MSC Jumps into Vehicle Transport Offering $700M for Gram Car Carriers
MSC Mediterranean Shipping Company and the Aponte family are making a bold move to break into the hot car and vehicle transport segment. The container carrier giant has agreed to an aggregate equity purchase price of approximately $700 million (NOK 7.643 billion) in a cash tender to acquire Norway-based Gram Car Carriers.
Vehicle carriers are one of the hottest segments in the shipping industry currently with vessels and capacity in short supply. Gram Car Carriers, currently with a fleet of 18 owned vessels, reports it is the third-largest tonnage provider within the PCTC segment. The company’s operation is mostly mid-sized (up to 5,000 vehicles) and Panamax (up to 7,000 vehicles) vessels and has a small interest in distribution vessels (up to 2,000 vehicles) which are used in a capacity similar to a feeder service in the container segment. Gram has also been harvesting value selling assets including reporting it will recognize a net book gain of $36.6 million on one of its mid-size vessels due to be delivered in the second quarter to its new owner.
MSC is offering a significant premium to the share price of Gram, highlighting it is a 17.5 percent premium to the all-time high closing trading price of the shares. They are offering three-quarters (77 percent) over the one-year average trading price and a third over the 30-day average. Shareholders will receive nearly $25 per share when the offer is combined with a first-quarter cash dividend also announced by the company today.
“Today's voluntary offer by one of the world's leading maritime groups, is a validation of the unique position GCC has built as a leading car shipping tonnage provider and the long-term commitment put in by the entire team,” said Ivar Myklebust, Chair of the Board of Gram Car Carriers. “The board is satisfied that the offer represents a fair valuation of GCC, as is also reflected in the recommendation to shareholders to accept the offer."
The board of Gram has unanimously resolved to recommend the offer which will be made by SAS Shipping Agency Services Sarl, a subsidiary of MSC Group. They reported that approximately 56 percent of the company’s stock has already pledged in support of the deal, with the largest shareholders giving irrevocable undertakings to accept the offer.
MSC Group highlights that it is familiar with the market for vehicle transport as it already has two car carrier ships (capacity 6,700 car equivalent units each) and regularly transports, on its container vessels, an important volume of cars in containers. They said the objective of the deal is to expand the MSC Group's presence in the market for car transportation at sea.
Major participants in the market, including Hoegh and Wallenius Wilhelmsen, have been moving to increase capacity ordering larger new vessels while Chinese car manufacturers have also moved to start their own shipping divisions. France’s CMA CGM is also breaking into the market having entered a long-term charter with Eastern Pacific Shipping for four newly-built LNG-fueled car carriers. MSC reports it plans to continue Gram under its existing name and with the current operating structure.
They expect to launch the tender offer before the end of May. The closing is expected in the third quarter, or, at the latest in the fourth quarter, of 2024.
The deal is the latest in a series of major acquisitions by MSC, which also remains very active in the secondhand market buying containerships. The group acquired logistics operations and railroad investments and is waiting to close the acquisition at the port of Hamburg. It is also making significant investments in the cruise sector. Started by Gianluigi Aponte in 1970, today the company employs more than 200,000 people and operates on more than 300 trade routes calling at more than 520 ports.