The Executive Board and the Supervisory Board of VTG Aktiengesellschaft, one of the leading railcar leasing and rail logistics companies in Europe, today published their joint reasoned opinion pursuant to Section 27 of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz – WpÜG) on the voluntary public takeover offer by Warwick Holding GmbH, an indirect subsidiary of funds advised by Morgan Stanley Infrastructure Inc. After an in-depth assessment of the offer document and fairness of the offer consideration from a financial point of view, the Executive Board and the Supervisory Board recommend that VTG shareholders do not accept the offer.
Dr. Heiko Fischer, Chairman of the Executive Board of VTG Aktiengesellschaft, explains: “We recommend to our shareholders not to accept the offer by Morgan Stanley Infrastructure Inc. as the consideration offered does not reflect the fundamental value and the future potential of VTG. Nor does the offer contain an appropriate control premium – it is substantially lower than for comparable transactions.”
The recommendation of the Executive Board and the Supervisory Board of VTG is based, in particular, on the following considerations:
Offer price does not reflect the fundamental value of VTG
The offer price of EUR 53 per share does not reflect the fundamental value that VTG can generate as an independent company. Thanks to its long-standing experience and high-level technical expertise, VTG is one of the market leaders and at the forefront of innovation in the European railcar leasing and rail logistics market. Due to an attractive market environment, the strengthening of the business model by the proposed acquisition of the CIT Rail Holdings (Europe) SAS ("Nacco acquisition"), and the digitization strategy initiated by the company, VTG has excellent growth prospects. This is also reflected in analyst target prices published until 3 September 2018, which already take into account the financial figures for the first half of 2018 and also the progress made regarding the Nacco acquisition and, on a trading basis and consequently subject to a takeover/control premium, result in an average target price of EUR 58.44. Furthermore, the offer price implies a significant discount to the net asset value of the wagon fleet determined on the basis of the discounted earnings method.
No customary control premium and discount to comparable M&A transactions
With a 4.3 % premium on the volume-weighted three-month average share price on 13 July 2018 – the last stock exchange trading day prior to the publication of the decision to submit the offer – the offer price does not contain an appropriate control premium. By comparison, the average control premium paid over the last ten years for German companies with an equity value exceeding EUR 1 billion was 27%.
Furthermore, the offer is significantly lower than the EBITDA multipliers achieved in comparable M&A transactions in the adjacent European locomotive hiring business and for market-leading quasi-infrastructure companies in the German-speaking markets in recent years.
The full reasoned opinion of VTG’s Executive Board and Supervisory Board can be viewed here.
It is explicitly pointed out that solely the reasoned opinion of the Executive Board and the Supervisory Board is authoritative. The information in this press release does not represent any explanations of or additions to the content of the reasoned opinion.
VTG Aktiengesellschaft is one of Europe’s leading railcar leasing and rail logistics companies, with a fleet consisting of more than 83,000 railcars. VTG offers a full-range service, providing tank cars, intermodal cars, standard freight cars and sliding wall cars. In addition to the leasing of railcars, the Group offers comprehensive multi-modal logistics services, mainly around rail transport, and global tank container transports.
With the combination of its three interlinked divisions Railcar, Rail Logistics and Tank Container Logistics, VTG offers its customers a high-performance platform for international transport of their freight. The Group has many years of experience and specific expertise, in particular in the transport of liquid and sensitive goods. Its customers include numerous well-known companies from almost every industrial sector, for example the chemical, petroleum, automotive, paper and agricultural industries.
In the financial year 2017, VTG generated revenue of EUR 1,014 million and operating profit (EBITDA) of EUR 343 million. Via its subsidiaries and affiliates the company, which has its head office in Hamburg, is mainly present in Europe, North America, Russia and Asia. As at 31 December 2017, VTG had 1,500 employees worldwide. VTG AG is listed on the official Prime Standard market of the Frankfurt Stock Exchange and also on the SDAX (WKN: VTG999).