Gree Electric Appliances Inc., China’s largest air-conditioner maker, is going ahead with a plan to diversify its business outside of home appliances by paying 13 billion yuan ($2 billion) to buy an electric-vehicle manufacturer.
The appliance maker, which announced its intention to buy Zhuhai Yinlong New Energy Co. in March, will fund the purchase by selling 834.9 million new shares at 15.57 yuan apiece, about 19 percent lower than the stock’s last traded price, according to a filing to the Shenzhen stock exchange. The company’s shares have been suspended from trading since February.
Gree is making the purchase in order to support the Chinese government’s push to clean up the environment and promote greener technologies, Chairman Dong Mingzhu said in an interview in Beijing in March.
Yinlong started manufacturing batteries for electric vehicles in 2009 and has a line of seven electric passenger cars and 18 electric buses, according to its website. Gree gets about 86 percent of its revenue from manufacturing air conditioners and parts. It sells two out of every five air-conditioners in China, according to data from Euromonitor International.
Gree is among the dozens of startups and industrial companies venturing into the field of producing electric vehicles. China has designated new-energy vehicles a strategic industry as part of a broader push to upgrade its manufacturing sector. Electric vehicles also would curtail tailpipe emissions that contribute to worsening air pollution in major cities.
By Chua Kong Ho