(Yicai) March 17 -- Shares of China's Youon Technology surged by the daily limit after the loss-making hydrogen bike platform announced that Yang Lei, chief executive of Ant-backed bike-sharing giant Hello, will become its actual controller.

Youon [SHA: 603776] closed 10 percent higher at CNY16.81 (USD2.30) in Shanghai today, extending the year-to-date uptick to exceed 30 percent.

Hamao Commerce Consult, a subsidiary of Hello, will become the controlling shareholder of Youon, the Jiangsu province-based hydrogen-powered bike company announced yesterday. Hamao and Yang, the co-founder of Hello, will spend around CNY1.5 billion (USD209 million) to take control of Youon, based on several transactions.

Youon is a pioneer in shared hydrogen bikes in China but the business of offering an even more environmentally-friendly alternative to electric bikes has turned out to be difficult as the firm expects to remain unprofitable last year.

The ownership shift is expected to bring in shareholders with rich industrial resources to support Youon's long-term growth, the target company said, adding that Hello's business layout covers mobility, ride-hailing and local lifestyle services.

Multi-Step Acquisition

The shareholder shake-up requires several steps. First, Hamao will acquire 32.7 million shares -- representing almost 13.7 percent of Youon's total share capital -- from Sun Jisheng and other individual shareholders for CNY450 million (USD62 million). Sun also agreed to waive the voting rights of the nearly 33 million shares, making up 13.8 percent of the total.

Moreover, Hamao will buy 14.4 million shares held by Yunxin, an investment company under Ant Group, making up 6 percent of equity capital. The price is CNY220 million.

In order to consolidate Yang's position as the actual controller, Youon also agreed to issue no more than 71.8 million new shares to Hamao, a portion not exceeding 30 percent of Youon's share capital before the issuance. The proceeds are expected to reach up to CNY840 million.

After the transfers, the shareholding of Sun and persons acting in concert will decline to 24.9 percent from 34.2 percent, and Yunxin's shareholding ratio will drop to 1.9 percent from 7.9 percent.

Youon has fallen deeper into losses in recent years. In 2023, its net loss widened to CNY127 million from the previous year's CNY68 million (USD9.4 million) while revenue dropped 20 percent to CNY545 million.

The company expects to report a net loss of CNY55 million to CNY80 million for last year along with falling revenue due to the shrinking shared bicycle business and inventory cuts.

Editor: Emmi Laine