Stellantis strengthens in China by investing €1.5bn for Leapmotor share

Stellantis intends to leverage Leapmotor's highly innovative and cost-efficient EV ecosystem in China to help achieve the key electrification goals set in Dare Forward 2030, while remaining open to exploring any further mutually beneficial synergies, the note points out.

HANGZHOU/MILAN (Reuters) - Stellantis will invest about 1.5 billion euros to acquire 21 percent of Chinese electric vehicle company Leapmotor, in which it will become a major shareholder with two seats on the board of directors.

The deal will enable Stellantis to strengthen its presence in China and provide the Chinese automaker with a base in Europe.

"The Chinese offensive (in electric vehicle production) is visible everywhere," Stellantis CEO Carlos Tavares told reporters. "With this agreement we can benefit from it instead of being its victims."

The agreement, a joint note said, also calls for the establishment of Leapmotor International, a Netherlands-based joint venture in which Stellantis will have 51 percent, with exclusive rights to export and sell as well as manufacture Leapmotor products outside the Chinese region. The joint venture will begin deliveries in the second half of 2024.

The car company is concerned about growing competition from low-cost Chinese electric vehicles in Europe, a fear shared by the European Commission, which has launched a state aid investigation into whether to impose duties to protect European manufacturers from importing Chinese vehicles.

Tavares has in the past objected to low-cost Chinese imports into Europe, but explained that the agreement with Leapmotor does not make Stellantis a "Trojan horse," criticizing the launch of the EU investigation.

"We like competition. Starting an investigation is not the best way to deal with these issues," he said.

Leapmotor's stock closed today's session down about 11 percent while Stellantis is down 1.5 percent in the Italian stock market.

Under the agreement, subject to regulatory approval, Leapmotor will issue 194.3 million shares to Stellantis at a price of 43.8 Hong Kong dollars per share, a premium of 19 percent over the last closing, giving Stellantis about 21.07 percent of the total Hong Kong-listed shares.

Shareholder Dahua said it will sell its 90 million Leapmotor shares to Stellantis as part of the deal.

(Italian version Francesca Piscioneri, editing Sabina Suzzi)