Kaixin Auto Holdings (NASDAQ:KXIN) jumped 27.7% in premarket trading Wednesday after announcing a new strategic acquisition that expands its footprint in China’s auto retail and wholesale market.
On December 2, 2025, the company signed an agreement for its wholly owned subsidiary, Zhejiang Kaixin Auto Co., Ltd., to purchase 100% of Zhejiang Ordinary Smile Auto Sales Co., Ltd. Kaixin will pay for the deal by issuing up to $15 million in newly created Class A ordinary shares to the seller.
These consideration shares will be placed in escrow and gradually released over a five-year span, contingent on the acquired company hitting a series of performance milestones. Revenue targets begin at RMB 665 million in year one, rising each year to reach RMB 974 million by year five.
Throughout the assessment period, the seller will maintain dividend rights and voting power associated with the escrowed shares. If the target company falls short of its performance goals in any given year, a portion of the shares will be adjusted and canceled following the formula set in the contract. On the other hand, if results exceed the revenue goal by at least 50% in a given period, that surplus can be applied to offset prior underperformance.
Zhejiang Ordinary Smile Auto Sales Co., Ltd., which operates in China’s automotive wholesale and retail sector, will become an indirect wholly owned subsidiary of Kaixin once the transaction officially closes.