(Yicai Global) Aug. 7 -- TIZA Information Industry Corp. [SHE:300209], a Chinese provider of Internet of Things solutions for industry, plans to acquire cross-border e-commerce business Shenzhen Youkeshu Technology Co. [NEEQ:836586] for CNY3.4 billion (USD500 million).

Upon completion, the deal will represent the third largest merger deal on China's New Third Board stock market, a trading platform for shares in small-sized Chinese companies also known as the NEEQ.

The companies confirmed reports of the acquisition on Aug. 4 with TIZA intending to acquire a 99.99 percent stake in the firm through shares and cash.

The valuation is the result of market negotiations, Li Zhiqiang, Shenzhen Youkesh's chief executive, told Yicai Global. The two sides have been in talks on the merger since February when the listed companies suspended trading, he added.

The deal amount indicates that Shenzhen Youkeshu's value has not increased significantly in the first half of the year. The firm's C round financing in the first quarter valued the enterprise at CNY2.9 billion.

The target company aims to achieve a net profit of CNY960 million (USD141 million) over the next three years.

Shenzhen Youkeshu was founded in 2010 with a registered capital of CNY250 million. The group focuses on cross-border trade and its products have been sold to more than 200 countries and regions from North America, Europe and Southeast Asia. It had operating income of CNY2.49 billion in 2016, up 141 percent on the year, with net profit of CNY105 million, up 63 percent.

TIZA focuses on providing industrial internet information technology services, and has four main businesses including intelligent manufacturing, modern agriculture, public utilities and overseas investment. The firm's total market value is about CNY8 billion (USD1.18 billion) and it reported CNY720 million in operating income last year, up 146 percent annually. Net profit was CNY97 million, up 5,437 percent on the year.