Battle heats up for Hamburg port operator as MSC makes $1.4 billion offer

By Friederike Heine and Jan Schwartz

BERLIN (Reuters) - Swiss-based MSC, the world's biggest container shipping company, has offered to buy almost half of the main operator of Hamburg port in a deal that could be worth nearly 1.3 billion euros ($1.4 billion), setting the stage for a potential bidding war.

Shares in HHLA, which runs Germany's biggest port, soared 49% to a 19-month high as shortly after Wednesday's announcement German logistics billionaire Klaus-Michael Kuehne said he was considering a counter offer.

"We are examining the submission of a public takeover bid, but would prefer an agreement with the city of Hamburg on privatisation - be it in the direction of Kuehne Holding, or in the direction of Hapag-Lloyd," in which he owns a 30% stake, Kuehne told Reuters in an email.

Under a deal between MSC and the city of Hamburg, MSC will make a cash offer of 16.75 euros ($17.99) per share to acquire all listed class A stock in HHLA.

That is well above Tuesday's closing share price of 11.54 euros and, if the offer is taken up in full, would give MSC a 49.9% stake in HHLA at a cost of about 1.26 billion euros, according to Reuters calculations.

The city of Hamburg, which owns 69% of HHLA's A shares and all of its unlisted S-shares, would retain control of Hamburg port with a 50.1% stake via the S-shares.

A source familiar with the deal gave an enterprise value of 2.6 billion euros, including 1.4 billion euros in debt.

Hapag-Lloyd did not comment on a potential bid, saying only that the deal would "not affect our cooperation with HHLA".

A company source said the fact Hapag-Lloyd would essentially be paying terminal fees to its biggest competitor under the deal was an "affront".

If Hapag were to join the bidding fray, "it would certainly be an uphill battle," analyst Marc Zeck of investment bank Stifel said, pointing to the difference in size between it and MSC, as well as the additional volume MSC could commit to.

Nikolas Mauder at Kepler Cheuvreux said there were concerns about a "wall" of capital expenditure needed at HHLA, which like other German ports is facing major challenges amid weak foreign demand and fierce competition.

HHLA earlier this year sold a stake in one of its three terminals in Hamburg port to Chinese shipping firm Cosco in a deal that was met with protests within Germany's government coalition and from abroad over increasing Chinese influence.

HHLA said its management board would review the MSC offer.

($1 = 0.9312 euros)

(Additional reporting by Andrey Sychev in Gdansk and Sabine Wollrab in Frankfurt; Writing by Rachel More; Editing by Emelia Sithole-Matarise and David Holmes)