China's biggest home appliance retailer, Gome Electrical Appliances Holding Ltd, has clinched a deal to acquire its rival China Paradise Electronics Retail Ltd, according to the Shanghai Morning Post.

Gome's cash and share swap offer has been accepted by China Paradise's management and the value of the deal will be more than HK$4.94 billion (US$618 million), an unnamed source told the newspaper.

Gome is reported to have offered one share and an additional cash amount for every three shares in China Paradise.

China Paradise, the nation's third-biggest player in the sector, would maintain its Yolo brand after the acquisition, while its merger agreement with Beijing Dazhong Electrical Appliances, the fifth-largest player in the sector, remains effective.

Officials from the two companies declined to comment, but both confirmed a press conference concerning the issue would be held today.

The deal between Gome and China Paradise is expected to create a chain worth 80 billion yuan (US$10 billion) in sales revenue annually and more than one-tenth of the market share.

Gome originally offered one new share for every three shares in China Paradise, which would only have given a 3.3 per cent premium for the latter, according to the last traded prices of the two companies.

China Paradise's shares were suspended from trading last Monday at HK$2.05 (26 US cents) per share. Trading in Gome stock was halted on Tuesday at HK$6.35 (81 US cents).

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