SCHEDULE: Geely to Acquire ZEEKR in Definitive Merger Agreement, Paving Way for Delisting

Geely Automobile Holdings Limited has entered into a definitive merger agreement to acquire ZEEKR Intelligent Technology Holding Limited, making ZEEKR a wholly-owned subsidiary and leading to its delisting from the New York Stock Exchange.

Summary

• Geely Automobile Holdings Limited (Geely) will acquire ZEEKR Intelligent Technology Holding Limited (Zeekr) through a merger, with Zeekr becoming an indirect wholly-owned subsidiary of Geely.
• Zeekr shareholders will have the option to receive either cash or Geely shares as consideration for their Zeekr shares or American Depositary Shares (ADSs).
• For each Zeekr Share, holders can elect to receive US$2.687 in cash or 1.23 Geely Shares.
• For each Zeekr ADS, holders can elect to receive US$26.87 in cash or 12.3 Geely Shares, delivered as Geely ADSs.
• Hong Kong Non-Professional Investors holding Zeekr Shares or ADSs will only be entitled to receive cash consideration.
• The merger requires approval from Zeekr shareholders (two-thirds majority) and Geely's independent shareholders (over 50%).
• Regulatory approvals from the Hong Kong Stock Exchange, PRC authorities (NDRC, MOFCOM, CSRC), and certain US state 'Blue Sky' filings are conditions for closing.
• The transaction is expected to close in the fourth quarter of 2025.
• Upon completion, Zeekr's ADSs will be delisted from the New York Stock Exchange and deregistered under the Exchange Act.
• An undertaking agreement with GHGK Innovation Limited, a Zeekr shareholder related to Geely's controlling person Shufu Li, limits its stock election to avoid triggering a mandatory offer obligation under Hong Kong Takeovers Code if the increase in voting rights for Shufu Li and concert parties exceeds 2%.

Sentiment

Score: 7

Explanation: The document details a definitive merger agreement with clear terms and conditions, indicating a structured and planned strategic move. While there are standard risks associated with any merger (e.g., regulatory approvals, shareholder votes), the agreement appears comprehensive and well-supported by both parties' boards, suggesting a positive outlook for the transaction's completion.

Positives

• The merger provides a clear path for Zeekr to become a wholly-owned subsidiary of Geely, streamlining corporate structure.
• Shareholders of Zeekr are offered a choice between cash and Geely shares, providing flexibility based on their investment preferences.
• The transaction is supported by both Zeekr's Special Committee and Board, and Geely's Board, indicating strong internal alignment.

Negatives

• The delisting of Zeekr ADSs from the New York Stock Exchange will remove Zeekr as a standalone publicly traded entity, potentially limiting direct investment opportunities for some investors.
• The GHGK Undertaking introduces complexity regarding the stock election for a significant shareholder, potentially limiting their ability to fully convert to Geely shares if it triggers a mandatory offer obligation.

Risks

• Failure to obtain the required shareholder approvals from either Zeekr or Geely could prevent the merger from closing.
• Inability to secure necessary regulatory approvals from Hong Kong Stock Exchange, PRC authorities (NDRC, MOFCOM, CSRC), or US state 'Blue Sky' filings could delay or prevent the merger.
• Any final and non-appealable order, judgment, writ, injunction, decree, decision, ruling, or verdict from a Governmental Entity that permanently enjoins or prohibits the merger could terminate the agreement.
• A 'Material Adverse Effect' on either Zeekr or Geely, as defined in the agreement, could lead to termination.
• Breaches of covenants or representations and warranties by either party that cannot be cured by the Outside Date could result in termination.

Future Outlook

The merger is expected to close in the fourth quarter of 2025, subject to various shareholder and regulatory approvals. Upon completion, Zeekr will become a privately held, wholly-owned subsidiary of Geely, leading to its delisting from the New York Stock Exchange.

Management Comments

• The Zeekr Board, acting upon the unanimous recommendation of a special committee, determined that the merger and related transactions are fair to and in the best interests of Zeekr and its shareholders, and resolved to recommend approval to shareholders.
• The Geely Board determined that the merger and Geely Share Issuance are fair and reasonable and in the best interests of Geely and its shareholders, and resolved to recommend approval to shareholders.

Industry Context

This merger signifies a strategic consolidation within the automotive industry, particularly in the electric vehicle (EV) sector, where Geely is a major player. By fully integrating Zeekr, Geely aims to strengthen its control and synergy over its premium EV brand, potentially enhancing its competitive position against other global EV manufacturers and traditional automakers transitioning to EVs.

Comparison to Industry Standards

• The merger consideration, offering both cash and stock options, is a common structure in take-private transactions, providing flexibility to target shareholders.
• The requirement for independent shareholder approval from Geely (over 50%) aligns with corporate governance best practices for related-party transactions, ensuring minority shareholder protection.
• The indemnification provisions for directors and officers for a period of six years post-merger are standard in such agreements, aiming to protect former management from liabilities arising from their past service.
• The termination fees (Geely: US$137.67 million, Zeekr: US$68.83 million) and reimbursement amounts (up to US$2 million) are customary in merger agreements, serving as liquidated damages for certain termination events, comparable to similar-sized transactions in the automotive or technology sectors.
• The undertaking by GHGK to limit stock election to avoid triggering a mandatory offer obligation under Hong Kong's Takeovers Code demonstrates compliance with specific regional regulatory requirements, which is a critical aspect for cross-border transactions involving listed entities.

Management Changes

Corporate Governance

Legal Proceedings

• No material legal proceedings are pending or threatened against Zeekr or its subsidiaries, or their directors/officers, except as would not have a Zeekr Material Adverse Effect.
• No material legal proceedings are pending or threatened against Geely or its subsidiaries, or their directors/officers, except as would not have a Geely Material Adverse Effect.
• Both parties agree to promptly notify each other of any proceedings commenced or threatened relating to the merger and provide opportunity to participate in defense or settlement.

Related Party Transactions

• The merger itself is a related-party transaction, as Geely is a significant shareholder of Zeekr and Shufu Li, who controls Geely, is also a beneficial owner of Zeekr shares through various entities.
• The GHGK Undertaking Agreement is a specific related-party arrangement between GHGK Innovation Limited (a Zeekr shareholder related to Shufu Li) and Geely Automobile Holdings Limited, addressing the election of merger consideration to manage potential Hong Kong Takeovers Code implications.

Stakeholder Impact

• **Shareholders (Zeekr)**: Will receive cash or Geely shares/ADSs in exchange for their Zeekr holdings, leading to Zeekr's delisting. Hong Kong Non-Professional Investors will receive cash only.
• **Shareholders (Geely)**: Will vote on the merger, which involves the issuance of new Geely shares as consideration. The transaction is expected to be in their best interests.
• **Employees (Zeekr)**: Officers of Zeekr immediately prior to the Effective Time will become officers of the Surviving Corporation. Zeekr RSU Awards will be converted into Geely Share Awards, maintaining substantially similar terms and conditions.
• **Management (Zeekr)**: Directors of Merger Sub will become directors of the Surviving Corporation. Zeekr's current directors and officers will have indemnification rights and D&O insurance coverage extended for six years.
• **Customers/Suppliers**: The document indicates efforts to preserve relationships with customers, advertisers, licensors, and suppliers, suggesting minimal direct negative impact on these stakeholders from the merger itself.

Next Steps

• Zeekr to prepare and mail proxy solicitation materials (Zeekr Proxy Statement) for the Zeekr Shareholders Meeting.
• Zeekr to call the Zeekr Shareholders Meeting to obtain the Required Zeekr Vote.
• Geely to submit the circular (Geely EGM Circular) to the Hong Kong Stock Exchange for vetting and subsequently mail it to Geely Shareholders.
• Geely to call the Geely Shareholders Meeting to obtain the Required Geely Vote.
• Both parties to use reasonable best efforts to obtain all necessary regulatory approvals and complete required filings (Hong Kong Stock Exchange Approval, PRC Regulatory Filings, Blue Sky Filings).
• Geely to ensure sufficient cash is deposited with the Exchange Agent for cash consideration at or prior to the Effective Time.
• Zeekr to purchase and fully pay for a non-cancellable extension of directors and officers liability insurance for at least six years post-merger.
• Geely and Zeekr to cause the delisting of Zeekr Shares from the New York Stock Exchange and deregistration under the Exchange Act as promptly as practicable after the Effective Time.

Key Dates

Keywords

Merger, Acquisition, Delisting, ZEEKR, Geely, Automotive, Electric Vehicles, Shareholder Vote, Regulatory Approval, SEC Filing