Chinese secondhand car dealership Kaixin Auto Holdings on Thursday said it has received approval from Nasdaq to acquire Haitaoche, an e-commerce platform for imported cars.
Talks of the acquisition began last November before the two companies signed a definitive share purchase agreement on December 31, 2020, Kaixin Auto said in a statement, adding that the deal is expected to be finalized this May.
Haitaoche on Monday also announced that it has signed a cooperation agreement with JD.com, and aims to sell 2 billion yuan ($308 million) worth of Haitaoche vehicles on the e-commerce platform.
“The volume of sales will then increase by at least 50% annually during a three-year period. The total sales of the cooperation agreement is 9.5 billion yuan ($1.4 billion),” the company stated.
Kaixin’s Nasdaq-listed shares closed up 8% at $2.56 on Thursday following the significant merger announcement.
Kaixin Auto Holdings, formerly CM Seven Star Acquisition Corporation, was established in 2015 by parent company Renren Inc. and is headquartered in Beijing. Kaixin, which translates as “happy”, primarily sells used vehicles from premium brands including Audi, BMW, Mercedes-Benz, Land Rover and Porsche. It also offers third-party financing, extended warranties and insurance services.
The acquisition of Haitaoche will allow Kaixin Auto to tap into China’s fast-growing e-commerce auto market, which it hopes will shift the momentum following a period of losses and bad press.
In the first half of 2020, the firm reported a revenue of $33 million, just a tenth of its earnings in the previous year.
In late March, Kaixin Auto was accused of setting up 14 fake joint ventures (JV) between May 2017 and March 2018 to extend its second-hand car sales network nationwide, according to a report by Securities Times.
Several local partners among these JVs have also accused Kaixin Auto of falsifying inventories and sales contracts, the report added.