What’s new: A venture controlled by the founder of Chinese automaker Zhejiang Geely Holding agreed to acquire a 79% stake in Chinese smartphone maker Meizu, according to a statement published Monday by China’s market regulator.
The State Administration of Market Regulation said Hubei Xingji Shidai Technology Co. Ltd. agreed to purchase the stake from Meizu’s founder and a unit of Alibaba Group Holding Ltd. The statement didn’t disclose the financial terms of the deal.
After the transaction, Meizu founder Huang Zhang’s stake in the company will be reduced to 9.79% from 49.08%. Taobao China Holding Ltd., a wholly owned subsidiary of Alibaba, will sell its entire 27.23% stake to Xingji.
Xingji Shidai was launched by Geely Chairman Li Shufu last September with registered capital of 715 million yuan ($106 million). The company hasn’t conducted any real business. Li owns a 55% stake in Xingji Shidai.
Other shareholders of Xingji Shidai include Ecarx Holdings Inc. a mobility tech company providing in-vehicle mobility systems for Geely’s cars. Li is also the largest investor in Ecarx.
The background: Founded in 2003 as a maker of MP3 music players, Meizu was one of the earlier businesses to jump into smartphones in 2007, rolling out its first model two years later. Meizu operates a Xiaomi-like online sales model but has struggled to break into China’s top five smartphone companies amid fierce competition.
Alibaba invested $590 million in Meizu in 2015, aiming to integrate its struggling operating system YunOS with Meizu’s smartphone, but the collaboration didn’t succeed.
Other second-tier smartphone makers face similar challenges amid consolidation of the market around top players. Facing operational difficulties since 2017, Meizu took measures such as closing stores, reducing employees and cutting prices to lower costs and clear inventory. In the first quarter of 2022, Meizu's market share in China was about 0.1%.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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