Today, Gree Electric intends to acquire a 100% stake in Zhuhai Yinlong by issuing shares at a transaction price of 13 billion yuan. After completion of the acquisition, Zhuhai Yinlong will become a wholly-owned subsidiary of Gree Electric.
According to statistics, Zhuhai Yinlong was founded in 2004. It is a research and production integration enterprise specialized in lithium battery, electric vehicle powertrain, vehicle and smart grid peaking and frequency modulation system, and has three major production bases in the country. With an annual production capacity of 33,000 pure electric buses, 100,000 pure electric SUVs, 620 million ampere-hours of batteries, 5,000 tons of lithium titanate raw materials, and 800 MW of storage capacity. Last year, sales of new energy vehicles reached 7,000, and annual sales of pure electric buses ranked seventh in the country.
In recent years, Gree Group has continuously diversified its investment from mobile phones to new energy sources. In fact, as early as March 2016, Gree Electric Appliance Co., Ltd. has issued an announcement that plans to issue shares to purchase assets. The subject of the transaction is Zhuhai Yinlong New Energy Co., Ltd. For Gree at this time, why should we buy Yinlong?
Good policy environment:
According to analysis from outsiders, the state clearly stated that it is necessary to vigorously support new energy vehicles with pure electric power, and government agencies have successively introduced subsidies for new energy vehicles. Under the favorable policy environment, Gree and other manufacturers have been willing to gamble.
Focus on battery technology:
Dong Mingzhu said at the Gree Shareholders' Electric Appliances Conference in 2015 that his intention to acquire Yinlong was to acquire Yinlong Power Battery and Energy Storage Battery Technology in addition to the vehicle manufacturer.
In May of this year, when the media interviewed Dong Mingzhu, he asked: Yinlong’s revenue in 2015 was only 3 billion yuan, far from the 100 billion yuan target, and it costs 10 billion yuan to buy it. Is it worth it?
Dong Mingzhu immediately gave the following answer:
The value of Gree's air conditioner for more than 20 years is several billion. We have doubled it in three years. What can this be considered? The current battery is full for 6 minutes and the battery life can be up to 10 years and 20 years. This technology does not fly? Now the car that runs on Tiananmen Square in Beijing is using the technology of Yinlong. Its complex ownership structure is not complicated. I don't care. I've come to this technology.
From a series of statements by Dong Mingzhu, it can be seen that Dong Mingzhu’s plan to build a car has no time to delay.
Before this, there were also cases where household appliance companies entered the automotive sector. Five years ago, Huang Hongsheng, the founder of Skyworth, reorganized the acquisition of Nanjing Jinlong into a new energy vehicle. In the first four years, the company took over losses and lost 40 million in one year. This is undoubtedly a lesson for Gree.
Judging from the current situation, Gree’s acquisition of Zhuhai Yinlong and existing businesses do not coincide well with each other. In comparison, Leshi and other companies entering new energy vehicles are closely linked to their own business ecosystems, of which LeTV has a controlling interest. Easy to come to improve the entire car hardware and software service system. In the face of multiple uncertainties, Yinlong's entry will be incremental or pressure on Gree, and we will wait and see.
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