SCHEDULE 13D/A: Geely Proposes Privatization of ZEEKR at Premium Valuation, Offering Cash or Stock Alternative

Geely Automobile Holdings Limited has submitted a preliminary non-binding proposal to acquire all outstanding shares of ZEEKR Intelligent Technology Holding Limited not already owned, aiming for privatization and delisting from the NYSE.

Summary

• Geely Automobile Holdings Limited (Geely) has submitted a preliminary non-binding proposal to acquire all issued and outstanding ordinary shares and American depository shares (ADSs) of ZEEKR Intelligent Technology Holding Limited (ZEEKR) not already beneficially owned by Geely.
• The proposed transaction values ZEEKR at US$2.566 per ordinary share or US$25.66 per ADS.
• ZEEKR shareholders and ADS holders will have the option to receive either US$2.566 in cash per share (or US$25.66 in cash per ADS) or 1.23 newly issued ordinary shares of Geely per ZEEKR share (or 12.3 Geely shares per ADS).
• The stock alternative is based on Geely's 30-day volume-weighted average price of HK$16.14 ending May 6, 2025, and a US$ to HK$ exchange rate of 1:7.7503.
• The proposed cash consideration represents a premium of approximately 13.6% to ZEEKR's ADS closing price on the NYSE on May 6, 2025, and a 20.0% premium to the 30-day volume-weighted average price ending May 6, 2025.
• Geely currently beneficially owns 1,668,996,860 ZEEKR shares, representing approximately 65.7% of the total issued and outstanding shares.
• The transaction, if completed, would result in ZEEKR becoming a wholly-owned subsidiary of Geely, privatized, and delisted from the New York Stock Exchange.
• Geely intends to finance the transaction through the issuance of Geely shares, cash on its balance sheet, and, if needed, debt financing.
• The proposal is non-binding and subject to due diligence, negotiation, and execution of definitive agreements.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the significant premium offered to ZEEKR shareholders and the strategic rationale for Geely. However, the non-binding nature of the proposal and the potential delisting introduce some uncertainty, preventing a higher score.

Positives

• The proposal offers a significant premium of approximately 13.6% to ZEEKR's ADS closing price on May 6, 2025, and 20.0% to the 30-day volume-weighted average price, providing an attractive opportunity for shareholders.
• Shareholders are offered flexibility with an election option for either cash or Geely shares, catering to different investment preferences.
• Geely has expressed commitment to working expeditiously to bring the proposed transaction to a successful and timely conclusion.
• Geely's stated intention not to sell its existing 65.7% stake in ZEEKR to any third party indicates a strong commitment to the proposed acquisition.

Negatives

• The proposal is preliminary and non-binding, meaning there is no guarantee that a definitive agreement will be reached or that the transaction will be completed.
• The transaction is subject to customary commercial, legal, financial, and accounting due diligence, which could uncover issues or lead to changes in terms.
• If the transaction is completed, ZEEKR will be delisted from the New York Stock Exchange, removing its public trading liquidity.
• Shareholders who fail to make a valid election will automatically be deemed to elect the Cash Alternative, potentially not aligning with their preferred outcome.

Risks

• The proposal is non-binding and does not create any binding rights or obligations; a binding commitment will only result from the execution of definitive agreements.
• There is no guarantee that Geely will make any subsequent proposal, and if made, no assurance that they will successfully consummate any proposed transaction.
• The completion of the transaction is contingent upon satisfactory results of Geely's due diligence investigation.
• The delisting of ZEEKR from the New York Stock Exchange would remove its public market access and liquidity for investors.

Future Outlook

Geely intends to move expeditiously to complete the proposed transaction, including conducting customary due diligence and negotiating definitive agreements. The reporting persons may also explore other strategic alternatives, including different corporate transactions, sales or acquisitions of shares/assets, or engaging with third parties for other strategic transactions that could lead to a delisting, if the current proposal does not materialize.

Management Comments

• "We believe that our proposal provides an attractive opportunity for the Company's shareholders and ADS holders."
• "We are interested only in pursuing the Transaction and we do not intend to sell our stake in the Company to any third party."
• "We look forward to hearing from you."

Industry Context

This proposal reflects a strategic move by Geely, a major global automotive group, to fully integrate ZEEKR, its intelligent electric vehicle (EV) technology subsidiary. In the rapidly evolving EV market, consolidating ownership can allow for more streamlined decision-making, deeper integration of R&D and manufacturing, and potentially better resource allocation to compete with other global EV players. Privatization removes the pressures of public market scrutiny, enabling long-term strategic investments and potentially facilitating a more agile response to market dynamics and technological advancements in the EV sector.

Comparison to Industry Standards

• The premium offered (13.6% to closing price, 20.0% to 30-day VWAP) is within the typical range for take-private transactions, though specific premiums vary widely based on market conditions, company performance, and strategic rationale.
• While the document does not list specific comparable companies or projects, take-private transactions by parent companies are a common strategy in the automotive and technology sectors to gain full control over promising subsidiaries, especially in capital-intensive and rapidly evolving industries like electric vehicles.
• The dual option of cash or stock is also a common feature in such transactions, providing flexibility to shareholders based on their investment horizon and risk appetite, similar to other major M&A deals in the industry.

Stakeholder Impact

• Shareholders and ADS holders: Potential to realize value at a premium through cash or participate in Geely's future growth via stock.
• Employees: Not explicitly mentioned, but privatization could lead to operational restructuring or integration with Geely's broader organization.
• Customers and Suppliers: Potential for changes in strategic direction or operational synergies under full Geely ownership, which could indirectly impact relationships.
• Creditors: Geely's intention to use debt financing for the transaction could impact its own credit profile and, by extension, ZEEKR's post-acquisition.

Next Steps

• ZEEKR's Board of Directors is expected to independently evaluate the proposal.
• Independent, disinterested members of ZEEKR's Board will consider the proposed transaction.
• Geely will proceed with customary commercial, legal, financial, and accounting due diligence.
• Negotiation and finalization of definitive agreements for the transaction.
• Geely will file an amendment to its Schedule 13D and make an inside information announcement as required by regulations.
• Geely may explore other strategic alternatives if the current proposal does not lead to a definitive agreement.

Key Dates

Recommendation

Keywords

ZEEKR, Geely, Privatization, Acquisition, Delisting, NYSE, American Depository Shares, Ordinary Shares, Business Combination, Tender Offer, Schedule 13D/A, Electric Vehicles, Automotive