The battle for Denver petroleum shipper and storage company TransMontaigne Inc. continued Thursday with the announcement of a new bid for the company from Morgan Stanley Capital Group Inc.
TransMontaigne (NYSE: TMG) said Morgan Stanley has offered to buy the 90 percent of the company it doesn’t already own for $10.50 per share in cash — and substantially the same terms as had been offered by an affiliate of SemGroup L.P.
TransMontaigne gathers, transports, stores and markets refined petroleum products, chemicals and crude oil. The company primarily operates in the Mississippi River corridor and along major pipelines leading from the Gulf Coast to the eastern United States.
TransMontaigne owns and operates 43 petroleum terminals with a capacity of about 15 million barrels of oil. The company has more than 600 employees and reported 2005 sales of $8.5 billion.
Morgan Stanley kicked off bidding for TransMontaigne with an $8.50 per share offer disclosed March 22.
SemGroup came back and offered TransMontaigne $9.75 per share, or $570 million. TransMontaigne agreed, according to a filing with the Securities and Exchange Commission on March 29, and signed an agreement that included a $15 million breakup fee to be paid to SemGroup if the deal fell through.
TransMontaigne’s shares gained $1.11 Thursday to close at $10.89 each, on news of Morgan Stanley’s latest offer.
TransMontaigne said Thursday its board of directors will meet as soon as possible to consider Morgan Stanley’s offer and decide “whether it currently constitutes, or may become, a superior proposal.”
If the board decides it is, it’ll authorize the company’s management to start negotiations with Morgan Stanley, TransMontaigne said.
But some think this is just the start of a bidding war for TransMontaigne.
“SemGroup has to make a decision on how badly they really want this stuff,” said Jerry Paul, CEO of hedge fund Quixote Capital Management LLC in Greenwood Village.
“They have unique real estate,” Paul said of TransMontaigne. “How many oil storage farms are you willing to have in your backyard? There’s only so many places along the river that you can put this stuff. We think these are pretty unique, difficult-to-replicate assets. And being the landlord of the facilities of a commodity that has risen in the last six to 12 months, I think I’d be thinking about a rent increase.”
Nor is a $15 million breakup fee all that much money when offers are reaching these heights, Paul said.