(Yicai) Nov. 15 -- Shares of Zeekr Intelligent Technology Holding plummeted after its parent company, Geely Holding Group, announced that the premium electric vehicle brand would acquire its more affordable sister brand, Lynk & Co, to create the "new Zeekr," with a target of exceeding one million in annual sales by 2026.

Zeekr [NYSE: ZK] plunged 23.7 percent to USD22.24 in New York yesterday. In Hong Kong, Geely Automobile Holdings [HKG: 0175], the listed unit of Geely, fell 5.3 percent to HKD13.18 (USD1.70) as of 2.28 p.m.

Under the restructuring, Zeekr will acquire 51 percent of Lynk & Co's equity, while a Geely Holding unit will have the remaining 49 percent, the Hangzhou-based conglomerate announced yesterday.

On the same day, Geely subsidiary Volvo disclosed that it would sell a 30 percent stake in Lynk & Co to Zeekr for CNY5.4 billion (USD746.5 million). The cash transaction is expected to close in the first quarter of next year.

In addition, Zeekr purchased another 20 percent stake in Lynk & Co from its parent for CNY3.6 billion. It will also subscribe to 1 percent of Lynk & Co's increased registered capital at a cost of nearly CNY370 million (USD51.2 million).

Geely Holding has high expectations for the integration, emphasizing that the collaboration between Zeekr and Lynk & Co will drive economies of scale, with a goal of achieving annual production and sales exceeding one million units by 2026.

Furthermore, Geely Auto's controlling stake in Zeekr will be further expanded, following Geely Holding's transfer of an 11.3 percent stake in Zeekr. This will give Geely Auto around 62 percent ownership of Zeekr. Public data indicates Geely Holding owns nearly 40 percent of Geely Auto.

The integration of Zeekr and Lynk aims to eliminate competition between the two brands in terms of market positioning, development capabilities, and sales networks, according to Gui Shengyue, chief executive of Geely Auto.

The "new Zeekr" will keep the operations of the two brands independent, An Conghui, CEO of Zeekr, said yesterday. The brands have different market positioning as Zeekr covers the luxury market and Lynk covers the medium to high-end market, he added.

Zeekr will focus on medium- and large-sized luxury models, while Lynk & Co will cater to the high-end market of small- and medium-sized cars. Both brands will produce pure electric and hybrid vehicles, with larger models being hybrid, he added.

Editors: Xu Wei, Emmi Laine