(Yicai Global) May 9 -- Shares of Chinese botanical drug developer Kpc Pharmaceuticals jumped by the daily limit after Shenzhen-based China Resources Sanjiu Medical and Pharmaceutical said it intends to buy a controlling stake in the former for CNY2.9 billion (USD433 million).

Kpc's stock price [SHA: 600422] rose by 10 percent to CNY11.84 (USD1.80) intraday. The shares have surged in value almost by a third in the past 12 months.

China Resources Sanjiu will purchase a 28 percent stake in Kpc to promote the development of the traditional Chinese medicine industrial chain, represented by panax notoginseng, also known as sanchi ginseng, the buyer said in a statement yesterday. The medicinal plant, mainly produced in southwestern China’s Yunnan province where Kpc is headquartered, is used to treat cardiovascular disorders based on TCM.

The acquisition is in line with China Resources Sanjiu's development strategy and aims to build a leading company in the industrial chain of Chinese ginseng, the buyer said, adding that it is on the lookout for more TCM acquisitions.

Cooperation between the two companies can help Kpc ease its shortage of retail channels while the purchaser can improve its competitiveness, according to the statement.

The buyer's stock price was not majorly affected by the news. China Resources Sanjiu [SHE: 000999] climbed 1.8 percent to close at CNY39.46.

Editor: Emmi Laine, Xiao Yi