Container lessor Textainer (TGH) has agreed to be taken private in a deal that values the company at $7.4 billion. That's well above where the stock was trading on Friday, and as a result Textainer shares are up 44% in Monday trading.
A key cog in the global supply chain is going private
Textainer is one of the largest owners of the rectangular shipping containers that are the primary way goods are shipped around the world. Companies use intermodal containers because they can easily be transferred from ship to rail to truck without costly unpacking, but most shippers lease the containers from companies like Textainer instead of buying their own.
Late Sunday, Textainer said it had agreed to be acquired by private equity fund Stonepeak. Terms of the deal call for Textainer holders to receive $50 per share in cash for each share owned, a significant premium to Friday's $34.15 close.
The deal values Textainer's equity at about $2.1 billion, with Stonepeak also set to take on more than $5 billion worth of debt. Textainer's business is a highly leveraged one, borrowing to buy containers and then using the cash from leases to fund debt payments. The company said that the deal should make it easier for Textainer to continue to access capital.
"By partnering with Stonepeak, we will gain access to investment capital and industry expertise, positioning us for continued growth in the years to come," CEO Olivier Ghesquiere said in a statement.
Is Textainer a buy on its merger news?
This deal comes just months after one of Textainer's largest rivals, Triton International, agreed to be taken private by Brookfield Infrastructure Partners. Both deals were likely sparked at least somewhat by the rising interest rate environment. With borrowing costs going up, companies like Textainer and Triton face the challenge of raising lease rates in an uncertain economy or watching margins fall.
The premium Stonepeak is offering is substantial, and there is nothing to suggest a rival offer could be forthcoming. Although nothing is set in stone until the deal closes, the most likely course from here is existing Textainer shareholders will receive their $50 per share in cash when the deal closes sometime in early 2024.
With the stock already near that level, there's no reason to buy in today.
