After WM Motor terminated the RTO process with Apollo Travel on the Hong Kong Stock Exchange, the story of "WM Motor Sells Oneself" comes to a new sequel - WM Motor sells itself to Kaixin Automobile. On the evening of September 11, Kaixin Auto Holdings announced that it had signed a non-binding acquisition term sheet with WM Motor and planned to issue a certain number of new shares to acquire 100% of the equity of WM Motor held by its existing shareholders.
With Kaixin Auto taking over, WM Motor may be able to renew its life again.
Happy to acquire Weimar, for what purpose?
An insider close to Kaixin Auto revealed that Kaixin Auto and WM Motor have been discussing the merger for a long time. Kaixin Auto’s acquisition of WM Motor is an overall acquisition, including overseas parent companies and domestic assets.
It is reported that since the process of US stocks is relatively simple, there may be further news about this merger soon.
In fact, it is not difficult to see from the dynamics of WM Motor that the merger and acquisition between Kaixin Automobile and WM Motor is not an emergency, but a layout after a consultation.
On September 8, WM Motor's "predecessor" Apollo Travel issued an announcement stating that relevant parties have agreed to terminate the acquisition of WM Motor. The announcement mentioned that the reasons for the termination of the acquisition include global market turmoil and geopolitical conflicts, continued uncertainty in the financial market atmosphere, and short-term economic recovery after the epidemic and other business factors.
Subsequently, WM Motor confirmed the news and posted on social media: "After careful consideration, WM Motor has voluntarily terminated the RTO process with Apollo Travel on the Hong Kong Stock Exchange."
Apollo Travel exited the market, and Kaixin Auto quickly took over.
According to public information, Kaixin Auto, formerly known as Renren Automobile, is a second-hand car dealer group under Renren.com. It was established in 2015, entered the second-hand car retail field in 2017, and was listed on Nasdaq in 2019.
Kaixin Auto's main business in the early stage was automobile finance. It will start its car manufacturing business in 2021, establish a new energy vehicle division, and form new energy vehicle R&D, production and marketing teams.
The acquisition of WM Motor is actually part of Kaixin Automobile’s car-making layout. But in the eyes of the outside world, this merger and acquisition is not a business act of "you are strong and I am weak", but more like mutual redemption.
Image source: Visual China
WM Motor's operating difficulties have long been a fact on the table. At the beginning of this year, there were endless reports of WM Motor employees being furloughed and without pay, and the office was cut off from water and internet, and its operations were basically at a standstill.
On the other hand, Kaixin Auto has been in the red since 2019. In the three years from 2020 to 2022, its net losses reached US$5.3 million, US$196.5 million and US$84.706 million respectively, with a cumulative loss of US$286.5 million.
In the face of poor business management, Kaixin Automobile still needs to acquire WM Motor through bloodshed. Kaixin Automobile is actually targeting two factories that WM Motor has production qualifications.
Kaixin Auto stated in the announcement that WM Motor currently has two Industry 4.0 standard smart manufacturing bases - Wenzhou Production Base and Huanggang Production Base (expected to achieve an annual production capacity of 250,000 units), and they have both smart manufacturing bases and two new energy vehicle production qualifications.
This is not only the only valuable asset left by WM, but also a rare resource in the current automobile market. In recent years, with the introduction of a series of policies, the Ministry of Industry and Information Technology has issued only a handful of new energy vehicle production qualifications. Previously, Ziyoujia had to declare that it could not deliver because it did not have "dual qualifications."
Kaixin Automobile was interested in building cars, and WM Motor needed a "successor", so a cooperation was reached.
It is worth mentioning that this is Kaixin Auto’s second merger and acquisition in the past three months. At the end of August this year, Kaixin Auto announced the completion of the acquisition of Maolinstar, and Maolinstar officially became a wholly-owned subsidiary of Kaixin Auto.
It is reported that Kaixin Automobile’s new energy vehicle product positioning will focus on micro pure electric vehicles, mainly for overseas markets, with prices within 100,000 yuan, targeting tier 3 to tier 6 cities.
Although everyone gets what they need, there is still a question mark as to whether this merger is a good deal for both parties.
Weimar once again "lives like an animal"
Since last year, Weimar has been looking for a new buyer to "survive" many times.
Even when the business situation was in crisis, it received capital injection from the local government of Mianyang City in December last year and received blessings from state-owned enterprises. The registered capital increased from 170 million yuan to 520 million yuan.
At that time, the legal representative, executive director and manager of WM Automotive Technology (Sichuan) Co., Ltd., a subsidiary of WM, also changed, from Shen Hui to He Wei; Mianyang Anzhou Investment Holding Group Co., Ltd. became the company's new shareholder, holding approximately 67.3% of the shares, while WM Automotive Technology Group Co., Ltd. reduced its shareholding ratio to 32.7%.
However, these funds were unable to save Weimar, which was suffering from severe hemorrhage, and its operating conditions continued to deteriorate. It was exposed one after another that employees were suspended without pay, property fees were not paid due to financial problems, the company was unable to bear the cost of app maintenance and iteration, and sales channels were paralyzed.
At the critical moment when he was on the verge of bankruptcy, Shen Hui found a new home for Weimar, namely Apollo Travel.
In January this year, Apollo Travel announced that it planned to acquire the entire issued share capital of WM Motor Global Investment Limited, a wholly-owned subsidiary of WM Holding, for US$2.023 billion, and would settle the matter by allotting 28.8 billion consideration shares at an issue price of HK$0.55 per share.
At that time, in order to supplement working capital, Weimar also received three financial supports before listing, nearly 2 billion yuan - a well-known commercial bank in Hong Kong and Macao invested 250 million Hong Kong dollars; Zhengwei International invested 500 million yuan; Agile Group invested 1.5 billion Hong Kong dollars.
Image source: Shen Hui Weibo
When the outside world thought that WM Motor was holding on to its arms to temporarily tide over the crisis, it announced that it had terminated the IPO process and turned to Kaixin Auto. At this time, Weimar is implementing what Shen Hui said on social media to "live like an animal." This time, how long can Weimar continue to live?
Investors have also expressed their stance on this transaction with practical actions. As of the opening of trading on September 13, Eastern Time, Kaixin Auto's stock price was still less than $1, with the opening price being 0.2610.
In March this year, Kaixin Auto also received a notice from Nasdaq stating that the closing price of its stock did not meet Nasdaq’s minimum stock price requirements. Nasdaq gives companies 180 days to return to compliance. Calculated according to the announcement time, September 25, 2023 will be the final deadline. If Kaixin Auto still does not meet the minimum stock price requirements, it will face delisting.
Weimar's future is still uncertain, but Shen Hui is already abroad. Similar plots are like history repeating itself. Although Shen Hui has stated on his Weibo that he is on a business trip, when he will return to China has become a matter of particular concern to netizens.