The bid by Ningbo Jihong Investment Co and Jiye Auto Parts GmbH, both affiliated companies of Ningbo Jifeng Auto Parts Co Ltd, to take control of German company Grammer is tipped to succeed, after the bidders lowered the acceptance threshold from 50% to 36%.

If the offer is successful, it will represent a big step forward for Ningbo Jinfeng, which is a much smaller company than Grammer. Ningbo Jifeng also produces headrests, armrests and interiors, mainly for Chinese automakers. It had revenues of Euro 250 million equivalent in 2017, while Grammer had revenues of Euro1.8 billion.

The Wang family are the controlling shareholders of Ningbo Jifeng Auto Parts Co. Ltd. The German acquisition entity, Jiye Auto Parts GmbH, is indirectly controlled by the same holding company of the Wang family that controls Ningbo Jifeng Auto Parts, which is listed on the Shanghai Stock Exchange

Jifeng Auto is already Grammer’s biggest shareholder with 25%. It originally came in as a White Knight in 2017, after the billionaire German-Bosnian Hastor family, which owns a rival car parts supplier, built up a 19% hostile stake. 

Grammer management would ideally like the Hastor family to exit the company by tendering there shares. But by lowering the threshold, Jiye is effectively saying that even if they hold out they will be sidelined, with Jiye and its associates owning 61% of the company.

On July 18 Jiye Auto Parts GmbH reduced the minimum acceptance threshold for its voluntary takeover offer for all outstanding shares of Grammer AG, which had been published on June 25, from 50 per cent plus one share to 36 percent plus one share. The acceptance period, originally expiring on July 23, was extended by two weeks until August 6. All other terms and conditions of the offer remain unchanged. These are a payment of Euro 60 per share, plus a dividend payment of Euro 1.25 per share. The offer puts a valuation of around Euro 780 million (US$905 million) on Grammer.

Grammer management said that the offer would “further stabilize the shareholder structure” as well as and “optimize the global secure the global growth strategy.

So far there are no signs that the German government is concerned about the takeover, or has any plans to review it.

Grammer is headquartered in Amberg, Bavaria, not far from Nuremberg. It specialises in the development and production of components and systems for automotive interiors, as well as seats for onroad and offroad vehicles. 
Ist Automotive Division supplies headrests, armrests, center console systems and high-quality interior components and operating systems to auto manufacturers and automotive system suppliers. The Commercial Vehicles Division makes seats for the truck and offroad seat segments (tractors, construction machinery, forklifts) as well as train and bus seats. With 13,000 employees, Grammer operates in 19 countries around the world. Grammer and Ningbo Jifeng have been working together since 2012.

On July 6 the Grammer Executive Board and the Supervisory Board made a joint recommendation to accept the offer. They released their joint reasoned statement regarding the voluntary public takeover offer submitted by Jiye Auto Parts GmbH, a company affiliated with Ningbo Jifeng.

 

Back in late May Jiye announced its decision to launch a voluntary public takeover offer to the shareholders of Grammer AG. Prior to the offer, both companies had signed a business combination agreement providing for guarantees for jobs as well as Grammer AG’s existing facilities, brand and know-how.

 

The acceptance period of the offer commenced upon the publication of the bid documentation on June and 25 was originally due to expire at midnight on July 23.

 

The Executive Board and the Supervisory Board of Grammer AG said that they are of the view that the conclusion of the offer is in the interest of Grammer and the Grammer shareholders, and that in light of Grammer’s future outlook as an independent company, the overall circumstances of the offer as well as the conclusions from two fairness opinions, they considered the offer price of Euro 60 per Grammer share to be adequate.

Grammer shares are listed in the SDAX and traded on the Frankfurt and Munich stock exchanges via the electronic trading system Xetra.