(Yicai Global) April 27 -- Two real estate firms based in China's eastern Zhejiang province are forging stronger ties.

Xinhu Zhongbao will subscribe for 323 million H shares in Greentown China Holdings for HKD3.1 billion (USD400 million) in cash for a 12.95 percent stake that will make it its third-largest shareholder and give it a seat on its board when the deal closes.

The subscription price is HKD9.50 (USD1.23), a 35.52 percent premium on Greentown China shares’ [HKG:3900] closing quote of HKD7.01 on April 24, per the announcement.

Greentown China traded up 9.13 percent at HKD7.65 in late morning, while Xinhu Zhongbao’s stock [SHA:600208] rose to 1.6 percent up at CNY3.17 (45 US cents).

Greentown China will start to participate in seven Xinhu Zhongbao projects covering 3.23 million square meters in constructed area within one week and raise more money to repay loans and fund its business operations, the announcement added.

Xinhu Zhongbao’s purchase of shares in Greentown China is based on their intention to enhance their future cooperation and bring in their own advantages in brand, land reserves and funding to gain mutual benefits, Xinhu Zhongbao stated.

Greentown China’s introduction of Xinhu Zhongbao as its shareholder will generate opportunities for the pair’s exchange and cooperation, consolidate its financial foundation, and widen its shareholder base, Greentown China’s board noted.

Editor: Ben Armour