SHANGHAI-LISTED auto supplier Ningbo Jifeng Auto Parts is aiming to buy German rival Grammer in an agreed deal at a time when Chinese takeovers face increased scrutiny from German and European authorities eager to protect domestic know-how.

The two companies signed a business combination agreement Tuesday under which Ningbo Jifeng would offer 61.25 euros per share for Grammer, valuing the group at around 772 million euros (US$893 million), including dividends.

Shares in Grammer closed 19.3 percent higher at 61.20 euros Tuesday, just below the Ningbo Jifeng offer price, on the news.

Grammer said the two companies aimed 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 a global growth strategy, without giving more detail.

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

Ningbo Jifeng’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.

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 transaction, which could soften possible opposition to a takeover.

Ningbo Jifeng already holds 25.51 percent of shares in Grammer, having raised its stake in October last year.

Sources said around that time Ningbo Jifeng wanted to increase its stake amid a power struggle with a rival shareholder, Bosnia’s Hastor family.

Its management has generally welcomed the attention of 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. (SD-Agencies)