Laobaixing Pharmacy Chain Joint Stock Company (SHSE:603883) and Yixintang Pharmaceutical Group Co., Ltd. (SZSE:002727) are in advanced talks to create China's biggest drugstore chain via a share swap, three people familiar with the matter said. Laobaixing's founders, Xie Zilong and Chen Xiulan, are expected to have a bigger stake in the merged firm than Yixintang's founder Ruan Hongxian, said two of the people. The talks have been ongoing for more than three months, the two people said.

One person said the firms are aiming to finalize and announce the deal in the coming days, adding that Laobaixing would remain the listed entity. The sources declined to be identified as the discussions were not public. Laobaixing, Yixintang did not immediately respond to requests for comment yesterday.