On 28 May 2020, Gotion High-Tech Co., Ltd. ("Gotion", 002074.SZ) and Volkswagen (China) Investment Co., Ltd. ("VCIC") successfully signed a package deal with respect to strategic cooperation, including a Share Subscription and Strategic Cooperation Agreement between the two companies, and a Share Purchase Agreement and a Shareholders Agreement between VCIC and the controlling shareholder of Gotion .This transaction is a landmark case of Chinese A-share listed companies bringing in strategic investments from international OEM after effectiveness of the Foreign Investment Law and introduction of the CSRC's new refinancing regulations in early 2020. The transaction has a number of innovative arrangements in its structure.
According to the agreements reached among the parties, Gotion will make a private placement equivalent to 30% of its total share capital prior to the placement to VCIC, raising a total of not more than RMB 7,306,207,300. The funds raised will be invested in new power lithium batteries projects, high-nickel ternary cathode material projects and to increase working capital of Gotion. At the same time, the controlling shareholders of Gotion will transfer approximately 5% of the total share capital of Gotion to VCIC, making VCIC the largest shareholder after the Transaction. The parties also reached a series of strategic arrangements in connection with supply of battery products.
Gotion is a leading domestic lithium battery manufacturer for new energy vehicles, and has a focus on independent research and development, production and sales of lithium-ion batteries, with a long-established industry-leading market share. Volkswagen Group is one of the strongest multinational companies in the global automobile industry, and has been vigorously promoting its electric vehicle strategy in recent years. This deal marks the kickoff of a strategic cooperation relationship between Gotion and Volkswagen China. The parties will complement each other in technology and resources and realize common development in the new energy sector. Thanks to introduction of a series of policies and measures by China to promote foreign investment and capital market reform, the successful signing of the transaction will inject new vitality into the new energy sector as well as China's capital market.
As the legal counsel of Gotion for the deal, KWM team has provided comprehensive legal services on this strategic investment project. The KWM project team is led by partners Xu Ping and Zhang Yongliang, and consists of partners Song Yanyan, Yao Lijuan, and senior associates Dong Yun and Zhang Dai. The successful signing of agreements is a critical milestone of this deal. Going forward, KWM will continue to assist the client to close the deal smoothly.
