FRANKFURT -- Grammer is in advanced negotiations with China's Ningbo Jifeng Auto over a possible takeover deal that could value the German maker of seats at about 750 million euros ($872 million).
Grammer sold a minority stake to Jifeng Auto in 2017 to fend off aggressive intervention by the Bosnian billionaire Hastor family, investors who had been involved in an acrimonious supply dispute with Volkswagen Group. The Hastors, through family investment vehicles, rank as Grammer's second-biggest stockholders with a combined 19 percent stake, according to data compiled by Bloomberg.
Grammer received an indicative proposal of 60 euros a share, supplier said Tuesday in a statement. That's 17 percent more than the stock's closing price on Monday. The prospective buyer would also pay a 1.25-euro dividend per share.
"At this stage it is uncertain whether the negotiations will be concluded successfully and a takeover offer will be launched," Grammer said, adding that it is "assessing strategic options in the best interest of the company."
Sources said the transaction was conditional on Jifeng Auto reaching 50 percent ownership of Grammer. It currently holds 25.51 percent. The Chinese group is not aiming for a domination agreement, which would require a stake of at least 75 percent, the sources also said.
The Jifeng Auto offer might not be enough to win over the Hastors, who would be more likely to seek 70 euros a share, Harald Eggeling, an analyst at Oddo, said.
Jifeng Auto, controlled by the family of Chairman Wang Yiping, is willing to grant wide-ranging guarantees in any business-combination agreement, people familiar with the matter said, asking not to be identified because the information is private. Final discussions were delayed after a range of issues emerged during talks on Monday, the people said.
Analysts' median fair value for Grammer is 53.50 euros a share, according to the German company's website.
The Hastors pushed at last year's annual shareholders meeting to replace much of Grammer's leadership, including CEO Hartmut Mueller. The move eventually failed after Jifeng Auto, acting as a white knight, backed Grammer's management. While the clash with the family resulted in a "noticeable drop in orders" last year, Mueller said in March that Grammer is likely to largely make up for the lost business.
Wang told Bloomberg News a year ago that his company 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 move by the Ningbo-based head- and arm-rest manufacturer could revive concerns among Germany's leadership about Chinese investors' purchases of assets in Europe's biggest economy that were sparked by the 2016 purchase of robot maker Kuka by Midea Group. In February, Li Shufu, the chairman and main owner of China Zhejiang Geely Holding Group, revealed he had amassed a stake of 9.69 percent in Daimler, making him the single largest shareholder in the company.
Even so, a takeover could be endorsed by automakers. The Hastors' Prevent Group took the unprecedented step two years ago of halting component deliveries to VW because of an orders dispute. Volkswagen last month reportedly canceled all supplier contracts with that company as a result of the conflict.
North American interests
Grammer has been beefing up its interests in North America. Last week it announced plans to acquire Toledo Molding & Die. Once the $271 million purchase of TMD is finalized, Grammer will pick up another $300 million in sales in North America, 10 plants in the U.S. and another site in central Mexico and 1,600 employees.
Grammer currently has about $250 million in North American revenue, with five U.S. plants, and two in Mexico.
TMD will help it balance out its geographic footprint, Grammer officials said in an investor presentation. It now sees 68 percent of its sales in the Europe, the Middle East and Africa region, 18 percent in the Americas and 16 percent in Asia Pacific. After the acquisition, the Americas will account for 28 percent of sales, EMEA 59 percent and the rest from Asia Pacific.
Automotive News Europe, Plastics News and Reuters contributed to this report