Morgan Stanley unit bids for VTG

Morgan Stanley Infrastructure announced a cash takeover offer for rail logistics group VTG on Monday after securing a large stake from German billionaire Klaus-Michael Kuehne.

The US investor is offering €53 for every share it does not already own, valuing the German firm at about €1.52bn. VTG stock, listed on Germany’s small cap index, spiked 14% to €55.

Kuehne Holding agreed to sell about 20% of VTG for more than €300m, raising Morgan Stanley Infrastructure’s stake in the company to 49%.

“We have friendly intentions and believe that due to our infrastructure expertise we are an excellent partner to drive VTG’s growth,” Markus Hottenrott, chief investment officer at Morgan Stanley Infrastructure Partners, said.

He said the fund holds its investments for about seven years and that a potential domination agreement, requiring 75% of the shares, or a delisting of VTG, was not crucial to Morgan Stanley’s plans for the company.

Kuehne had bought his stake for less than €30 a piece from US investor Wilbur Ross, who acquired the company from TUI in 2005 and floated it in 2007.

VTG’s third largest investor, the Joachim-Herz Foundation behind consumer goods firm Beiersdorf, said it had not yet decided whether to tender its shares. Ahead of the deal, VTG will need to close the €780m acquisition of French peer Nacco, which will be financed in part by a planned €300m capital increase.

Separately, a solution needs to be found for VTG’s small Russia business as Morgan Stanley wants to avoid any of its companies doing business with Russian counterparts targeted by US sanctions.