Nutryfarm International is acquiring a 45 per cent stake in tech company First Linkage for 90 million yuan (S$18.7 million) as part of moves to diversify its operations.
The company halted trading on Thursday afternoon after its share price jumped by nearly 35 per cent to 31 cents, prompting a query from the Singapore Exchange (SGX).
Nutryfarm said in response on Thursday night that the share price rally came as it was finalising the terms of the deal.
In a separate filing that night, Nutryfarm said the acquisition was part of efforts to seek potential opportunities linked to its existing operations, including an Internet management business, so it could diversify income streams.
Its core business is in nutrition and health food products.
Its subsidiary LottVision has entered into the sale and purchase agreement with Mr Wang Xiaoxin, who will retain 55 per cent of First Linkage after the deal.
First Linkage provides exclusive technical and other services, including education management consulting services, intellectual property licences, technical support and consulting services.
Nutryfarm said: "Together with the increase in the numbers of Internet users, online businesses and e-commerce activities in China, there has been an increase in the requirements for Internet support networks.
"The group believes that there will be a growth in the demand for Internet access services, network services and internet solutions."
While it plans to keep its core business in nutrition and health food products, it has "excess working capital" that it is able to deploy as it seeks to increase its profitability and attract more investors.
Nutryfarm requested a lifting of its trading halt and trading re-commenced yesterday morning.