subject: ZAP (OTCBB: ZAAP) Heats Up with Merger [print this page] ZAP, the California Company which has been manufacturing electric vehicles (EV) for 15 years, announced today the signing of an agreement with China's Jonway Auto. ZAP will acquire 51% of Zhejiang Jonway Automobile Co. Ltd.
This agreement between the two small-caps will further maximize ZAP's strategy to sell into the lucrative and emerging China market. Since 1994, ZAP has supplied more than 117,000 different ranges of vehicles to the military, government and many corporate fleets. Its range includes electric trucks, vans, motorcycles, scooters and ATV's.
Jonway Auto is a wholly owned subsidiary of Jonway Group, a 20-year vehicle manufacturer in China. The company boasts a state-of-the-art 3.6M square foot plant in Sanmen, China. The plant currently provides more than 800 jobs to employees that manufacturer around 1,000 cars per month.
According to the agreement signed by the directors of ZAP and Jonway Auto on July 2nd, 201, ZAP will acquire 51% of Jonway Auto for $21M in cash. ZAP also landed the right to acquire the remaining 49% at the same valuation by March 30, 2011 or at the prevailing market valuation if acquired after the date.
"By combining ZAP's experienced team of EV engineers with Jonway's manufacturing capabilities, the combined ZAP Jonway will be able to scale up with the fast-growing worldwide market for affordable electric and fuel-efficient vehicles," said Steve Schneider, CEO of ZAP Jonway. "The new entity will leverage ZAP's extensive intellectual property and international market access with Jonway's current China distribution channels and revenue base, for enhanced shareholder value. The new company creates an integrated worldwide sales and manufacturing operation."
The merger between ZAP and Jonway has enormous potential for ZAP. For one, it will give them the access to Jonway's large distribution channels throughout China-Jonway has more than 80 factory direct dealerships and hundreds of factory authorized dealers.
Furthermore, the deal allows ZAP to commercialize its innovative EV technology and leverage the strengths of Jonway's large volume manufacturing capability to maximize production, sales, and ROI.
Earlier this year, through its joint venture ZAP Hangzhou, the company built and integrated electric drive systems into several Jonway Cars. These cars are now being exhibited and used as Electronic taxis in the Shanghai Expo.
Shares of ZAP are currently trading up $.02, or around 4% at $.53 on less than average volume.
