Brookfield Infrastructure Strikes $13.3 Billion Deal for Shipping Container Giant
Triton International , the world’s largest lessor of shipping containers and a Barron’s pick over the years, has agreed to be acquired by Brookfield Infrastructure in a $13.3 billion transaction.
The cash-and-stock deal is valued at $85 per Triton share, versus the $31 and $63.50 levels where Barron’s recommended buying shares in 2018 and 2022, respectively.
Triton (TRTN) leases the rectangular metal boxes that carry the vast majority of the world’s trade outside of oil and other raw materials. Its customers include all of the major shipping lines, such as Maersk, MSC, and Cosco. They have relied more heavily on Triton and its competitors in recent years, first in an effort to become more efficient and focus investment spending on new ships, and then during the supply-chain madness of the pandemic era.
The disruption was a gift for Triton, as bottlenecks lengthened shipping times and customers required more containers. The company added more than a million containers to its fleet and was able to lock in sky-high leasing rates. The average lease duration for Triton containers in 2021 was 13 years.
Record revenue, earnings, and free cash flow were the result. “Triton was able to refinance much of its debt in the past two years and lower its interest cost,” wrote Barron’s last year. “Being able to charge more on the assets it leases, while paying less for financing those assets, is obviously a winning formula. The long-term nature of Triton’s leases means the company and its shareholders will continue to benefit from 2020 and 2021’s shipping-container chaos for years to come.”
Triton also raised its dividend several times and resumed buying back stock, returning profit to shareholders.
This past Wednesday, Brookfield Infrastructure (BIPC)—a subsidiary of Brookfield Infrastructure Partners (BIP)—announced a deal to acquire Triton for a mix of cash and stock valuing the company’s equity at $4.7 billion. At $85 a share, the deal represented a 35% premium to Triton stock’s closing price of $63.01 on Tuesday.
“Triton is an attractive business with highly contracted and stable cash flows, strong margins, and a track record of value creation,” said Brookfield CEO Sam Pollock. For Brookfield, adding Triton gives it access to a core provider to the world’s shipping infrastructure with attractive cash returns.
Triton shareholders will get $68.50 in cash and $16.50 in Brookfield Infrastructure shares, subject to a collar should the latter stock move significantly before closing. Management expects the deal to close in the fourth quarter of 2023.