Grammer Agrees to Chinese Partner's $889 Million Takeover Offer

(Bloomberg) -- Grammer AG agreed to a buyout offer by affiliates of Chinese partner Ningbo Jifeng Auto Parts Co. that values the German maker of vehicle seats at about 770 million euros ($889 million).

Grammer’s supervisory board endorsed the suitors’ plan to pay 60 euros a share plus a 1.25-euro-a-share dividend for full control and signed a business-combination agreement outlining the companies’ ties, the Amberg-based manufacturer said Tuesday in a statement. The minimum acceptance threshold for the deal is 50 percent of Grammer’s stock plus one share, including the 25 percent already controlled by Jifeng Auto, the German company’s biggest stakeholder.

The deal will “further stabilize the shareholder structure” and “optimize the global footprint and secure the global growth strategy” of the two car-parts suppliers, Grammer said.

Jifeng Auto, which wasn’t directly involved in the deal talks, was brought in as an investor last year as Grammer fended off a push for control by the Bosnian billionaire Hastor family, who had been involved in an acrimonious supply dispute with carmaking giant Volkswagen AG. A takeover has the potential to revive German political concerns about the strategic implications of local takeovers by Chinese buyers.

Including the dividend, the offer price is 19 percent more than Grammer’s closing share price on Monday, before Bloomberg News reported on terms of the possible deal. That matches the shares’ gain Tuesday, when the stock cost 61.20 euros at the close in Frankfurt in its biggest jump since April 2009. Jifeng Auto shares declined 1.1 percent in Shanghai.

Hastors’ Role

The Hastors rank as Grammer’s second-biggest stockholders with a combined 19 percent stake through family investment vehicles, according to data compiled by Bloomberg.

The Jifeng Auto offer might not be enough to win over the family, who would be more likely to seek 70 euros a share, Harald Eggeling, an analyst at Oddo, said by phone. At the same time, it would allow the family to withdraw from the German company after they lost a battle for control, which “could have a positive operational impact on Grammer as the shareholder structure still seems to be a source of concern for some customers,” Marc-Rene Tonn, an analyst at Warburg, wrote Tuesday in a report.

A spokesman for the Hastors’ investment vehicles declined earlier to comment on the talks.

Chinese investments that have prompted scrutiny by Germany’s leadership in recent years include the 2016 purchase of robot maker Kuka AG by Midea Group Co., a planned takeover of semiconductor-equipment maker Aixtron SE that regulators halted that year and the State Grid Corporation of China’s bid for a 20 percent stake in 50Hertz Transmission GmbH. In the car industry, Chinese billionaire Li Shufu is now the biggest investor in Mercedes-Benz parent Daimler AG with a stake of just under 10 percent.

Ventures Strategy

Wang told Bloomberg News a year ago that his Ningbo-based head- and arm-rest manufacturer and Grammer were in the process of setting up joint ventures in China and discussing other potential cooperation projects and that further stake purchases were possible.

A takeover by Jifeng Auto could be endorsed by German automakers as a way of staving off the Hastors’ expansion in the industry. The family’s Prevent Group took the unprecedented step two years ago of halting component deliveries to Volkswagen because of an orders dispute. Volkswagen last month reportedly canceled all supplier contracts with that company as a result of the conflict. Daimler is also in a legal dispute with Prevent.

©2018 Bloomberg L.P.

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