In view of the high levels of air pollution in Chinese cities, the government there is offering heavy subsidies to EV manufacturers. To take advantage of the anticipated growth in the number of electric vehicles on the roads, the largest air conditioner manufacturer in China, Gree Electric Appliances of Zhuhai has finalized a deal to acquire Zhuhai Yinlong New Energy, a company that manufactures lithium-ion batteries and electric vehicles. The USD 1.95 billion merger will take the form of a stock swap. Yinlong’s 21 stockholders will get 834.93 million shares that are worth 15.57 yuan each as an outcome of the deal.
Yinlong New Energy is a startup that was established in 2009 and is based in Zhuhai, the same city where Gree is also based. The company has three manufacturing facilities; one in Guangdong province and two others in Hebei province. The three plants have the capacity to manufacture 33,000 electric buses on an annual basis. In 2015, the company made 3,189 units, thus making Yinlong the seventh-largest manufacturer of electric buses in China.
Gree meanwhile has been facing declining demand for its products, with revenue dropping in the January-June period by 1.9% when compared to the same period last year to 49.18 billion yuan.
The electric-vehicle industry meanwhile has very bright prospects, with the Chinese government offering generous subsidies for each electric car or plug-in hybrid sold. In preparation for this trend, other companies are also joining the EV bandwagon. The Midea Group recently took over German robotics firm Kuka in a USD 4.19 billion deal
Hamid Moaref has always been fascinated by cars and the automotive industry. His family has a longstanding association with the industry and has been in the tire business for the past 35 years. Raised in Dubai, Hamid attended Capilano University in Vancouver where he graduated with a BBA in marketing before attending an intensive course in magazine publishing in 2005. He has been the publisher and chief editor of Tires & Parts magazine for the past ten years.
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