Share prices of China Unicom Hong Kong Ltd reached to its two-year high after it was announced that Telefonica SA is going to increase its stake in the company. It gained more than 3.9 per cent at the Hong Kong exchange to be at HK$12.82.

Considering just the intra-day rise, it is the highest that the company has seen since Sept. 8, 2008. Post the deal, the total stake of Telefonica in China Unicom will become 9.77 per cent.

On the other hand, the Chinese company is going to raise its stake by 1.37 per cent in its Spanish operation.

For the same, China Unicom will be purchasing 21.8 million shares in Telefonica and is going to pay a price of 17.16 euros per share.

Each of the company will be buying stake worth $500 million of shares in the other one and so maintain the balance. This also means that the strategic alliance between the two companies will become deeper after the deal.

The other aim is to also enter into parts of Asia, Europe and Latin America where the joint venture is getting explored.