Just a year after its high-profile IPO on the NYSE in May 2024, the electric vehicle (EV) manufacturer Zeekr is reportedly considering a return to private ownership. This potential move is driven by Geely, the majority stakeholder with a 65.7% share, aiming to better position Zeekr amidst intensifying competition in the EV market. The initial public offering was met with considerable fanfare, but the rapidly evolving landscape may necessitate a strategic pivot.
Zeekr Store in Shanghai. Photo by: Patrick George
Rumors circulating on Chinese social media suggest that Geely’s CEO, Li Shufu, has proposed that Geely purchase the remaining shares of Zeekr, effectively taking the company private. This proposal reflects a strategic decision to streamline internal management and consolidate resources, which Shufu believes will enhance Geely’s overall global competitiveness. The rationale behind this move is to shield Zeekr from the pressures of public shareholders, allowing for more agile and long-term strategic planning.
The potential privatization of Zeekr aligns with Geely’s broader strategy of consolidating its diverse brand portfolio. Geely’s automotive empire includes numerous brands, such as Lynk & Co, Smart, Lotus, and several mid-range brands like Farizon, Radar, and Geely Galaxy, in addition to its Sino-Swedish premium EV brands. Recent moves, such as merging Zeekr and Lynk & Co into a single group, indicate a push towards greater synergy and efficiency within the organization.
Zeekr plays a crucial role in Geely’s EV development efforts, and closer collaboration across brands could lead to significant advancements. By going private, Zeekr can focus on innovation and long-term growth without the quarterly pressures of public markets. This strategic shift may enable Geely to better leverage Zeekr’s technological capabilities across its entire brand ecosystem, enhancing its competitive edge in the global EV market.
The market has responded positively to the news of Zeekr potentially going private. Following the announcement, Zeekr’s stock experienced an increase of approximately 11%, reaching around $25 per share. This is noteworthy considering that Zeekr’s stock opened at $28 per share during its IPO last May and peaked at about $33 on March 11 of this year. The market’s reaction suggests investor confidence in Geely’s strategic direction.
To acquire the remaining shares of Zeekr, Geely would need to invest an estimated $2.2 billion. Despite the potential privatization, Li Shufu has indicated that Geely and Zeekr will continue to collaborate with US and international financial markets. This suggests that Geely aims to maintain a global presence and leverage international partnerships even if Zeekr is no longer publicly traded. The move could signal a broader trend of Chinese companies reevaluating their public listings in response to evolving market dynamics and competitive pressures.
| Metric | Value | Date |
|---|---|---|
| IPO Opening Price | $28 per share | May 2024 |
| Stock Peak | $33 per share | March 11, 2024 |
| Current Price (Post-Announcement) | ~$25 per share | June 2024 |
| Required Investment for Remaining Shares | $2.2 Billion | N/A |
