Morgan Stanley offered to buy Denver- based TransMontaigne Inc., a distributor of gasoline and other fuels, for about $421 million as its oil-trading unit seeks to gain access to trucking terminals and storage facilities.
The offer to pay $8.50 a share for TransMontaigne, disclosed in a regulatory filing Wednesday, represents a 15 percent premium over Tuesday’s closing price. TransMontaigne spokeswoman Judy Kinard said the company was reviewing the bid and declined to comment further.
Securities firms such as Morgan Stanley and Goldman Sachs Group Inc. are snapping up power plants, oil terminals and gas reserves to augment trading in futures and derivatives linked to energy prices. TransMontaigne owns 43 terminals along Mississippi River barge routes and on two pipelines that run from refineries in Texas and Louisiana to cities in the Northeast.
“The real value for Morgan Stanley is going to be the storage terminals,” said John Olson, managing partner of Pool Capital Partners in Houston, which runs three energy- oriented hedge funds with a combined $140 million.
“You can stock up on fuel in the summer and carry it into the winter, at which point you might get a better price.”
TransMontaigne shares jumped $1.80, 24 percent, to $9.22 in New York Stock Exchange trading, the biggest increase in almost six years. Shares of Morgan Stanley, which reported a 17 percent profit increase Wednesday rose $1.53 to $61.94.
The move in TransMontaigne’s stock above Morgan Stanley’s offer suggests investors are speculating the company may fetch a higher bid, said Olson, whose firm doesn’t own TransMontaigne shares.
New York-based Morgan Stanley, the world’s third-biggest securities firm by market value, already supplies fuel to TransMontaigne at 29 terminals under an agreement that took effect early last year and runs through 2011.
That deal gave Morgan Stanley warrants to purchase 5.5 million TransMontaigne shares, representing a 10 percent stake in the company, according to the filing.
Morgan Stanley’s buyout proposal followed an inquiry from TransMontaigne chief executive Donald Anderson as to whether the firm “would be interested in an expansion of our strategic relationship,” John Shapiro, president of Morgan Stanley’s commodities business, Morgan Stanley Capital Group Inc., wrote Tuesday in a letter to Anderson.
“We would propose completing remaining due diligence expeditiously,” Shapiro wrote in the letter.
He declined to comment beyond the contents of the letter.
The 5,500-mile Colonial pipeline system runs from Houston to New York and is the world’s largest for refined fuels such as gasoline, diesel and heating oil, delivering about 95 million gallons of fuel a day. The 3,100-mile Plantation pipeline, owned by Kinder Morgan Energy Partners LP, runs from Baton Rouge, La., to Washington.
TransMontaigne’s terminals “are in a good position, in terms of being close to the population centers,” said Michael Doss, an analyst at Moody’s Investors Service who covers TransMontaigne’s debt.
