(Yicai) Nov. 10 -- Shares of Visionox Technology surged by the exchange-imposed daily trading limit after the struggling Chinese organic light-emitting diode display panel maker said the investment arm of the Hefei government will become its controller.

Visionox [SHE: 002387] closed 10 percent up at CNY9.32 (USD1.31) in Shenzhen today. The stock had halted trading Since Nov. 3 in anticipation of the takeover.

Visionox will issue 419 million new shares at CNY7.01 apiece to Hefei Jianshu Investment in a private placement worth over CNY2.9 billion (USD412 million), the Beijing-based firm announced yesterday. The price represents a 16 percent discount over Visionox’s closing price of CNY8.33 on Oct. 31.

Once the deal is completed, Hefei Jianshu Investment will increase its stake in Visionox to 31.9 percent from 11.5 percent, becoming its largest shareholder. The People’s Government of Shushan district, Hefei, will be the actual controller.

The proceeds of the private placement will be used to supplement the company’s working capital and repay debts, Visionox noted.

Hefei is one of Visionox’s key production hubs. Besides two six-generation active matrix OLED production lines already in operation, the firm is also building an 8.6-generation AMOLED production line in the city, with a designated annual production capacity of 32,000 pieces and a total investment of CNY55 billion (USD7.7 billion).

Visionox has been unprofitable for several years, with deteriorating asset quality. Its financial report showed a net loss of CNY1.6 billion in the first three quarters of this year. As of Sept. 30, its asset-to-liability ratio had risen to 84.4 percent, compared with 49.4 percent at the end of 2020.

In the first half of this year, Visionox held a 9.1 percent stake of the global smartphone OLED panel market, ranking fifth behind Samsung Electronics, BOE Technology Group, Tianma Microelectronics, and TCL China Star Optoelectronics, according to data from Sigmaintell. A year earlier, its market share stood at 10.3 percent, placing it third.

Editor: Futura Costaglione