’ equity of nearly CNY1.2 billion (USD161 million) as of March 31.

In June last year, Chinese real estate developer and leasing service provider Vantone Neo Development Group unveiled plans to purchase a 60 percent stake in Source Photonics for USD324 million in cash. However, it terminated the deal in January due to opposition from major shareholders and shifting market conditions.

Dongshan Precision had revenue of CNY36.8 billion (USD5.1 billion) last year, of which over 67 percent came from printed circuit board operations, nearly 20 percent from display panel and device sales, and just over 12 percent from precision component assembly, according to the company’s 2024 earnings report.

Editor: Futura Costaglione