Israel’s Kenon, China’s Chery sell control in car maker for $1 billion
After news of the sale of control of Qoros, shares of Kenon, controlled by business tycoon Idan Ofer, surge almost 30% in Tel Aviv
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Shares of Israel’s Kenon Holdings Ltd., controlled by business tycoon Idan Ofer, surged almost 30 percent in Tel Aviv Tuesday after the company said that a China-based investor related to the Baoneng group has bought a 51 percent stake in its loss-making car manufacturing unit Qoros Automobile Co.
The Chinese investor paid $1 billion for the stake, Kenon said in a statement to the Tel Aviv Stock Exchange. Kenon shares advanced 27% at 1:15 p.m. in Tel Aviv.
As a result of the deal, Kenon, which owned a 50% stake in Qoros, said its stake in the car maker will now drop to 24%. The stake of Wuhu Chery Automobile Investment Co. Ltd, which also held a 50% stake in Qoros, will drop to 25%. Wuhu is a subsidiary of Chery Automobile Co. Ltd.
Qoros, founded by Kenon and Chery, develops and markets cars with regular, hybrid, and electric engines worldwide including in the Chinese market. Its losses to date total nearly $1.6 billion, the Globes website reported.
The agreement with the Chinese investor is a lifesaver for the car maker, Globes said, as it has not managed to make headway in penetrating the market despite the huge investments and the heavy losses incurred by its shareholders.
As part of the deal, Kenon will have the option to sell its entire remaining stake in Qoros for some added $480 million to the Chinese investor, in two stages, and the Chinese investor will have an option to increase its stake to 67% over the next two years. The agreement also stipulates that Qoros will have to repay existing shareholder loans to Kenon and Chery for a total of some $145 million. The investor has also made a commitment to buy, either directly or via an affiliate, some 100,00 vehicles a year from Qoros, over the next three years.
Ofer’s previous car venture, Better Place, which hoped to revolutionize driving through the use of battery-switching in electric cars in Israel and worldwide, filed for bankruptcy in 2013 after it burned through some $454 million in 2012 alone, with $7 million in revenue and an operating loss of $386 million. Ofer owned a stake in Better Place via Israel Corp.
