Gree makes foray into e-vehicles
China's largest air conditioner manufacturer is jumping on the electric vehicle bandwagon, having agreed to pay 13 billion yuan ($1.95 billion; 1.72 billion euros) to acquire an automaker in Guangdong province.
Gree Electric Appliances Inc will finance the takeover of Zhuhai Yinlong New Energy Co by selling 834.9 million new shares at 15.57 yuan apiece, about 19 percent lower than the stock's last traded price, according to its filing to the Shenzhen stock exchange on Aug 18.
Gree shares have been halted from trading since Feb 22 "because of a possible important takeover". Its shares will remain suspended until after the Shenzhen Stock Exchange and other government agencies review and approve the acquisition, the appliance maker said in a statement on Aug 18.
Established in 2004, Yinlong started making inroads into the new energy sector in 2009. The company sold 3,189 electric buses last year, seizing a 3.6 percent market share in China.
It has a lineup of seven electric passenger cars and 18 e-buses, and manufactures lithium-ion batteries and controller systems for electric vehicles, according to its website.
Dong Mingzhu, the president of Gree, has long made public that the company plans to produce e-cars as part of its strategy to diversify its business interests.
She told China Daily this year that Gree's business activities will range from its core air conditioners and white goods to smartphones, new energy vehicles and intelligent equipment.
The company launched the second generation of its smartphone in June, after an almost yearlong trial operation of its first generation, which was sold only to employees for testing purposes.
Auto industry analysts believe Gree's foray into the e-car sector is mainly a result of the favorable policies such as subsidies that have been introduced to promote and develop the sector.
China, already the world's largest new energy vehicle market, plans to put 5 million such vehicles on its roads by 2020.
However, some media reports have suggested Gree's takeover is aimed more at Yinlong's battery technology than its auto division.
Dong revealed in March that Gree is developing new products that will serve air conditioners and generate electricity for home appliances under the same roof, Automotive Business Review reported. The magazine said such products would require electricity generation and storage technologies, which Yinlong specializes in.
Gree also released its mid-year financial report on Aug 18. Its net profit rose 12 percent to 6.4 billion yuan in the first half of the year, while its revenue slipped 1.85 percent to 49.2 billion yuan.
Its revenue slumped nearly one-third to 99.8 billion yuan last year, the company's first annual sales decline on record.
