Geely offers to take Zeekr unit private in $2.2bn deal
Chinese carmaker Geely Automobile on Wednesday offered to pay $2.2bn (R40.18bn) to privatise its unit Zeekr just a year after it took the EV brand public in the US, saying it wanted to consolidate its business to fend off competition.
Geely offered to pay $25.66 (R468) per Zeekr's American Depositary Share, a premium of 13.6% to the stock's closing price on Tuesday.
As of May 7, Geely held about 65.7% of the total issued and outstanding share capital of Zeekr. Its offer-per-ADS values Zeekr at $6.52bn (R119bn) and it would need to pay $2.2bn for the remaining 34.3% share, according to Reuters calculations.
Zeekr's ADSs jumped 11.11% to $25.10 (R458) in US premarket trading.
Zeekr will be fully merged into Geely Auto on completion of the transaction, Geely said.
'In the face of fierce market competition and an increasingly complex economic environment, we will assess the situation and, in accordance with the spirit of the 'Taizhou Declaration,' continue to promote the integration of our automotive business,' Geely chair Li Shufu said on WeChat.
Geely Holding, which owns multiple automotive brands including Geely, Zeekr and Volvo, has pivoted away from its history of aggressive acquisitions to streamlining operations and cutting costs amid a brutal price war in China's car market.
Li, also the founder of Geely, announced the so-called 'Taizhou Declaration' last year, urging a greater strategic focus at Geely, better synergies and elimination of internal competition.
It has since been restructuring its brands into two units — Geely Auto and Zeekr Group — targeting the mass market and premium segments, respectively.
In March, it also merged three existing units employing nearly 2,000 engineers to develop digital cockpit systems into a single unified team.
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