Vietnamese EV maker, VinFast (NASDAQ:VFS) revealed Wednesday that the automaker will acquire a 99.8% stake in battery maker VinES as they seek to strengthen its production capabilities and competitive position.
VinFast, which is backed by Vingroup, Vietnam's leading conglomerate, said its strategic acquisition of VinES, another key component of the Vingroup ecosystem, will enable the electric vehicle maker to ensure a stable battery supply while aiming to reduce battery expenses by 5% to 7%.
According to documents submitted to the U.S. securities regulator, VinFast has disclosed its intention to acquire VinES without any upfront payment, except for taking on approximately $462 million in debt.
Additionally, VinES founder, Pham Nhat Vuong has expressed his willingness to support the electric vehicle manufacturer by covering all interest payments associated with VinES's existing borrowings until 2027.
"The acquisition of VinES will help VinFast control our battery technology and supply chain, thus optimizing operating expenses and enriching technology content in our electric vehicles," said VinFast executive, Thuy Le.
However, in the short term, VinFast is expecting a rise in expenses for battery research and development, as well as factory operations, following the acquisition. Following the completion of the transaction, VinFast will assume full control of both the assets and responsibilities of VinES.
Shares of VFS are up 5.87% in mid-day trading on Wednesday.