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Ningbo Jifeng seeks to snap up German auto supplier Grammer
Reuters | 2018/6/1

SHANGHAI -- Auto supplier Ningbo Jifeng Auto Parts wants to buy German rival Grammer at a time when Chinese takeovers face increased scrutiny from German and European authorities eager to protect domestic know-how.

The two companies signed an agreement on Tuesday under which Ningo would offer 61.25 euros per share for Grammer, valuing the group at around 772 million euros ($893 million), including dividends.

Grammer said the two companies aim to deepen a strategic partnership, which started when the Chinese company took a stake in Grammer early last year, and to optimize its global footprint and secure more robust global growth, without providing more details.

The offer will test Germany's willingness to tolerate Chinese takeovers, following an unsolicited approach by Geely chairman Li Shufu to secure a $9 billion stake in Daimler.

Ningbo's offer comes as European lawmakers finalize a European proposal for greater scrutiny of investments made with state influence or aimed at transferring key technologies to a third country, a clear reference to some Chinese state-led firms that have bought European rivals.

It also comes less than a week after German Chancellor Angela Merkel, during a trip to China, called on the world's No.2 economy to open up key industries to outside markets, demanding greater reciprocity between both regions when it comes to takeovers and market access to technologies.

Sources familiar with the matter said that Ningbo Jifeng is offering to guarantee jobs at Grammer for 7-1/2 years as part of the proposed deal, which could soften possible opposition to a takeover.

Ningbo Jifeng holds 25.51 percent of Grammer shares after raising its stake in October.

Sources told Reuters around that time the Chinese firm wanted to increase its stake amid a power struggle with a rival shareholder, Bosnia's Hastor family.

Grammer management has generally welcomed Ningbo Jifeng, another supplier of vehicle interior components, as a potential "white knight" in its conflict with Hastor.

"We would view such a bid as positive as it offers the Hastor group a good opportunity to exit," DZ Bank analyst Michael Punzet wrote in a note, keeping a "hold" rating on the stock.

Grammer said on Tuesday its executive board welcomed and supported the takeover offer.

Ningbo Jifeng's offer will be conditional upon it obtaining at least 50 percent plus one share in Grammer, including the stake it already holds, as well as regulatory approvals.

But on Wednesday, Grammer shareholder Cascade international said it sees a fair value of Grammer at up to 100 euros ($116.14) a share, dismissing the 61.25 euros bid from Chinese rival Ningbo Jifeng as insufficient.

"We regard the offer as economically insufficient," Cascade International Investment said about a non-binding offer published on Tuesday by China's Ningbo Jifeng Auto Parts.

A takeover of Grammer should be valued between 85 euros to 100 euros a share, Cascade said.

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