Hong Kong-based Geely has sold 600 million primary shares at the bottom of the HK$10.80-HK$11.20 ($1.39-$1.44) price range, or at a 7.85% discount to the last closing price of HK$11.72, according to its release.
Geely, one of China's most internationally-known companies due to its investments in Daimler, Volvo and Proton, is building the facilities in Taizhou, where it has car plants. It aims to produce 500 satellites a year by around 2025, with around 300 highly-skilled staff, it said in a statement.
Monday's move to merge the two units come as global automakers pursue alliances to respond better to the cost of switching to electric cars, tougher emission rules and autonomous driving.
Under the agreement, expected to be finalised by the end of 2019, the new vehicle will go on global sale in 2022, the German and Chinese car giants said in a joint statement.
Toyota said in a statement to Reuters that it and Geely are currently "communicating with each other" about gasoline-electric hybrid technology.
They did not disclose the value of the transaction, which makes Geely Volvo's largest owner by capital and the second biggest by voting rights after investment firm Industrivarden.
Zhejiang Geely Holding Group Co Ltd, parent of Hong Kong-based Geely Automobile Holdings Ltd, will also acquire 51 percent of Proton's stake in British car maker Lotus, the companies said, without disclosing the value of the deals.