Geely has been met with resistance from investors regarding its $2.2bn take-private bid for its electric car unit, Zeekr, reported Reuters.
Early investors, including Contemporary Amperex Technology (CATL), Intel Capital, and Boyu Capital, have expressed concerns that the offer does not reflect Zeekr’s fair value.
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The investors, who participated in Zeekr’s initial fundraising, have voiced their dissatisfaction through two letters to the company’s board and a special committee.
They argue that the privatisation price is too low, with the first letter stating that it values Zeekr at only $6.5bn, significantly less than its peers such as Li Auto and Xpeng.
Geely, known for purchasing international brands like Volvo and Proton, announced its intention to fully integrate Zeekr into Geely Auto on 7 May.
This move came as a surprise, especially since Zeekr went public in the US just a year prior.
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By GlobalDataThe bid has also raised speculation about the future of other Geely units poised for Hong Kong listings, such as CaoCao, and the possibility of delisting US-listed units like Polestar.
Geely Auto, which holds approximately two-thirds of Zeekr, and Zeekr itself fall under the Geely Holding umbrella, chaired by Geely founder Eric Li.
A Geely spokesperson stated that discussions with Zeekr’s special committee are in progress, while Zeekr, CATL, Intel Capital, Boyu Capital, and Cathay Fortune have not commented. Bilibili, another investor, declined to comment.
The offer, as per Geely Auto’s filing, is non-binding, with a binding agreement contingent on the execution of definitive agreements and their terms and conditions.
Eric Li’s strategy has shifted from aggressive acquisitions to streamlining operations and reducing costs amidst intense competition in China’s auto market.
Zeekr has emerged as an asset for Geely, with sales reaching 41,403 units in the first quarter, a 25% increase year-on-year, surpassing BYD’s premium brand Denza.
The investors have urged that any privatisation deal should gain the approval of the majority of “independent minority” shareholders.
The five investors were part of Zeekr’s first external fundraising round in 2021, valuing the company at $9bn, and held a combined 6% stake.
A later round in 2023 valued Zeekr at $13bn, but its public valuation dropped to $5.5bn.
Y2 Capital, another investor, has also reportedly sent a letter echoing these concerns.
Geely’s offer of $25.66 per American Depository Share of Zeekr is a 24% premium over the average share price before the announcement, below the average US take-private deal premium of 40% since 2023.
Despite this, Zeekr shares are trading above the offer price, closing last at $26.59.
Analysts suggest that Geely Auto may have enough votes to proceed with the privatisation without additional shareholder approvals due to its 65.7% stake in Zeekr.
