Pursuant to our material event disclosures dated 26.02.2018 and 02.07.2018, Vestel Elektronik Sanayi ve Ticaret AŞ acquired 100% shares (50,000 shares each with a nominal value of TL 1) of Zorlu Gayrimenkul Proje Taahhüt Anonim Şirketi at their nominal value of TL50,000 from the existing shareholders, namely; Ahmet Nazif Zorlu, Zeki Zorlu, Selen Zorlu Melik, Olgun Zorlu ve Mehmet Emre Zorlu. The acquisition was done with the aim of converting this company by amending its Articles of Association to another company, which will become the vehicle for undertaking Vestel Elektronik Sanayi ve Ticaret AŞ’s planned investment for battery manufacturing. The payment for the shares was made upfront in cash.
At the Extraordinary General Assembly Meeting of Zorlu Gayrimenkul Proje Taahhüt Anonim Şirketi held on July 5, 2018, the amendments to the company’s Articles of Association were approved and then registered with the trade registry. Accordingly, the company’s corporate title was changed to Vest Batarya Sistemleri Anonim Şirketi and the company’s “Purpose and Subject” was amended as production, marketing, sales, import and export of battery anode, cathode and cells and battery packs used in electric vehicles and electrical energy storage systems.
As per our material event disclosure dated February 26, 2018, the Board of Directors of Vestel Elektronik Sanayi ve Ticaret AŞ (“Vestel Elektronik”) passed the following resolution at its meeting on June 29, 2018.
Pursuant to the Company’s goal to diversify its lines of business and achieve profitable growth by investing in new-generation technologies, Vestel Elektronik will establish a battery plant to manufacture batteries for electric vehicles and energy storage systems in a 50/50 partnership with the Chinese investment company GSR Capital Resources Corporation, which is set to become one of the major global players in battery manufacturing through recent acquisitions and the Chinese National Modern Energy Holdings Limited, which focuses on renewable energy and manufacturing of electric vehicles with the aim of turning our country into a battery production hub for the European market.
In order to secure the supply of nickel sulphate and cobalt sulphate compounds, which are critical raw materials for the production of EV batteries, it was decided by the unanimous vote of those present at the meeting to purchase 916,335,000 shares (each with a nominal value of TL1 and representing 50% of the company’s share capital) of Meta Nikel Kobalt Madencilik Sanayi ve Ticaret AŞ, which is involved in nickel-cobalt mining, for a total consideration of US$250 mn. The acquisition value is in accordance with the valuation range of US$447.2 million and US$572 million stated in the independent appraisal report prepared by Ernst & Young Advisory Services, which is licensed by the Capital Markets Board and also takes into account the transaction value agreed in the share purchase agreement signed between Zorlu Group and the afore-mentioned Chinese companies on February 25, 2018 for the sale of the 50% shares of Meta Nikel Kobalt Madencilik Sanayi ve Ticaret AŞ to the latter. The amount due to Zorlu Holding (US$237 mn) will be offset against Vestel Elektronik’s receivables from the Holding while the remaining amount (US$13 mn) will be paid in cash to other shareholders within one month of the share transfer.
An assessment of the acquisition pursuant to the Articles 5 and 6 of the "Communiqué on the Common Principles Regarding Material Transactions and the Right to Dissociate (II-23.1) ("Communiqué") by the Capital Markets Board indicated that;
a) The ratio of the transaction amount to Vestel Elektronik’s total assets reported in the Company’s latest financial statements announced to the public (March 31, 2018): Based on the transaction value of TL 1,152,075,000 and the Company’s total assets of TL 14,734,356,000, the ratio is calculated as 7.8%.
b) The ratio of the transaction value to the Company’s market value, which is calculated based on the arithmetic mean of the daily adjusted weighted average prices for the six months prior to the Board of Directors’ resolution: The ratio of the transaction value, which is TL 1,152,075,000, to the Company’s average market value, which is calculated as TL 3,287,965,435 based on the arithmetic mean of the daily adjusted weighted average prices for the six months prior to June 29, 2018, is 35%.
The ratios calculated above fall below the 50% threshold set forth by the legislation. As such, the acquisition is not considered to be a "Material Transaction" as per the Communiqué.
The demand is projected to rise rapidly for the Li-ion batteries, the most crucial and costly component of electric vehicles, in line with the growth in the electric vehicle market. Nickel and cobalt are the most essential raw materials for the production of Li-ion batteries. As such, the increasing penetration of electric vehicles is expected to increase the demand for nickel and cobalt and make sustainable and secure supply of these materials more and more critical. The fact that currently a large portion of the world's nickel and cobalt reserves are located in regions where supply may be interrupted puts the supply security of these materials at risk. Accordingly, in an effort to secure the supply of these materials and protect themselves against price fluctuations, major global battery manufacturers are investing in companies that hold nickel and cobalt reserves.
For these reasons, the above acquisition is expected to secure the raw materials needed for Vestel Elektronik’s planned battery investment and will also serve towards the Company’s goal of becoming a prominent automotive electronics supplier for the European market in the medium-long term.
Meta Nikel Kobalt Madencilik Sanayi ve Ticaret AŞ (“META”) which was founded in 2000 to undertake nickel mining in Turkey, has been operating under Zorlu Group since 2007. The company's nickel cobalt mining facility in Gördes, Manisa was commissioned at the end of 2014. The facility has a production capacity of 10,000 tons of nickel content and 550 tons of cobalt content per annum. Besides Gördes, META also has a licensed field in Eskişehir and undertakes surveying activities in various regions of Turkey. Currently, META produces nickel-cobalt hydroxide (MHP), which is an intermediate product, and plans to undertake an investment for the production of nickel sulfate and cobalt sulfate compounds, which are critical for Li-ion battery production in the upcoming period.
Pursuant to our announcement dated June 2, 2018, the incorporation and registration procedures for “Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret AŞ”, which is established primarily to produce electric passenger cars and carry out supporting activities within the framework of Turkey’s Automobile Project, have been completed. Vestel Elektronik Sanayi ve Ticaret AŞ participates in the said company as a founding partner with a 19% share.
Vestel Elektronik Sanayi ve Ticaret AŞ bought 83,366 Vestel Beyaz Eşya Sanayi ve Ticaret AŞ (“Vestel Beyaz Eşya”) shares in the stock market at a price range of TL 10.60 to TL 11.00 per share on June 21, 2018. Following the transaction, the Company’s share in Vestel Beyaz Eşya reached 95.18%.
Vestel Elektronik Sanayi ve Ticaret AŞ bought 89,132 Vestel Beyaz Eşya Sanayi ve Ticaret AŞ (“Vestel Beyaz Eşya”) shares in the stock market at a price range of TL 11.05 to TL 11.30 per share on June 11, 2018. Following the transaction, the Company’s share in Vestel Beyaz Eşya reached 95.13%.
Vestel Elektronik Sanayi ve Ticaret AŞ bought 446,814 Vestel Beyaz Eşya Sanayi ve Ticaret AŞ (“Vestel Beyaz Eşya”) shares in the stock market at a price range of TL 10.73 to TL 11.00 per share on June 8, 2018. Following the transaction, the Company’s share in Vestel Beyaz Eşya reached 95.08%.
Vestel Elektronik Sanayi ve Ticaret AŞ bought 118,755 Vestel Beyaz Eşya Sanayi ve Ticaret AŞ (“Vestel Beyaz Eşya”) shares in the stock market at a price range of TL 10.09 to TL 10.49 per share on June 6, 2018. Following the transaction, the Company’s share in Vestel Beyaz Eşya reached 94.85%.
Pursuant to our material event disclosure dated November 2, 2017; Vestel Elektronik Sanayi ve Ticaret AŞ decided to participate as a founding partner with a 19% share in “Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret AŞ”, which is planned to be established to produce mainly electric passenger cars and carry out supporting activities within the framework of Turkey’s Automobile Project, following the work undertaken by the Joint Initiative Group, to which Company’s controlling shareholder, Zorlu Holding AŞ was a party. In this respect, the Shareholders Agreement and Articles of Association have been signed on May 31, 2018. Establishment of the new company will be completed following the completion of necessary procedures.
Vestel Elektronik Sanayi ve Ticaret AŞ bought 204,030 Vestel Beyaz Eşya Sanayi ve Ticaret AŞ (“Vestel Beyaz Eşya”) shares in the stock market at a price range of TL 10.20 to TL 10.50 per share on June 1, 2018. Following the transaction, the Company’s share in Vestel Beyaz Eşya reached 94.79%.
Vestel Elektronik Sanayi ve Ticaret AŞ bought 47,729 Vestel Beyaz Eşya Sanayi ve Ticaret AŞ (“Vestel Beyaz Eşya”) shares in the stock market at a price range of TL 9.92 to TL 10.00 per share on May 31, 2018. Following the transaction, the Company’s share in Vestel Beyaz Eşya reached 94.68%.