Zeekr expects to use its own cash reserves and external financing to fund the acquisition.
Zeekr (NYSE: ZK) has announced that it will acquire a controlling stake in Lynk & Co, confirming a media report from earlier today.
The premium electric vehicle (EV) subsidiary of the Geely Holding Group today announced a series of deals that will give it a 51 percent stake in Lynk & Co, with the remaining 49 percent held by Geely.
Lynk & Co was born in 2017 as a joint venture between Geely Auto and Volvo Cars.
Previously, Ningbo Geely Automobile Industry Co Ltd held 50 percent of Lynk & Co, Geely Holding 20 percent and Volvo Cars 30 percent.
Ningbo Geely is a wholly-owned subsidiary of Geely Automobile Holdings Limited (HKG: 0175), Zeekr's controlling shareholder. Volvo Cars is Geely Holding's indirect, non-wholly-owned subsidiary in Sweden.
On November 14, Zeekr entered into agreements to acquire a 20 percent stake in Lynk & Co from Geely Holding for RMB 3.6 billion ($500 million) and a 30 percent stake in Lynk & Co from Volvo Cars for RMB 5.4 billion, according to an announcement today.
Zeekr said it expects to use its own cash reserves and external financing to fund the acquisition.
At the same time, Zeekr has entered into a capital injection agreement with Lynk & Co and Ningbo Geely, whereby Lynk & Co will increase its registered capital and Zeekr will subscribe for all of the increased registered capital at a subscription price of RMB 367,346,940.
After the capital injection and share transfer, Zeekr will hold 51 percent of the shares of Lynk & Co and Ningbo Geely will hold 49 percent of the shares of Lynk & Co.
The deal values Lynk & Co at about $2.5 billion, CnEVPost's calculation shows.
Separately, Volvo Cars today announced the divestment of its 30 percent stake in Lynk & Co to Zeekr, for a transaction consideration of RMB 5.4 billion.
The consideration will be paid in cash, with 70 percent paid at closing and 30 percent plus interest paid one year after closing, according to a statement from Volvo Cars.
The transaction is expected to close in the first quarter of 2025, Volvo Cars said.
Volvo Cars has been a minority shareholder in Lynk & Co since the company was founded in 2017.
The divestment is related to a new phase of Lynk & Co's future development, which includes a new ownership structure for the company, Volvo Cars said, adding that it will continue to focus on operational cooperation with Lynk & Co in specific markets of strategic interest to both companies.
In its statement, Geely Holding said the move was a key initiative of its Taizhou Declaration, aiming to reduce connected transactions, eliminate intercompetition and promote internal resource integration and convergence.
After the transaction closes, Geely Auto's stake in Zeekr will increase to about 62.8 percent.
Earlier today, China's state-owned Economic Daily reported that Geely will integrate Lynk & Co under the Zeekr brand to focus its resources on the rapidly changing new energy vehicle (NEV) market.
Zeekr and Lynk & Co will be strategically integrated with the goal of achieving Zeekr's controlling stake in Lynk & Co, the report said.
Geely has announced its transition from strategic expansion to strategic focus since September 1, 2024, when it issued the Taizhou Declaration. Since then, the integration of Geely's businesses is accelerating and has now touched the core business, the report noted.
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