(Yicai) Nov. 18 -- Shares in Hunan Heshun Petroleum soared by the exchange-imposed limit today for the third day running after the Chinese gas station operator said that it plans to spend up to CNY540 million (USD75.9 million) to take control of MSquare Technology, a semiconductor IP company. 

Heshun Petroleum’s share price [SHA:603353] closed up 10 percent at CNY33.91 (USD4.76). 

Heshun Petroleum plans to invest CNY540 million to acquire a 34 percent stake in MSquare, the Changsha-based company said on Nov. 16. Through a voting rights agreement, it will control 51 percent of the firm’s voting power. After the capital increase, the total value of MSquare will not exceed CNY1.5 billion (USD223 million). 

Heshun Petroleum, which owns and operates 35 gas stations, has been facing shrinking profits in its refined oil wholesale and retail business. Net profit has been tumbling since it peaked in 2020. Last year, the firm’s net profit was less than one-fifth of that in 2020. And in the first three quarters, net profit almost halved from a year earlier to just CNY21.8 million (USD3 million). As of Sept. 30, Heshun Petroleum had cash and cash equivalents of CNY312 million (USD43.8 million). The company has also been expanding into new energy charging stations. 

MSquare, which was set up in August 2021, operates in the niche field of semiconductor IPs and focuses on developing high-speed interface IP and Chiplet solutions. Despite being in the booming chip sector, MSquare has racked up net losses of approximately CNY84 million (USD11.8 million) over the past two and a half years.

Whether this acquisition will create real synergies remains to be seen.

Editor: Kim Taylor