Latest news with #TaizhouDeclaration
TimesLIVE
08-05-2025
- Automotive
- TimesLIVE
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.
New Straits Times
07-05-2025
- Automotive
- New Straits Times
Chinese carmaker Geely offers to take Zeekr unit private in US$2.2bil deal
KUALA LUMPUR: Chinese automaker Geely Automobile on Wednesday offered to pay US$2.2 billion 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 US$25.66 per Zeekr's American Depositary Share, a premium of 13.6 per cent to the stock's closing price on Tuesday. As of May 7, Geely held around 65.7 per cent of the total issued and outstanding share capital of Zeekr. Its offer-per-ADS values Zeekr at US$6.52 billion and it would need to pay US$2.2 billion for the remaining 34.3 per cent share, according to Reuters calculations. Zeekr's ADSs jumped 11.11 per cent to US$25.10 in US premarket trading. Zeekr will be fully merged into Geely Auto upon 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 chairman 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 auto 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. US LISTING Zeekr was founded in 2021 as a premium EV brand of Geely whose cars featured the group's flagship in-house technologies from EV architecture to batteries. Sales of the brand reached 41,403 units in the first quarter with six models, increasing 25 per cent from a year ago and outselling BYD's premium brand Denza. It went public in the US in May last year at a valuation of US$6.8 billion, the first major listing by a Chinese company in the country since 2021. Geely's announcement also comes after Zeekr was named in a letter by two Republican lawmakers to the US Securities and Exchange Commission that called for 25 Chinese companies to be delisted from US exchanges, saying they had military links that put US national security at risk. Zeekr did not respond to a request for comment on the letter. More than 100 Chinese companies are listed on US exchanges and have a collective market cap of around US$1 trillion. Investor concerns over the possible forced de-listing of Chinese companies from US exchanges have reemerged since the tit-for-tat trade war between the world's two largest economies. China is evaluating a US proposal to resume trade talks over the latter's 145 per cent tariffs and has created a list of US-made products for exemption from its 125 per cent retaliatory tariffs.
Japan Times
17-03-2025
- Automotive
- Japan Times
Geely billionaire goes on a cost-cutting spree to catch rivals
Li Shufu, the billionaire behind one of the world's largest automobile empires, has been doing some soul-searching. In China, Zhejiang Geely Holding Group's Geely Automobile, which reports earnings on Thursday, is trying to catch up to electric-vehicle leader BYD. In Europe, Volvo Car AB is caught in the midst of a trade conflict that's tempered its global ambitions. And in the U.S., a lucrative market effectively closed to Chinese brands, New York-listed Polestar Automotive Holding and Lotus Technology have been reduced to penny stocks. After more than a decade of expansion that started with the acquisition of Sweden's Volvo in 2010, Li is now making cost-cutting the order of the day to stop the hemorrhaging at several of his carmakers. The shift was laid out in a document called the Taizhou Declaration, which called for consolidation, synergies and savings to eliminate redundancies across the group. Li first released it in Chinese, setting out broad terms of a new strategy meant to bolster his companies as EV demand sputters and tariff conflicts threaten sales. "The Taizhou Declaration set forth a lot of changes in terms of organizational structure,' said Yale Zhang, the managing director of Shanghai-based consultancy Automotive Foresight. "Keeping so many brands with different marketing and distribution networks, these all add to costs.' The Taizhou Declaration is similar in intent to the Ningbo Declaration in 2007, which kicked off Geely's acquisition spree. This newer missive is meant to ensure the group's continued long-term growth by increasing internal synergies and making better products, a Geely spokesperson said. A Zeekr showroom in Shanghai | Bloomberg But whereas Geely indeed grew after Ningbo — buying Western brands such as Volvo, Lotus and a significant stake in Mercedes-Benz Group AG — one of Li's first moves since Taizhou has been to consolidate. In November, he put plans in place to combine two similar brands — Zeekr and Lynk & Co. — in a deal valuing the latter at $2.5 billion. The move was meant to create synergies while maintaining independent operations mostly at the front end. According to Zhang, that makes sense. "If there's overlap and competition between brands, that's an unnecessary waste,' he said. "Especially in this age of EVs, when advanced driver-assistance and other technologies are going to require huge investment.' Investor enthusiasm for electric-car stocks was high during Geely's era of expansion. But the EV slowdown has made raising funds increasingly difficult, and that's reflected in the valuation of companies within Li's empire. The total market value of Geely's five main listed entities, which include Hong Kong-traded Geely Automobile Holdings and Polestar, has plunged by around $75 billion from their peak. Investors have come to realize there may be a messy middle for EV uptake after satiating early adopters. Swaying more drivers away from combustion-engine cars will require cheaper EVs, better charging infrastructure and likely more government sweeteners. While EV sales are still growing — albeit at a slower pace — that hasn't translated into profits for several of Geely's businesses. Polestar, Zeekr and Lotus reported combined losses of $2.2 billion for the first three quarters of 2024. Volvo and Geely Auto brought in roughly $3 billion over the same period. Not including Lotus, debt has also climbed at the four, to $8.1 billion as of June 30, from $5.3 billion at the end of 2021, Bloomberg-compiled data show. The Taizhou Declaration, sometimes referred to as Li's Little Red Book, gets its name from the Chinese billionaire's hometown south of Shanghai, where Geely first started as a manufacturer of refrigerator parts. It was conceived as a group effort, with as many as 50 executives writing sections of the draft and liaising with Li as bits were finalized, Geely Automobile Chief Executive Officer Daniel Li told Chinese magazine Caijing earlier this year. He may update investors on the strategy shift on March 20, when the carmaker reports 2024 earnings. Polestar, Geely's sporty sub-brand that's deepest in the red, is also addressing its deficiencies. The company presented a new strategy to investors in January after coming off another year where sales fell short of than 50,000 cars — far from the 215,000 forecast in its prospectus three years ago. At the briefing, Polestar delayed its target of reaching cash flow breakeven by another two years. Bernstein analyst Daniel Roeska expects the company will burn through another $3 billion before then. Polestar electric vehicles during the 2024 New York International Auto Show | Bloomberg Polestar also has been moving to a more traditional dealership model after previously taking a Tesla-like approach to retailing. It plans to bring down funding needs by reducing inventory and capital expenditures. CEO Michael Lohscheller sees the carmaker as still adding value to the broader group because it's a relatively established Western brand. "Bringing a Chinese brand to Europe or to the U.S. is not that easy. So to have Polestar is really an asset,' he said. Volvo also appears to be taking the Taizhou Declaration to heart. After reporting a drop in earnings for 2024, executives said the focus this year will be on cash preservation. Not only is Volvo facing potential U.S. tariffs, it's also feeling the heat from the European Union's higher levies on made-in-China EVs, which have hit its popular EX30. The electric sport utility vehicle is currently produced in China but will be made at Volvo's factory in Ghent, Belgium, starting this year to sidestep the duties. If U.S. President Donald Trump imposes additional tariffs also on EU imports, Volvo will have to reassess the economics of producing the EX30 and other models in Europe for export to North America, Volvo CEO Jim Rowan said last month. As a group, Geely's sales last year reached 3.3 million vehicles, making it the 10th-largest automaker in the world. Li has set a goal of selling 5 million vehicles in 2027, which would be similar to what Jeep maker Stellantis NV and Ford Motor delivered last year. Bill Peng, an automotive consultant at Alvarez & Marsal, said the consolidation set out in the Taizhou Declaration is at least a step in the right direction. "Things can change fast,' Peng said. "Competition dynamics may be different going forward.'
