In a bold, cross-industry move, Chinese extruder Conch Profiles and Science Co. Ltd. plans to acquire a majority stake in Chery Automotive Co. Ltd.'s electric vehicle subsidiary.
Publicly traded Conch shared few details in its recent filing with the Shenzhen Stock Exchange that announced the news, other than that it plans to finance the deal with cash and issuance of additional shares.
Chinese financial media Caixin said privately held Chery as a whole saw its 2015 profit tank 70 percent to 173 million yuan, while total sales dipped 6 percent to 28.1 billion yuan. The EV business, however, managed to more than triple its sales and net profit in the same year, reaching 1.1 billion yuan and 87.3 million yuan, respectively. It sold 140,000 EVs in 2015.
Conch reported 2015 sales of 3.4 billion yuan, down 12.2 percent year over year. Net profit declined at a similar rate of 12.9 percent to 94.5 million yuan. It is one of the largest profile extruders in China with annual capacity of 600,000 metric tons.
Both Conch and Chery are based in Wuhu, Anhui province. The government-owned Anhui Provincial Investment Group Holding Co. Ltd. has an investment in both companies.
Chery currently owns 40 percent of its EV subsidiary, and the remaining stake is now held by government-backed investment firms.