SANTA ROSA -- Electric vehicle maker Zap will acquire 51 percent of Chinese vehicle manufacturer Jonway Auto for $29.03 million in cash. Zap will also acquire exclusive international distribution rights to Jonway's automobiles in a stock deal valued at $31.5 million based on $1 per share.
The merger agreement was signed by the boards of directors for both companies on July 2.
Jonway has about 800 employees and currently manufactures approximately 1,000 vehicles a month with a capacity to produce up to 30,000 a year. It reported 2009 revenues of $40 million and about $20 million for the first quarter of 2010. Jonway will be completely debt-free upon the closing of the deal.
The transaction intends to combine Zap's electric vehicle technology with Jonway's mass-production capabilities to expand in the growing EV market in China. It will accelerate cost-effective manufacturing of Zap's electric vehicles and gives it access to Jonway's distribution channels.
Zap plans to acquire the remaining 49 percent of Jonway in a second phase of the transaction following final regulatory approval.
"By combining Zap's experienced team of EV engineers with Jonway's manufacturing capabilities, the combined Zap Jonway will be able to scale up with the fast-growing worldwide market for affordable electric and fuel-efficient vehicles," said Steve Schneider, CEO of Zap Jonway.
Zap's stock price was 57.5 cents a share at 10:45 a.m. today, an increase of nearly 28 percent from yesterday's closing price.