China's Geely said on Thursday its premium electric vehicle maker Zeekr plans to take control of sister brand Lynk & Co - the first big restructuring move in a planned overhaul for the sprawling automotive group.

Geely Holding, which owns the two marques as well as 10 other automotive brands, has pivoted away from its history of aggressive acquisitions to streamlining its operations and cutting costs.

Group Chairman Eric Li told staff in September that deep integration was needed to improve efficiency and reduce costs. All brands in the group should clarify how their models are positioned to avoid overlap, he added.

Geely said it wants Zeekr and Lynk to form a new energy vehicle manufacturing group with combined annual sales of more than a million units. That compares with about 339,000 vehicles for the two brands in 2023.

"If we don't integrate (Zeekr and Lynk), we must face issues such as internal competition ... and redundant investments in many aspects such as R&D, sales, which is stupid," Gui Shengyue, chief executive of Geely Automobile Holdings told a conference call with analysts after the announcement.

"If we don't do it, the overall competitiveness of Geely definitely would not be improved."

The deal provides for Zeekr to purchase a stake of 30 percent from another group firm, Volvo Cars, and a stake of 20 percent from Geely Holding, the group said in a statement.

Shares in Volvo Cars were up 3.5 percent in early trade, among the biggest gainers on the pan-European STOXX 600 index.

US-listed shares of Zeekr dropped over 7 percent in premarket trading on Thursday after the announcement.

Zeekr will then nudge its stake up to 51 percent with a capital injection while Geely Auto, the group's main listed arm, will continue to own the rest.

The deal values Lynk, a Chinese-Swedish brand, at about 18 billion yuan. It should be completed by June next year, a person with direct knowledge of the plans said. (Reuters)