Shares of Geely Automobile Holdings and Zeekr Intelligent Technology Holding advanced after the Chinese auto giant and its premium new energy vehicle unit entered into a definitive merger agreement.
Geely Auto [HKG: 0175] was trading up 1.1 percent at HKD18.44 (USD2.35) as of lunch break in Hong Kong today, after earlier gaining as much as 2.9 percent. Zeekr's New York-listed stock [NYSE: ZK] rose 2.4 percent to USD28.48 yesterday.
Geely Auto will buy all Zeekr shares it does not already own for USD2.687 apiece or 1.23 newly issued shares of Geely Auto and USD26.87 per Zeekr American Depository Share (one ADS equals 10 shares) or 12.3 newly issued shares of Geely Auto, which represent an 18.9 percent premium over its closing price on May 6, the day before the acquisition was announced, and a 25.6 percent premium over the 30 trading days before May 6, the pair said in separate statements yesterday.
The merger, expected to be completed in the fourth quarter of this year, still needs to be approved by at least two-thirds of Zeekr's shareholders and by no less than half of Geely Auto's independent shareholders. Geely Auto and its subsidiaries, which own about 65.2 percent of Zeekr's shares, have already pledged their vote in favor of the merger.
On May 7, Geely Auto offered to buy all Zeekr shares for USD25.66 per ADS, a premium of 13.6 percent over its closing price the day before and a 20 percent premium over its volume-weighted average price over the previous 30 trading days. At that time, Geely Auto and its subsidiaries owned about 65.7 percent of Zeekr's shares.
The completion of Zeekr's merger will further improve Geely Auto's efficiency when carrying out its strategies, strengthen its ability to innovate, and enhance profitability to create greater value for all shareholders, according to Geely's statement.
Zeekr's acquisition is an important part of Zhejiang Geely Holding Group's strategy of creating a unified platform to enhance the competitiveness of its passenger car business and integrate resources under a sole entity. Moreover, it will help Geely avoid internal competition and address global market and economic challenges to enhance its overall efficiency.
"In line with the spirit of the Taizhou Declaration, the continued integration of Geely's automotive business gives rise to greater technological synergies, improves innovation capabilities, and increases profitability for all its holdings," said Chairman Li Shufu. "We will continue to maintain close communication and cooperation with American and global capital markets."
The Taizhou Declaration, introduced by Li last September, is a strategy aimed at strengthening Geely's core competitiveness through resource integration. Since then, the company has merged several sub-brands, including Lynk & Co into Zeekr and Geome into Galaxy.
Zeekr's merger into Geely Auto, along with Lynk & Co's merger into Zeekr, has signaled that the integration of Geely's internal resources has entered a new stage that will improve the overall competitiveness of the group and enhance its ability to adapt to the fast-changing market environment, according to industry analysts.
Once all mergers are completed, Geely's fleet will cover all market segments, from fossil fuel-powered vehicles to pure electric and plug-in hybrid electric vehicles, and all price ranges, from economy to mid-to-high-end and luxury models.
