car parts

Auto supplier Grammer welcomes takeover by Chinese white knight

Autozulieferer Grammer
New board seats. Source: dpa

German automotive supplier Grammer decided to put its Chinese white knight from a year ago into the saddle. The board of the listed Bavarian company agreed to an offer from Ningbo Jifeng that values the target at €780 million.

The Chinese company is offering a 20-percent premium for the shares – €61.25, compared to the Monday close of €51.30. Ningbo Jifeng already owns 25 percent of Grammer and hopes to raise the stake to at least 50 percent through the offer. It does not want a 75 percent investment that would allow it to take control of the company.

The Chinese auto supply firm took a 10-percent stake in Grammer last year to block a hostile takeover attempt by Prevent, a German-Bosnian auto supplier.

The acquisition of Grammer, which primarily makes car seats, armrests and headrests, is not likely to raise government objections even though Berlin has grown wary of China acquiring sensitive technology. Officials are growing worried over China’s hunger for European companies. Germany is especially worried about its automotive industry after China’s Geely Automotive bought a suprise minority holding in Daimler, which makes Mercedes-Benz cars. Geely is a direct competitor of Daimler with its Volvo sedans.

Reuters cited sources saying board approval came after the Chinese firm pledged to avoid job cuts among Grammer’s 13,000 employees for 7.5 years. Grammer last year rejected the offer from Prevent in part because of worries about layoffs. Also, Prevent’s aggressive tactics have made the company unpopular among German automakers. Ultimately, shareholders backed management and staved off the takeover, even though Prevent continues to hold 20 percent of the stock.

Berlin willingly gave a green light to the rescue last year. Grammer is different than Kuka, the German robot maker the government unsuccessfully tried to keep out of Chinese hands two years ago. It is also different than Leifeld, a maker of machines to process titanium steel, which Germany is currently considering blocking.

At the European level, the European Commission is looking more closely at Chinese takeovers. The trade committee of the European Parliament Tuesday affirmed the commission’s plans in this regard. The EU wants to review not only technology acquisitions like robotics or artificial intelligence, but also automotive, IT, telecommunications, media, voting infrastructure, and even farmland.

Stefan Menzel covers the auto industry for Handelsblatt. Till Hoppe is a Brussels correspondent. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: menzel@handelsblatt.com and hoppe@handelsblatt.com.

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