(Yicai) March 17 -- Shares of New Vision Microelectronics fell after the Chinese display chip manufacturer said it plans to acquire a rival company.

New Vision [SHA: 688593] closed 1.3 percent down at CNY22.63 (USD3.13) in Shanghai today, after earlier plunging as much as 8.3 percent. The stock suspended trading since March 3 after it initially announced the intention of the deal.

New Vision intends to purchase 100 percent of Aixiesheng Technology with cash and the proceeds from the issuance of new shares and convertible bonds to the shareholders of the target company, the Shanghai-based buyer announced on March 14.

The deal will help complement both parties' product categories and research and development advantages, as well as achieve collaboration and integration of supply chain and sales channels, New Vision noted.

The transaction amount is to be decided upon, as Aixiesheng's asset evaluation has not been conducted yet. But since its operating income last year was significantly higher than New Vision's, the deal will result in a major asset reorganization.

Aixiesheng develops and produces display driver and touch driver chips. Its revenue totaled CNY1.3 billion (USD175 million) and its net profit exceeded CNY20.6 million (USD2.8 million) last year. In comparison, New Vision had revenue of CNY507 million (USD70.2 million) and a net profit of CNY8.4 million (USD1.2 million) in the period.

New Vision is an integrated circuit designer focusing on researching, developing, and selling display chips, one of the main control components of display panels. It provides customers with comprehensive display chip system solutions, and its product applications cover scenarios such as smartwatches, smartphones, industrial control displays, tablets, information technology displays, televisions, and commercial displays.

Last November, Chinese electronics competent firm Shenzhen Yitoa Intelligent Control announced it planned to gain control of Aixiesheng. But two weeks later, the parties terminated the deal for their inability to agree on the transaction details and future product development.

Editors: Tang Shihua, Futura Costaglione