Geely and Zeekr seal merger agreement with enhanced offer
In a significant move, Chinese automotive giant Geely Holding has announced it will acquire the remaining shares of electric vehicle (EV) startup Zeekr that it does not already own. The decision comes after a series of negotiations, with the final acquisition price set at $26.87 per American Depositary Share (ADS), a significant increase from the initial proposal.
The higher valuation was primarily driven by Geely's desire to address investor concerns and complete the deal. Initially, some investors felt that the valuation underestimated Zeekr's worth, a sentiment that was expressed in a letter penned by Zeekr's five early investors on May 30. These investors, who participated in Zeekr's first round of external financing in 2021, when the company was valued at $9 billion, expressed concerns that Geely's proposed privatization offer undervalued the company.
Geely's increased offer aims to ensure that Zeekr shareholders feel fairly compensated and aligned with Geely's strategic goals. The higher valuation reflects Geely's confidence in its strategic pivot towards operational efficiency and cost reduction, amid a competitive EV market in China.
The merger between Geely and Zeekr is a new key step in Geely Holding's implementation of the "Taizhou Declaration" and advancement of its "One Geely" strategy. By acquiring full control of Zeekr, Geely aims to enhance its competitiveness in the premium EV segment, leveraging synergies and improving resource allocation.
Zeekr, founded in March 2021, listed on the NYSE on May 10, 2024, making it the fourth Chinese EV maker to list in the US. Following the merger, Zeekr will continue as the surviving entity and become a wholly-owned subsidiary of Geely. The deal also includes an equity option for Zeekr shareholders, aligning their interests with Geely's long-term success, which was seen as a positive move to address investor concerns.
Zeekr shareholders have the option to receive payment in cash or through a share swap for Geely shares. The merger is expected to be completed in the fourth quarter of 2025. Zeekr's current market capitalization stands at $7.07 billion, below Nio's $9.37 billion.
With this acquisition, Geely Holding aims to create greater value for all shareholders of the merged entity after the completion of the merger. The company also aims to enhance its strategic execution efficiency, innovation capabilities, and profitability. Zeekr will delist from the NYSE following the merger.
- The increased offer by Geely Holding for Zeekr aims to alleviate concerns from early investors who felt the initial valuation underestimated Zeekr's worth, as expressed in a letter on May 30.
- By acquiring full control of Zeekr, Geely Holding intends to improve resource allocation, leveraging synergies, and boosting its competitiveness in the premium electric vehicle segment.
- Following the merger, Zeekr will remain the surviving entity and become a wholly-owned subsidiary of Geely, with shareholders having the option to receive payment in cash or through a share swap for Geely shares.
- With this acquisition, Geely Holding aims to enhance its strategic execution efficiency, innovation capabilities, and profitability, creating greater value for all shareholders post-merger.
- This strategic move by Geely Holding is part of its implementation of the "Taizhou Declaration" and "One Geely" strategy, reflecting its ambition to stay competitive in the technology-driven automotive market, particularly in the electric vehicle sector.
