Canadian supplier Linamar Corp., which makes a variety of powertrain components, has offered 771 million euros ($882 million) in cash to acquire French peer Montupet SA.
Montupet, which is working with U.S. investment bank Jefferies, said its board is supporting Linamar's tender offer. The French company supplies aluminum castings and parts to automakers in Europe.
Linamar CEO Linda Hasenfratz said in a statement: "Montupet is a technical leader in the market, well known and respected for its engineering and processing expertise in the cylinder head segment in particular where we intend to grow and leverage our respective strengths.
"Our businesses are very complementary, with our finished machining strength and Montupet's casting expertise, and we are remarkably aligned in our business philosophies, manufacturing discipline and employee dedication with strong values and culture given our family business approach."
Linamar said it has financing commitments for 100 percent of the cash offer. Linamar ranks No. 65 on the Automotive News list of the top 100 global suppliers, with parts sales of $3.02 billion in 2014.
"Montupet and Linamar complement each other very well combining leading expertise in casting and machining," Montupet CEO Steph-ane Magnan said in the statement.
If the deal goes ahead, it would be the latest transaction carried out by a Canadian firm in Europe after Magna bought German supplier Getrag for $1.9 billion in July.
Reuters and Bloomberg contributed to this report.