MSC Launches Tender to Acquire Gram Car Carriers for $728 Million
The tender offer for a subsidiary of MSC Mediterranean Shipping Company to acquire Norway’s Gram Car Carriers launched today after the final approach ascent and gaining stock exchange approval. The deal has a purchase price for the company which calls itself the third largest tonnage provider with a modern car carrier fleet of $25.12 per share or a total of $728 million. That is a 17.5 percent premium to the company’s highest share price since going public in 2022.
MSC explains that it is looking to expand using its global logistics expertise and footprint. The market for vehicle transport is said to present business elements that are familiar to MSC and provide the opportunity for MSC to expand its presence in the sector and diversify. They point out that MSC currently has two car carriers (6,700-unit capacity) plus transports cars in containers on its containerships.
The deal comes at a time when there has been a strong demand in the car carrier sector with capacity shortages and car manufacturers signing exclusive contracts and adding dedicated fleets of ships. CMA CGM also joined into the sector this year with four chartered newbuild car carriers while majors such as Hoegh, Wallenius Wilhelmsen, and Hyundai Glovis are all expanding with some of the largest vessels ever built.
Gram has a fleet of 18 owned transport vessels having worked with the major carriers as a tonnage supplier. They also manage vessels. “To meet the specific needs of our operator customers, we provide highly advanced distribution vessels, mid-size vessels, and Panamax vessels with a capacity of between 2,000 and 7,000 units,” the company writes on its website while highlighting that it has four LNG dual-fuel vessels under construction. The majority of the fleet, however, is smaller with capacities between 2,500 and 5,000 units. Gram traces its origins back to 1982 when Peter Gram acquired his first vessel.
The board unanimously recommended the offer from MSC highlighting that it has a premium of up to 77 percent over the 365-day weighted average. MSC went public with its interest in acquiring the company in late April.
MSC is looking for 90 percent acceptance of the offer while reporting that over 54 percent of the shares are already committed by the largest shareholders. The tender launched today, May 27, and is scheduled to run to June 26. They may extend it till August 5 but expect the acquisition will close in the third or fourth quarter of this year. They will also be required to run a mandatory conversion for any shares not tendered.
It 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 terminals in the Port of Hamburg, Germany.