CATL is hero Zeekr’s minority shareholders need

ZEEKR Intelligent Technology Holding

03/06/2025 04:57

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own

By Katrina Hamlin

HONG KONG, June 3 (Reuters Breakingviews) - Contemporary Amperex Technology 300750.SZ is best known as the world’s largest battery maker. Now, the $333 billion Chinese company looks like an accidental advocate for minority shareholders. It may need to firm up its new role, however.

Carmaker Geely Auto 0175.HK wants to take its electric-car unit Zeekr ZK.N private at a $6.5 billion valuation just a year after its stock debuted in New York. As the group and founder Li Shufu control nearly 80% of shares, that seemed like a done deal.

Yet the target's early backers, including CATL, Intel Capital and Boyu Capital, a Chinese asset manager, have written to Zeekr’s board objecting to the lowball bid, Reuters reported, citing three people familiar with the situation.

They have a point. The 14% premium Geely is offering to the previous day’s closing share price is miserly. Over the past twelve months, the average take-private premium in the U.S. was 39%, per Dealogic. Even if Geely's heavy existing ownership merits some discount, at 0.2 times forecast sales for 2026, the implied valuation is also far below the 0.9 average for a basket of five peers, per Visible Alpha.

For now, Zeekr shares are trading in line with the cash and stock offer price, but the company's special committee set up to evaluate the offer might yet be tempted to listen to CATL, which is also a top supplier.

Robin Zeng’s group has been involved in multiple fundraising rounds for Zeekr, including the $500 million deal alongside Boyu and Intel in 2021 and a $750 million round in 2023, which valued the company at $13 billion. CATL has a five-year partnership with Zeekr, which was the first marque to use its 1000 km-range Qilin batteries. It also works with other brands controlled by Li, such as Volvo Cars VOLCARb.ST.

There may be limits to CATL’s sway as a supplier, but it has dozens of other reasons to embrace a new identity as an active shareholder too. CATL is a prolific investor in its partners, spending over $7 billion across more than 40 deals during the past decade, Dealogic data shows. Its holdings include Nio 9866.HK, Hozon and IM Motor.

These stakes are typically used to secure stronger ties with both clients and suppliers. In pushing back against Geely's lowball offer, CATL may be hoping to protect the value of the rest of its portfolio too.

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CONTEXT NEWS

Geely is undervaluing its electric-car unit Zeekr in a $2.2 billion buyout offer, five early investors in Zeekr have written to its board, Reuters reported on May 30, citing three sources with direct knowledge of the matter. The investors include Contemporary Amperex Technology, Intel Capital and Boyu Capital, the report added.

Geely Auto on May 7 offered to take private its New York-listed electric vehicle unit Zeekr Intelligent Technology, valuing the company at $6.5 billion. The Chinese parent offered to pay $25.66 per Zeekr American Depositary Receipt, a premium of about 14% to Zeekr’s closing price on May 6. Zeekr ADS holders can also opt to receive 12.3 newly issued Geely shares.

Geely's offer values Zeekr at a lower price-to-sales multiple than peers https://www.reuters.com/graphics/BRV-BRV/gdvznxqdyvw/chart.png

(Editing by Una Galani; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))