Zero Run Motors plans to issue subscription shares to Stellantis and establish a joint venture company to expand its international layout.

Intelligence Finance APP News: Zero Run Auto (09863) announced that on October 26, 2023, the company entered into a subscription agreement with Stellantis. According to the agreement, the company has conditionally agreed to issue and distribute 194 million H shares to Stellantis at a subscription price of HKD 43.8 per share. The subscription shares will be issued and distributed under the general authorization.

The total face value of the subscription shares is RMB 194 million, which is equivalent to approximately 21.07% and 17.40% of the total number of H shares issued by the company as of the date of this announcement and after the enlargement of the H shares through the subscription, respectively; and approximately 17.00% and 14.53% of the total number of shares issued by the company as of the date of this announcement and after the enlargement of the shares through the subscription, respectively. The subscription price represents a premium of 14.5% over the volume-weighted average price of the H shares for the 90 days prior to the subscription agreement date, and a premium over the average closing price of the H shares on the Stock Exchange of the five consecutive trading days immediately preceding the subscription agreement date.

On October 26, 2023, the company entered into a joint venture company establishment agreement with Stellantis, which relates to the establishment of a joint venture company between the company and Stellantis. After the establishment of the joint venture company, the joint venture company will be owned by the company and Stellantis with 49% and 51% equity interests, respectively. The joint venture company will become a consolidated subsidiary of Stellantis.

The company proposes to enter into an exclusive license agreement and a product sales framework agreement with the joint venture company. Under the exclusive license agreement, the company will grant the joint venture company an exclusive license to the intellectual property rights and other necessary rights, enabling the joint venture company to sell and distribute LPM products, after-sales service parts, and locally manufactured LPM products in the relevant regions, as well as manufacture components and provide services and support activities in the aforementioned areas. Under the product sales framework agreement, the company will sell LPM products to the joint venture group from time to time for distribution in the relevant regions, sell parts as needed for the production of locally manufactured LPM products, and sell after-sales service parts as needed for after-sales services.

It is reported that Stellantis is a publicly limited company registered and organized in the Netherlands, listed on the regulated markets of the New York Stock Exchange, Euronext Paris, and Borsa Italiana. Stellantis is a global leading automotive manufacturer and mobility service provider, with renowned and iconic brands that embody the founder's passion and vision, as well as the customers' love for its innovative products and services. Each brand under Stellantis has its own strengths and leads the world in the direction of travel, not only focusing on scale, but also striving to become the most outstanding sustainable mobility technology company, while adding value to all stakeholders and the communities in which it operates.As disclosed in the prospectus, one of the company's strategies is to expand into global markets and establish an international presence, particularly in the European market. The company's long-term strategy is to enter other major electric vehicle markets and become a global electric vehicle company. The strategic partnership with Stellantis will contribute to the company's goals. Stellantis has a strong global presence, with numerous automotive brands and a vast service and distribution network that can be leveraged. Subscription arrangements, joint venture agreements, exclusive licensing agreements, and product sales framework agreements are key components of the strategic partnership between the company and Stellantis, enabling the distribution of the company's vehicles in the relevant regions.

Stellantis has launched a long-term strategic plan called "Dare Forward 2030" to transform itself into a sustainable mobility technology company in line with its decarbonization strategy. By 2030, Stellantis aims to have a portfolio of over 75 fully electric vehicle models, achieving a 100% electric vehicle sales mix in the European passenger car market (excluding Malta, Iceland, Norway, Switzerland, and the UK) assuming favorable public policies, as well as a 50% electric vehicle sales mix in the US passenger car and light commercial vehicle market. In addition, the company's intelligent electric vehicles will benefit from mature sales and marketing systems, vehicle and parts distribution networks, charging, and after-sales services in the relevant regions. Therefore, the company believes that its intelligent electric vehicles align with Stellantis' plans and can benefit from synergies within Stellantis' ecosystem.

By expanding its international presence through the joint venture with Stellantis, the company can broaden its revenue base. It also plays a crucial and indispensable role in the joint venture by providing LPM products or components and enriching Stellantis' electric vehicle product portfolio. The expected collaboration is anticipated to attract new consumers for Stellantis and create new demand in the relevant regions, benefiting both the company and Stellantis.

While expanding overseas operations and establishing an international presence are key strategies for the company, it will also continue to develop its business in China. Therefore, the expected annual revenue contribution from the product sales framework agreement is projected to be less than 30%.