Chinese Billionaire Eric Li To Delist Zeekr One Year After U.S. IPO
Potential customers look at Zeekr electric cars in Yantai, Shandong province, earlier this year. CFOTO/Future Publishing via Getty Images
Chinese auto billionaire Eric Li's decision to privatize the New York-listed electric vehicle brand Zeekr was cheered by investors, with Hong Kong-listed shares of the parent company, Geely Automobile, rallying as much as 6.7% Thursday morning.
Geely, whose shares have risen 25% so far this year, announced its proposal to take Zeekr private in a stock exchange filing late Wednesday. The company plans to offer $25.70 for each of the Zeekr American Depositary Share (ADS) it doesn't already own, according to the filing. Geely owns 65.7% of Zeekr's total shares, the filing shows. To acquire the rest, the parent company needs to pay about $2.2 billion, according to Forbes' calculation based on the filing.
The move comes almost exactly a year after Zeekr completed its U.S. initial public offering last May. The EV brand, which now has a market capitalization of $6.4 billion, will be delisted and become a wholly owned Geely subsidiary if the deal is done, according to the stock exchange filing.
Analysts see multiple benefits from privatization. It might be a strategy to preempt moves to delist Chinese companies from American bourses as tensions rise between the world's two largest economies, Ke Yan, Singapore-based head of research at DZT Research, says by WeChat.
Zeekr was among dozens of Chinese companies—which also included e-commerce giants Alibaba, JD.com and PDD Holdings—that Republican lawmakers have proposed kicking off U.S. stock exchanges. Last week, they wrote a letter to the U.S. Securities and Exchange Commission arguing that the companies support China's military while attracting American capital.
A Zeekr representative didn't respond to messages seeking comment.
The privatization offer also brings plenty of commercial benefits, as it helps to reduce internal competition and consolidate resources, says Ke.
Zeekr isn't the only EV brand Geely operates. Li, who has a net worth of $16.4 billion partly based on a Geely stake, has over the years directed the firm to acquire multiple auto companies including Lotus, Lynk & Co and Volvo Cars, as he tries to build a global empire.
At a time of heightened competition at home, privatizing Zeekr can help the parent company focus on market opportunities, Yale Zhang, Shanghai-based managing director at consultancy Automotive Foresight, says by WeChat.
It can improve efficiencies, adjust supply chain resources and better position the brand to compete with the likes of Xiaomi, he continues. Due to good product offerings and improved marketing campaigns, Zhang estimates that Zeekr can meet its target of delivering 320,000 vehicles this year, up 12% from 285,441 units in 2024.
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