(Yicai Global) Aug. 27 -- The share price of China's Biocause Pharmaceutical jumped today after two weeks of trading suspension due to a plan to merge and take the name of its main income driver Guohua Life Insurance, effectively transforming the latter into the first small or medium-sized mainland-listed insurance company.

Biocause Pharma's [SHE:000627] stock price rose by the daily limit of 10 percent to CNY7.85 (USD1.10) this morning. The shares were suspended from Aug. 13 after the Hubei-headquartered firm first mentioned about the merger plan. 

Biocause Pharma will issue its own stocks to other shareholders of Guohua, including Hainan Kaiyi Industrial and Shanghai Boyonglun Technology, at CNY6.3 per share, the company announced yesterday. It will also give convertible bonds and pay in cash to Guohua's minority shareholders. The parent did not disclose the number of shares nor the value of Guohua's assets. 

The deal will make Guohua into the sixth mainland-listed insurer in China and allow the parent to directly control its life, health and accident insurance business. Established in November 2007, Shanghai-based Guohua has grown to become one of the top 20 insurance companies in China. In the first half of this year, its premium income was CNY26.7 billion (USD3.7 billion).

Besides pharmaceutical business, Biocause Pharma engages in new energy, chemical and financial sectors. However, 97 percent of its main business income came from Guohua last year, according to its earnings report. 

Editor: Emmi Laine