Kaixin Holdings announced a securities purchase agreement to acquire 100 % equity of Zhejiang Ordinary Smile Auto Sales Co., Ltd., a Chinese automobile wholesale and retail firm, through its wholly owned subsidiary Zhejiang Kaixin Auto Co., Ltd. The deal, signed on December 2, 2025, will be financed with up to $15 million of newly issued Class A ordinary shares.
The consideration is structured as a performance‑based escrow: the shares will be released in five equal tranches over five years, with each tranche tied to audited revenue milestones ranging from RMB 665 million ($94.2 million) in year 1 to RMB 974 million ($137.9 million) in year 5. This phased release aligns Kaixin’s equity dilution with the target’s growth trajectory and mitigates immediate cash outlay.
Kaixin’s decision comes amid a period of severe financial strain. The company reported a net revenue of $95,000 and a net loss of $8.4 million for the first half of 2025, with general and administrative expenses rising sharply. A 1‑for‑30 share consolidation effective December 1 was also announced to meet Nasdaq listing requirements, underscoring liquidity pressures.
Management views the acquisition as a strategic pivot to consolidate its automotive operations and expand its footprint in China’s wholesale and retail network. By bringing Zhejiang Ordinary Smile under its umbrella, Kaixin aims to leverage the target’s established dealer relationships and inventory base, potentially generating incremental revenue streams that could offset its current losses.
Analysts have expressed caution, citing the high‑risk, highly dilutive nature of the deal given Kaixin’s weak balance sheet. The market’s short‑term enthusiasm, reflected in a 21% after‑hours surge, is tempered by concerns over the company’s ability to meet the revenue targets and sustain profitability in a competitive market.
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