Chinese polysilicon producer GCL Technology has signed a non-binding memorandum of understanding to buy a controlling stake in an lithium iron phosphate (LFP) cathode manufacturer owned by its chairman’s family group for about CNY 2.5 billion ($374.3 million), as losses in its core polysilicon business continue.
GCL Technology Holdings has signed a non-binding memorandum of understanding to acquire about 81.91% of Sichuan GCL Lithium Battery Technology, an LFP cathode material producer, from Golden Concord Group, the parent group controlled by GCL Technology’s chairman, Zhu Gongshan, and his family.
The preliminary price is about CNY 2.5 billion, according to the Hong Kong-listed company’s filing. About CNY 650 million would be paid in cash and about CNY 1.85 billion in new GCL Technology shares, issued at no less than HK$1.30 each, or up to about 1,671 million shares. The final price will be based on an independent valuation.
Because the seller is controlled by the chairman’s family trust, the deal would be a connected transaction under Hong Kong listing rules. GCL Technology said it expects to seek a specific mandate from independent shareholders to issue the new shares. It has 30 days for due diligence and three months of exclusivity to negotiate a formal agreement.
The seller has guaranteed combined adjusted net profit of at least CNY 620 million for the target in 2027 and 2028. It has also committed to developing a sixth-generation LFP cathode material with a compacted density above 2.8 g/cm³ by the end of 2028, and would pay compensation if either target is missed.
LFP capacity
Sichuan GCL Lithium, based in Meishan, Sichuan province, has annual LFP production capacity of 120,000 tons at its first-phase facility, which occupies about 355 mu of a planned 1,000-mu site. A June report published by GCL said the company began production in July 2023 and supplies Contemporary Amperex Technology Co. Ltd. (CATL) and Haichen Energy Storage.
GCL Technology already makes LFP cathode material through its subsidiary Leshan Xinneng New Materials Technology. The first 200,000-ton phase began shipments in June at an average tax-inclusive price of CNY 60,320 per ton and has been profitable since operations began, the company said.
GCL Technology said the acquisition would help it “reduce its reliance on the pricing cycles of polysilicon and wafer products and enhance the stability of its earnings.” The company posted a net loss attributable to shareholders of CNY 2.08 billion in the first half of 2026, 17.2% wider than a year earlier. It said the polysilicon industry fell “into involution once again in the first half of 2026, with prices plummeting below the cash costs of most enterprises.” Its granular silicon sold for an average CNY 31.97/kg excluding tax, against a cash production cost of CNY 25.23/kg.
The company set out plans in May to transform into a multi-product new energy materials platform, built around silicon, lithium and carbon. It cited Chinese government data showing the country’s cumulative new-type energy storage capacity reached 153 GW/396 GWh at the end of June, up about 61% year on year.
The move follows a failed effort to tackle polysilicon overcapacity through consolidation. GCL Technology raised funds last year to support a government-backed plan in which China’s six largest polysilicon makers would raise about CNY 50 billion to acquire and idle roughly one-third of national capacity. China’s antitrust regulator later halted that plan, and rival Tongwei has since moved to acquire polysilicon producer Qinghai Lihao.
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