Chinese carmaker Geely offers to take its EV unit Zeekr private in $2.85 billion deal

HONG KONG - Shares of Chinese carmaker Geely Automobile jumped nearly 7 per cent on May 8 after it offered to pay US$2.2 billion (S$2.85 billion) to privatise its Zeekr unit, just a year after it took the electric vehicle brand public in the US.

Geely’s shares rose as much as 6.7 per cent in early trade to HK$17.90.

Geely offered to pay US$25.66 in cash or 12.3 in newly issued shares per Zeekr’s American Depositary Share, a premium of 13.6 per cent to the stock’s closing price on May 6.

“This appears an opportunistic proposal,” said Mr David Blennerhassett, a content strategist at financial services firm Ballingal Investment Advisors who publishes on SmartKarma, adding that Geely had almost sufficient votes to take Zeekr private given its 65.7 per cent stake in the firm.

“Geely already controls and consolidates Zeekr, so the impact, if any, will come from the cost outlay for shares not held – which could be largely mitigated under the scrip option.”

Geely said it wanted to consolidate its business to fend off fierce competition in China’s largest auto market.

The company, which owns multiple brands including Volvo, has been pivoting away from its history of aggressive acquisitions to streamlining operations and cutting costs.

Zeekr, which was founded in 2021 as a premium electric vehicle brand of Geely, went public in the US in May 2024 at a valuation of US$6.8 billion, the first major listing by a Chinese company in the country since 2021.

But investor concerns over whether Chinese firms could be forced to delist from US exchanges have re-emerged amid the tit-for-tat trade war between the world’s two largest economies.

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 American exchanges, saying they had military links that put US national security at risk.

China Auto Dealers Association analyst Li Yanwei said privatising Zeekr was the best choice for both companies at the moment given multiple headwinds, such as slower-than-expected sales for Zeekr’s new products like the 7X and US-China tensions.

The Trump administration has also imposed tariffs on imports of Chinese electric vehicles, in essence blocking Zeekr from selling in the US.

“The capital market is less enthusiastic about Chinese new energy vehicle companies, and the possibility of refinancing in the US capital market is much lower,” said Mr Li. REUTERS