GEELY AUTO(HK:00175) 3 6 Ke·2025-05-16 00:41Core Viewpoint - Geely Auto is merging with Zeekr, with Geely's executives taking a dominant role in the new company, indicating significant organizational adjustments for Geely compared to Zeekr [1][3] Group 1: Cost Reduction and Organizational Streamlining - Geely Auto announced a non-binding acquisition offer for Zeekr at $2.566 per share, aiming to facilitate Zeekr's delisting from the NYSE [2] - The timing of the privatization proposal is notable, as it comes just three days before Zeekr's one-year anniversary of being listed on the NYSE [3] - Geely's CEO, Gui Shengyue, emphasized the need for rapid problem-solving through integration to enhance competitiveness in a challenging Chinese automotive market [3] - The merger aims to address issues of inconsistent interests between the two companies due to different employee incentive mechanisms [3] - Geely's management structure will see Geely's CEO, Gan Jiayue, leading the merged entity, with a focus on significant organizational changes for Geely [3][5] - Geely aims to achieve cost reductions of over 3% in production, 10-20% in R&D optimization, and 10-20% in management efficiency post-merger [5] Group 2: Financial Implications and Market Positioning - In 2024, Geely and Zeekr's R&D expenses were approximately 10.42 billion and 9.72 billion respectively, with potential savings of over 2 billion from R&D alone if cost reduction targets are met [6] - The privatization offer represents a 13.6% premium over Zeekr's stock price on the announcement date and a 20% premium over the average price of the last 30 trading days, yet it remains below half of Zeekr's pre-IPO valuation [8] - The merger is primarily driven by the need for a more concentrated and efficient main business amidst increasing competition and diminishing returns from new energy and smart technology [9] - Geely's internal restructuring began in 2024, focusing on "focusing on the main business and concentrated development" as part of its strategic framework [9][12] Group 3: Strategic Integration and Brand Management - Geely is undergoing a systematic reform to address issues of brand matrix dispersion and insufficient business synergy, leading to the "One Geely" strategy [12] - The restructuring will streamline the ownership structure, allowing Geely to transition from a holding group to an operational entity [14][15] - Post-merger, Geely will maintain a multi-brand strategy, with Zeekr targeting the global luxury tech market, Lynk focusing on high-end new energy, and Geely Galaxy and China Star catering to the mainstream consumer market [15]