China’s Xpeng to acquire Didi’s smart EV unit in deal worth up to $744 million

HONG KONG (Reuters) -Chinese electric car company Xpeng said it will acquire ride-hailing giant Didi’s smart electric vehicle unit and the two companies will form a strategic partnership.

Xpeng’s shares surged around 16% in early Monday trade.

As part of the deal, which could be worth as much as $744 million, Xpeng will launch an A-class model next year under a new brand, currently called MONA, aiming to expand in the mass-market segment.

“Project ‘MONA’ will accelerate the Company’s production and sales growth and help achieve greater economies of scale,” Xpeng said in a statement.

Didi will support the launch by “providing access to its mobility market” and the two companies will explore strategic cooperation in a number of areas, including marketing, financial and insurance services.

Didi will acquire around 3.25% of Xpeng shares under the deal, which could increase depending on whether production and sales targets are fulfilled. The likely maximum deal value of $744 million includes potential milestone payments.

(Reporting by Josh Ye; Editing by Edwina Gibbs)