According to a statement it filed with the Shanghai Stock Exchange, the firm will sell 25 pct of its plant in Changshu city for 2.46 mln usd to Pilkington Italia.
Glasslink, its wholly-owned unit incorporated in Hong Kong, will also sell a 25 pct stake in the plant, for 1.81 mln usd to Pilkington Italia, a subsidiary under Pilkington Plc.
The two firms will then hold 50 pct each of the Changshu glassmaking plant which will be the new joint venture.
Shanghai Yaohua's board of directors has approved the deal but it is still subject to government approval, it said.
The new venture, will have a registered capital of 48.33 mln usd, Shanghai Yaohua said.
The venture will borrow the rest of the total planned investment of 96.68 mln usd.
Pilkington International Holdings BV, another unit under Pilkington Plc -- one of the world's largest manufacturers of glass and glazing products -- held an 18.98 pct stake in Shanghai Yaohua at the end of 2004.