Jinma Purchases Zotye with 11.6 Billion Yuan

Shanghai, March 8th, Gasgoo - The acquisition of Zotye Auto twisted and turned, but it finally settled with the results announced by China Securities Regulatory Commission. Gasgoo learns from China Securities Regulatory Commission that Jinma’s acquisition of Zotye Auto was conditionally approved. Allegedly, after the mergers and acquisitions, the company's main business will expand from auto parts manufacturing to vehicle manufacturing, and the company's market value will exceed 20 billion yuan.

Specifically, the company will acquire 100% stake of Zotye, with the transaction price of 11.6 billion, issuing 1.302 billion shares with 8.91 yuan / share. Matching raised funds was no more than 2 billion yuan, proposed to issue 219 million shares with 9.14 yuan / share. Net funds will all be used for new energy vehicle development projects.

Actually, as early as in March 2016, Jinma released the draft of purchasing Zotye with the price of 11.6 billion yuan. However, in the initial restructuring of the draft, acquisition method was the combination of cash payment and issue of shares, with the price of 5.44 yuan per share. On October 10th 2016, Jinma restart the acquisition, intending to purchase Zotye with 11.6 billion yuan. And it would buy 100% stake of Zotye with issue shares.

According to the announcement, the audit opinion of the commission: "Applicant should supplement the effects of new energy vehicles subsidy adjustment on subsequent profitability. Independent financial adviser and appraiser check and make clear opinions. Changjiang Elec. Tech. and Jinma implement one by one, and submit to supervision department of listed company relevant supplementary materials and the revised report in 10 working days."

On the evening of March 5th, Jinma replied to the Commission. It supplemented the effects of new energy vehicles subsidy adjustment on subsequent profitability. It is reported that new energy vehicles subsidy included in revenues in 2014, 2015 and 2016 were, respectively, 443 million yuan, 1.141 billion yuan and 1.551 billion yuan, accounting for 6.69%, 8.30% and 6.89% respectively. However, Jinma believes that the the decline of financial subsidies for new energy vehicles does not affect so much. With the rapid development of new energy industry, corresponding components supporting enterprises develop rapidly and industrial scale advantages gradually formed at the same time. Decline of subsidy instead forces the technology to upgrade constantly. Therefore, the corresponding parts and accessories cost gradually decrease and the quality of products will also be greatly improved.

According to the supplementary provisions, Jinma will raise no more than 2 billion yuan from additional shareholder, and the funds will all be used for new energy technology: research and development of new energy vehicle reducer, motor and motor controller, power battery, vehicle controller, charging, increasing range and other core areas. It will also construct trial and test technology center, covering product trial-manufacture, and product test (including vehicle, system, assembly, parts, materials, etc.).