Chinese media reports that Avatr has reached an agreement on the merger and acquisition of HiPhi and that work at HiPhi will resume this month.
HiPhi is this year’s highest profile victim so far of the brutal war for dominance in China’s new energy vehicle sector. Rumors about the company first began circulating in January. Then in February just after Chinese New Year the company stopped production ostensibly for a six month period. Payment of January salaries was postponed until the end of February. Then all salary payments after that were to be progressively wound down so that after mid-March any employees remaining with the company would only receive minimum wage.
HiPhi CEO and founder Ding Lei paid a visit to Changan in February resulting in rumors that Changan would buy a 51% stake in HiPhi. Changan insiders said the details on the Internet were not correct and that talks were ongoing.
It seems that these talks have finally had some success, the largest shareholder of the Avatr brand is Changan. So far neither party is denying the takeover. HiPhi when approached by the media stated “The announcement that has not been officially released cannot be confirmed online, and the interview needs can be recorded and sent to the corresponding departments of the company.”
Avatr replied more ambiguously with “Through internal understanding, we currently do not have this information.”
With Avatr as a high end brand there is some fit between them and HiPhi. However there may well be a culture problem with HiPhi being a private startup and Avatr essentially a state owned enterprise. Byton, another promising startup, famously evaporated after the involvement of FAW.
Avatr started out as a joint venture between Changan and Nio. After Nio withdrew due to financial problems battery producer CATL joined the brand. Currently Changan holds 41% ownership, CATL 14%, Chongqing Chengan Foundation 11% and the remainder spread over various investment groups. The brand currently only produces the Avatr 11 SUV and Avatr 12 sedan with the new Avatr 15 and 16 set to join later this year.
HiPhi has been fighting for its life since the troubles came to ahead in February. Ding Lei has previously said that that HiPhi only has at most a three month period to turn itself around. The Avatr deal will certainly meet this time frame and mean that the company can perhaps live again. HiPhi since the troubles has even resorted to livestream selling to try to raise funds. In it Yang Yueqing, engineering project director of HiPhi, was seen trying to sell steaks and other items!
We will bring you more details of the deal as they emerge.
Sources: Autohome, Fast Technology
Hope that this SOE, Chang’an, will not do another snuff out….. of such a promising start up like HiPhi.
It has the potential to be a tasty “steak” indeed.