VTG Aktiengesellschaft (WKN: VTG999), one of the leading railcar leasing and rail logistics companies in Europe, is acquiring CIT Rail Holdings (Europe) SAS and the associated Nacco Group. On October 1, 2018, a bidding consortium comprising railcar leasing firm Wascosa AG (Lucerne, Switzerland) and publicly traded Aves One AG (Hamburg) had already purchased those parts of the Nacco Group that needed to be sold to comply with conditions imposed by the German and Austrian antitrust authorities. Taking over the Nacco Group enlarges and adds to the diversity of VTG's railcar portfolio, while at the same time further increasing availability for customers in Europe.
"The Nacco takeover will strengthen our market position in Europe for a long time to come," says Dr. Heiko Fischer, Chairman of the Executive Board of VTG Aktiengesellschaft. "That's why we are pleased to finally be able to close out the transaction – despite the reduced scope – and to reinforce our position as a potent, forward-looking partner for rail transportation." Like VTG's existing European fleet, the Nacco railcars too will be fitted with VTG Connectors in the years ahead. This step – a logical continuation of VTG's innovation and digitization strategy – is creating a network of digitally connected freight cars that is unrivaled on the market.
On July 1, 2017, VTG first announced its intention to acquire all shares in Paris-based CIT Rail Holdings (Europe) SAS, the owner of the Nacco Group, off the American CIT Group. The relevant antitrust authorities approved the acquisition at the end of March 2018, subject to certain conditions. The sale of a railcar package to the bidding consortium has now satisfied the antitrust requirements.
The Nacco fleet that VTG has now acquired is a well-balanced portfolio of about 11,000 freight cars covering all the most common segments. The key markets for this portfolio are the UK, Scandinavia, the Netherlands, Belgium, Austria, France, Italy and Eastern Europe. Depending on the capital investments Nacco has continued to make in 2017 and 2018, VTG expects its new acquisition to add extra revenue of around EUR 85 million and extra EBITDA (earnings before interest, taxes, depreciation and amortization) of roughly EUR 70 million in 2019 (before transaction and integration costs).
Revenue and earnings effects from the Nacco transaction were explicitly excluded from the existing Group forecast for the financial year 2018. Now that the acquisition has been completed, the said revenue forecast (slightly higher than in the prior year) and the EBITDA forecast (between EUR 340 million and EUR 370 million) are no longer valid. However, since revenue and earnings effects from first-time consolidation of the Nacco Group as of the start of October cannot reliably be quantified at short notice, VTG will not update its forecast for the financial year 2018 for the time being. Without the effects of the Nacco transaction, the forecast would remain unchanged.
VTG is financing the transaction with a senior loan of some EUR 375 million, a privately placed hybrid bond of up to EUR 300 million and the utilization of an existing senior loan of approximately EUR 80 million. The hybrid bond will be refinanced on the capital market. To this end, a rights issue is planned to increase VTG's capital out of authorized capital.