SHANGHAI Zhenhua Port Machinery Co said yesterday it planned to sell two billion yuan (US$286 million) worth of new shares in a private placement to acquire two units from its parent.

The company will issue up to 140 million shares to parent, China Communications Construction Co, at 17.78 yuan apiece, or the average price of the past 20 trading days, Zhenhua said in a statement to the Shanghai Stock Exchange.

Zhenhua, the world's largest quayside crane maker, plans to take over a port machinery unit and a service unit from the parent via the share issue. The assets to be acquired are valued at two billion yuan.

Zhenhua said the deal created synergies and will help reduce same-business competition with its parent, and bolster its own competitiveness.

China Communications' holding in Zhenhua rose to 45.18 percent from 43.26 percent after the share placement, which needs approval from shareholders and the regulator, Zhenhua said.

Zhenhua soared 10 percent, the daily limit, to 17.04 yuan yesterday. The stock had been suspended from trading since March 28 pending the announcement.

"The acquisition could boost Zhenhua's market share and reinforce its market position, as well as add to its pricing negotiation power with customers and suppliers," said Hu Limei, industry analyst at SYWG Research & Consulting.

Meanwhile, Zhenhua said net profit rose 24.81 percent to two billion yuan, or 0.65 yuan per share, last year, in line with analyst estimates. Turnover climbed 22.86 percent to 21 billion yuan. Exports accounts for 87.5 percent of its total sales.

Hu said Zhenhua's sales may reach 30 billion yuan this year after the acquisition while maintaining its 2008 earnings forecast at 0.86 yuan per share, as it takes time for consolidation.