Alliance for the Future

Transcription

1 Alliance for the Future

2 Important Information This presentation is neither an offer to purchase nor a solicitation of an offer to sell shares. The final terms and further provisions regarding the public voluntary takeover offer are disclosed in the offer document. Investors and holders of Grammer shares are strongly recommended to read the offer document and all documents in connection with the public voluntary takeover offer, since they will contain important information. The German version of the offer document as well as a non-binding English translation of the offer document may be obtained free of charge from COMMERZBANK Aktiengesellschaft, CC-CF ECM Technical Execution, Mainzer Landstraße 151, Frankfurt am Main, Germany (request per fax +49 (69) stating the full postal address). The German version of the offer document and its non-binding English translation, are also available on the internet at If this presentation contains forward-looking statements, also with respect to the takeover offer, such statements do not represent facts and are characterized by words such as "will", "expect", "believe", "estimate", "intend", "aim", "assume" or similar expressions. Such forward-looking statements express the intentions, opinions or current expectations and assumptions of the bidder and the persons acting together with the bidder. Such forward-looking statements are based on current plans, estimates and forecasts which the bidder and the persons acting together with the bidder have made to the best of their knowledge, but which do not claim to be correct in the future. Forward-looking statements are subject to risks, uncertainties and changes in the accompanying circumstances that are difficult to predict and usually cannot be influenced by the bidder or the persons acting together with the bidder. These expectations and forward-looking statements can turn out to be incorrect and the actual events or consequences may differ materially from those contained in or expressed by such forward-looking statements. The bidder and the persons acting together with the bidder do not assume an obligation to update the forward-looking statements with respect to the actual development or incidents, basic conditions, assumptions or other factors.

3 Financing Offer Bidder 1 The Transaction Facts & Figures The Wang family, majority owners of Ningbo Jifeng Auto Parts Co., Ltd. ( Jifeng ), announced their intention to make a voluntary public takeover offer for all shares of the German automobile component supplier Grammer AG Offer will be made by German acquisition entity Jiye Auto Parts GmbH (the Bidder ) Bidder is indirectly controlled by the same holding company of the Wang family which is the majority owner of Jifeng Jifeng is a leading Chinese manufacturer of interior components for the automotive industry Bidder already owns a >25% stake in Grammer Offer: EUR cash consideration for each Grammer share Offer conditions include Minimum acceptance: 36% of all Grammer shares 1 ; this includes the >25% stake already owned by Bidder Customary regulatory approvals; transaction already pre-approved by key Chinese regulators including NDRC and MOFCOM Offer period: Four-week regular offer period; has begun with approval of offer document by BaFin 2 on 25-Jun-2018; offer period extended to 06-Aug-2018 following the amendment to the minimum acceptance threshold on 18-Jul-2018 Holding company of Wang family will contribute parts of the equity and controls Bidder Several leading Chinese equity funds will support the transaction as passive equity providers Equity will be largely used up before any debt financing is drawn down, securing a high equity ratio of the financing Debt financing to be provided by top Chinese commercial bank Shanghai Pudong Development Bank Cash confirmation provided by ICBC Frankfurt 1 On 18-Jul-2018, the Bidder reduced the acceptance threshold applicable to the Offer which had initially been set at 50% plus one share. For further information, please see the amendment to the offer document which is available on the Bidder s website. 2 Bundesanstalt für Finanzdienstleistungsaufsicht / German Federal Financial Supervisory Authority. 3

4 1 The Transaction Offer Price Grammer s shareholders will be offered a cash consideration of EUR per Grammer share % Premium 18.4% Premium EUR 6.39 Premium % Premium Last Close 3M VWAP Broker Median Target Price Pre-speculation Price 1 Attractive premia relative to last close, 3-month volume-weighted average share price and median broker target price 2 Overproportional increase of Grammer s share price since 22-Jan-2016 announcement of Hastor s 3% stake in the company and ongoing speculation on further changes in shareholder structure since. Offer price implies a 133% premium vs. market close of 21-Jan-2016 Grammer share price increase has been significantly more pronounced than, for example, the increase in German stock market index DAX in the same period (34.4%) and in German Mid-Cap Index MDAX (43.1%) 3 Offer price also takes into consideration that the acquiror has no intention to implement a domination agreement and does not plan to extract material synergies in the short term Note: Last Close, 3M VWAP and Broker Median Target Price adjusted for FY 2017 dividend of EUR1.25 which is assumed to have been priced into trading prices in close proximity to the announcement date. 4

5 1 The Transaction Key Terms Grammer and the Bidder have signed a Business Combination Agreement ( BCA ) that provides extensive guarantees for Grammer's management, employees and locations It also secures Grammer a high degree of independence and strong commitment to the current strategy Bidder commits not to initiate a reduction in the company s current workforce Bidder does not intend to implement a domination agreement Grammer's listing, financing and dividend policy will continue unchanged, as will the brand and plant locations Grammer retains intellectual property rights A joint Cooperation Committee with equal representation will ensure smooth cooperation after a successful offer 5

6 2 Company Overview Ningbo Jifeng Auto Parts Jifeng is majority-owned by the Wang family. It is a leading Chinese manufacturer of interior components for the automotive industry. Its success is underlined by a strong track record, financial stability, long-term thinking and socially responsible management Company Profile Founded in 1996 by the Wang family who today still holds c. 72% and controls the company s strategy and operations Headquartered in Ningbo, an industrial stronghold south of Shanghai, with 10 locations worldwide and more than 3,000 employees, Jifeng is now one of the top manufacturers of headrests and armrests globally Listed on the Shanghai Stock Exchange since 2015 with a market capitalization around EUR1.0bn Performance and Financial KPIs In 2017, Jifeng s recorded revenues of RMB1.9bn (~EUR248m) and net profit of RMB293m (~EUR38m) Customers Jifeng is well positioned with leading, fast growing Chinese OEMs, including JVs with foreign players such as GAC-FCA, Changan-Ford, FAW- VW and BMW-Brilliance, but has also made successful inroads with international customers such as Lear and Faurecia Overseas 12% Others 8% China 88% Armrest 33% Headrest¹ 59% 1 Includes revenues for Headrest and Headrest Stem. 6

7 2 Jifeng and Grammer History of Cooperation Jifeng and Grammer have been working together successfully since In 2017, the Wang family increased its stake in Grammer to more than 25%, becoming its largest shareholder and stabilizing the shareholder structure In 2017, Grammer faced pressure from its unstable shareholding structure. The Wang family rose to the occasion as a supporting, friendly shareholder in Grammer, thus helping to stabilize the ownership situation Initial stake acquired via a mandatory convertible bond agreed with Grammer s management and issued to the Wang family in early Since then, the Wang family has further expanded its stake to more than 25% The combination of the Wang family s controlling stake in Jifeng and its stake in Grammer strengthens a business relationship which started in 2012 with Grammer s acquisition of Nectec, which held a 50% stake in a JV in China with Jifeng. After the termination of the JV, Jifeng continued to supply headrest stems to Grammer in China Financial stability and profitable growth through partnerships are at the forefront of the Wang s ambitions. The familyowned company has made a long-term investment in Grammer, laying the foundation for a long-term partnership Cooperation enables the managements of Jifeng and Grammer to further expand their companies positions as bestin-class and preferred supplier to OEMs Current Stake >25% 7

8 3 Strategic Benefits of the Transaction Complementary customer bases and regional presence to increase crossselling Grammer: European (VW, BMW & Daimler) and US OEMs with presence in China Jifeng: fast-growing Chinese & international OEMs (Great Wall Motors, GAC-FCA, FAW-VW, Changan Ford, BMW-Brilliance) Broaden market and customer access of both parties Expand product portfolio & enhance cross-selling Complementary product portfolios to enhance crossselling opportunities Grammer: full seating systems for commercial vehicles & offroad, headrest, armrest & consoles for passenger cars Jifeng: strong focus on armrests and headrests in passenger cars Cost savings not a focus of the transaction Economies of scale may allow to achieve savings over time Joint procurement Leveraging Jifeng s efficient inhouse production technologies Increase profitabilty through deeper collaboration Support Grammer s stable management The Wang family s increased involvement has already had a significant positive impact on OEM s perception Secure a stable long-term shareholder base with the company getting a large friendly and constructive shareholder who fully supports Grammer s management and its strategy 8

9 4 Timeline Agreement On 29-May, Bidder and Grammer signed a BCA to create an Alliance for the Future; announcement of intention to launch a voluntary Public Takeover Offer Publication of the Offer Document Bidder has formally launched its voluntary Public Takeover Offer to all Grammer shareholders with the approval of the Offer Document on 25- Jun-2018 Tender Period The Acceptance Period starts on 25-Jun-2018 and will end at midnight (CEST) on 06-Aug and, if the Offer is successful, will be followed by a two-week additional extended offer period as legally required under German takeover law Conditions Closing of the Offer is subject to certain standard regulatory clearances, with key Chinese regulatory approvals already received in advance. Acceptance threshold 36% of all shares 2 Closing After confirmation of all necessary approvals by regulatory authorities, closing will take place Post Offer Cooperation A joint Cooperation Committee, with equal representation from both companies, will ensure a smooth process to intensify the cooperation following a successful offer Due to the amendment of the Offer on 18-Jul-2018, the acceptance period of the Offer has been extended by two weeks under mandatory law. Before the amendment, the initial offer period was due to end on 23-Jul On 18-Jul-2018, the Bidder reduced the acceptance threshold applicable to the Offer which had initially been set at 50% plus one share. For further information, please see the amendment to the offer document which is available on the Bidder s website. 9

10 Appendix

11 Contemplated Acquisition Structure Ningbo Jifeng Auto Parts ( Jifeng) (c. 72% Stake) Passive Equity Debt Financing JAP 3 Structure Chart Wang Family / Jihong 1 Onshore Offshore 25.56% Stake Transferred Jihan (China) 2 Jiye (China) 2 LuxCo (Luxembourg) 2 Bidder (Germany) 2 Background New acquisition structure established in order to facilitate involvement of passive equity co-investors Various legal limitations to bring in equity investors at the level of the operating entity Jifeng or of the level of JAP, former holder of the 25.56% stake in Grammer Multiple layers for tax and legal reasons to allow for efficient fund flow from China to German Bidder Jihong, 100% owned by the Wang family, controls all operational and strategic decisions at all levels Shareholder agreements ensure comprehensive control rights for Jifeng and the Wang family Co-investors purely financially motivated and passive Grammer shares held by JAP have already been transferred to Bidder outside of the offer Transfer simplifies ownership structure Grammer shares to be contributed into Jifeng following completion of the offering in the context of an A Share injection Allows for even closer cooperation and alignment Cash Consideration for Tendered Shares Grammer 1 Jihong is the holding company of the Wang family. 2 Wang family holds ultimate control and makes all strategic decisions. 3 Owned by the wife of Mr. Wang. 11

12 Overview of Financing Providers Party Role Details & Comments Wang Family Controls Bidder Ultimate decision-maker of the acquisition entity Owner of c. 72% of NJAP (Market Cap: EUR 926m) 1 CRRC Fund Passive equity co-investor Investment fund under CRRC, the world s largest rolling stock manufacturer Contributing ~EUR 60m DZRT Passive equity co-investor Asset management arm of Chinese securities firm Northeast Securities Contributing ~EUR 40m Haitong Passive equity co-investor One of the largest securities firms in China Contributing ~EUR 130m SPDB Fund Passive equity co-investor SPDB is a large Chinese bank with assets of ~$900bn Asset management arm of SPDB managing customer deposits SPDB Provider of debt financing Large Chinese bank with assets of ~$900bn Will provide ~EUR 290m in debt financing through onshore and offshore loans ICBC Cash confirming bank Cash confirmation issued based on guarantee letter from SPDB Some state ownership on the level of co-investors and involved banks but operational and strategic control of acquisition entity rests solely with the Wang family as ultimately controlling shareholder Source: CapIQ as of 15-Jun Market Cap converted into EUR at spot rate as of 15-Jun-2018 of

13 Sources & Uses Uses - Tendered Shares Sources - Equity Financing Tendered Shares m 9.1 Wang Family EURm Price per Share EUR CRRC Fund EURm 59.3 Consideration EURm DZRT EURm 39.0 Haitong EURm Uses - JAP Shares SPDB Fund EURm JAP Shares Acquired m 3.2 Total Equity Financing EURm Price per Share EUR Consideration EURm Sources - Debt Financing SPDB Onshore Loan EURm Uses - Transaction Costs SPDB Offshore Loan EURm 22.8 Estimated Costs EURm 37.0 Total Debt Financing EURm Total Uses EURm Total Sources EURm Structure ensures that equity financing is used up first before any debt is contributed to ensure a high equity share Passive equity co-investors to become shareholders of Jifeng in the context of the subsequent A Share injection Note: Number of tendered shares assumes all outstanding shares excluding shares held by Grammer in treasury and shares transferred from JAP to Bidder outside of the offer. 13