By Jiahui Huang and Dominic Chopping
Geely Automobile subsidiary Zeekr plans to acquire a 50% stake in Lynk & Co from its parent and Volvo Car, as the Chinese auto group seeks to boost resource utilization and enhance its competitiveness in China's electric-vehicle space.
Volvo Car agreed to sell its 30% stake in Lynk & Co to Zeekr for around $748 million, while Geely agreed to sell a 20% stake for 3.6 billion yuan, equivalent to $498.3 million, Geely said in a Hong Kong stock-exchange filing on Thursday.
Zeekr also plans to inject 367.3 million yuan of capital into Lynk & Co, Geely said.
Following the acquisition and the capital injection, Geely will hold a 49% stake in Lynk & Co, while Zeekr will own 51%, according to the filing. Lynk & Co will become an indirect non-wholly-owned subsidiary of Zeekr, Geely said.
The move comes as Geely has been working on maximizing its advantages to become more competitive in the EV market, analysts said.
"Geely has been working on restructuring this year, and this deal is to ensure that both Lynk & Co and Zeekr make efficient use of resources," said Bocom International auto analyst Angus Chan.
Lynk & Co has a stronger presence in markets outside of China, while Zeekr's strength is in the premium EV market, Chan added.
Lynk & Co, a joint venture between Swedish automaker Volvo Car and Geely, was founded in 2017. Lynk & Co focuses on hybrid cars, while EV specialist Zeekr plans to start producing hybrids in the future.
The relatively weaker sales performance of Lynk & Co may have been another reason for the acquisition, Chan said. Lynk & Co's revenue rose to 34.79 billion yuan in 2023 from 29.11 billion in 2022, and it reported a loss of 1.10 billion yuan last year, compared with profit after tax of 7.2 million yuan in 2022.
"With the more collaborative connections between Lynk & Co and Zeekr, both brands can make the most of the advantages in terms of technology and product mix and become more competitive in the auto market, which will better serve Geely's market share," CCB International analyst Qu Ke said.
Volvo will receive 5.4 billion yuan in cash for the stake sale, with 70% payable at closing and 30% plus interest paid one year after closing.
The deal is expected to close during the first quarter of 2025.
Write to Jiahui Huang at jiahui.huang@wsj.com and Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
November 14, 2024 05:06 ET (10:06 GMT)
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