The announcement comes as privately run financial conglomerates such as Changsha Yongjin Group, which controls Sinolink, are under pressure to restructure, with Beijing tightening supervision of financial holding firms.
The move also comes as China encourages mergers of the country's brokerages to create stronger players to compete with foreign giants such as Goldman Sachs and Morgan Stanley.
Guolian plans to issue China-listed A-shares to all Sinolink shareholders in an equity swap, Guolian said in filings to the Shanghai Stock Exchange. In addition, it would buy a 7.82% stake in Sinolink from Yongjin.
The two firms did not disclose the value of the acquisition or further details, saying these have "yet to be negotiated."
The merger still contains uncertainties, so Shanghai shares of both firms will be halted from Monday, a suspension expected to last up to 10 trading days, according to the statements.
Sinolink, with a market capitalization of 46.27 billion yuan ($6.84 billion) according Refinitiv data, saw its Shanghai-listed shares surge 10% on Friday ahead of the announcement.
Backed by the government of the southern city Wuxi, Guolian is worth 39.42 billion yuan.
China is pushing to combine second-tier players like First Capital Securities with Capital Securities.
(Reporting by Shivani Singh in Ningbo, Cheng Leng and Sophie Yu in Beijing, Samuel Shen in Shanghai; Editing by William Mallard)