Shunten International (HKG:0932) said it became the subject of a mandatory takeover offer after its substantial shareholder and chairman, Cheung Siu Fai, agreed to buy more shares of the company, according to a Hong Kong bourse filing Sunday.

Shares of the company jumped 50% in late morning trade Monday.

An entity tied to Cheung acquired nearly 553 million shares from Prosper Rich and close to 181.1 million shares from Hammer Capital Consulting at HK$0.024 each, or HK$17.6 million in total.

Hammer Capital also agreed to sell a further 32 million shares directly to Cheung for HK$768,000.

A total of over 766 million shares, representing 24.65% of the company's issued share capital, changed hands under the transactions for HK$18.4 million.

The purchases boosted Cheung's direct and indirect ownership of the business from 24.15% to 48.80%, mandating a voluntary takeover offer.

Cheung has offered to purchase the rest of the company's shares at HK$0.024 in cash each, valuing the entire business at HK$74.6 million.

Shunten, a health supplements distributor, said it had established an independent board committee to review the offer and make a recommendation to shareholders.