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MSC Clears Threshold to Buy Gram Car Carriers and Enter PCTC Market

car carrier
MSC only needs final regulatory approval before closing the acquisition and entering the car carrier marekt (Gram Car Carriers)

Published Jun 26, 2024 6:21 PM by The Maritime Executive

 

SAS Shipping Agencies Services Sàrl, a wholly owned subsidiary of MSC Mediterranean Shipping Company, reported late today June 26 that it has received more than 93.5 percent of the shares of Gram Car Carriers in its ongoing recommended voluntary cash offer to acquire the company and enter the car carrier business. Earlier in the day the companies reported that they were extending the offering period by several days to July 1 and had the right to continue to extend the offer until August 5 at their discretion.

MSC in April announced plans to jump into the red-hot car carrier segment through an approximately $700 million offer to acquire Gram Car Carriers based in Norway. The shipping group run by the Aponte family cited the strength of the car carrier market and their experience in the business. MSC highlighted that it already owns two car carriers and also transports vehicles in containers.

Gram Car Carriers, currently with a fleet of 17 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 enters into lease agreements providing capacity to the auto industry.

Making a strong offer valued at 77 percent over the one-year trading average for Gram’s stock, the deal won support from the board and the largest shareholders. They reported that approximately 56 percent of the company’s stock had been pledged in support of the deal, with the largest shareholders giving irrevocable undertakings to accept the offer. Having now exceeded 90 percent, MSC can squeeze out the remaining holders if they do not tender before July 1.

They also reported today that SAS Shipping has received regulatory approvals from the relevant authorities in Ukraine and Portugal to proceed with the acquisition. They are confident that it will receive the remaining approval from the Japan Fair Trade Commission in accordance with the timeline communicated in the offer document. They had previously said they expected the deal to close in the fourth quarter of 2024 and Gram will operate as a subsidiary of MSC.

MSC will be entering a rapidly growing market with major carriers including Hoegh, Wallenius Wilhelmsen, and Hyundai Glovis expanding. Hoegh reported that its new vessel, the world’s largest car carrier, is on sea trials ahead of its entry into service later this year. 

The strength of the market has attracted other new players including CMA CGM which will be operating four LNG-fueled PCTCs on long-term charter from Eastern Pacific. Due to limited capacity, car manufacturers have been chartering vessels while China’s EV manufacturer BYD started its own shipping company building vessels to move cars primarily to Europe.

The acquisition marks MSC's first large expansion in shipping outside containers other than the large investment into the cruise sector. MSC has however made logistics acquisitions, investments in a rail and air freight operation, and runs a port operator. It is also waiting for final approval to complete its acquisition of the operator of container terminals in the Port of Hamburg, Germany.