(Yicai) Sept. 6 -- Shares of Optowide Technology jumped after the Chinese researcher, developer, and supplier of optical components said it plans to invest up to USD10 million to buy a majority stake in its US peer GouMax Technology.

Optowide [SHA: 688195] was trading up 14.7 percent at CNY41.06 (USD5.62) in Shanghai as of 2.30 p.m. today.

Optowide intends to obtain an over 51 percent stake in GouMax by purchasing existing shares from the target company’s shareholders and newly-issued shares, the Fuzhou-based firm announced late yesterday.

After the acquisition, Optowide and the other shareholders of GouMax will set up a joint venture in China in which the parties will hold the same stakes as in GouMax to transfer the California-based company’s production line to China to improve production efficiency and reduce the overall manufacturing cost, Optowide noted.

Obtaining a controlling stake in GouMax will allow Optowide to quickly avoid technology, talent, and brand barriers, enter the relevant product market, and expand its product categories and customer resources, the company added.

As the deal falls under the voluntary reporting category of the regulations of the Committee on Foreign Investment in the United States, the acquisition is not required to be subject to CFIUS review, Optowide said, noting that if the US government agency adjusts its policy in the future, the purchase may still face a retrospective review.

Founded in 2015 in Silicon Valley, GouMax boasts many senior technical experts and high-quality customer resources. Its main clients include optical components, optical modules, and optical communication equipment companies, other firms in the optical fiber sensing industry, and scientific research and educational institutions.

GouMax reported a net loss of USD270,000 in the first half of this year, with an operating profit of USD1.3 million. Last year, the firm had a net profit of USD550,000 and an operating profit of USD3 million.

Editor: Futura Costaglione