The stock market has been laser-focused on two things recently: macroeconomic data and earnings reports. A favorable report on consumer prices sent stock index futures climbing sharply on Wednesday morning, with some indexes gaining more than in premarket trading.
However, other factors can also cause stocks to make big moves. In particular, when news surrounding a potential merger surfaces, it can give share prices a substantial lift. That's what shareholders in Triton International (TRTN) and Horizon Acquisition Corp. II (HZON) are seeing Wednesday morning, although you might think that the share prices would be moving in opposite directions given the very different nature of their respective news reports.
Triton gets a big bid
Shares of Triton International rose more than 30% in premarket trading Wednesday morning. The Bermuda-based business concentrates on intermodal shipping containers and attracted the attention of one of the giants of the transportation and logistics sector.
Triton agreed to an acquisition bid from Brookfield Infrastructure (BIP 0.44%) (BIPC 0.06%) that values the shipping container specialist's stock at $4.7 billion. Including debt, the offer reflects an enterprise value of $13.3 billion for Triton. Under the terms of the deal, Triton shareholders would receive a combination of stock and cash, with $68.50 per share as a cash payment plus shares of Brookfield Infrastructure's corporate entity worth an additional $16.50 per share. The exact number of Brookfield Infrastructure Corporation shares that Triton investors will receive depends on the value of those Brookfield shares closer to the closing of the acquisition.
Brookfield expects the transaction to close in the fourth quarter of 2023, and it believes that the offer is a good one. The company cited Triton's stable cash flow, strong profit margin, and smart strategy for creating value for shareholders. With assets that have proven irreplaceable, particularly during supply chain challenges, Triton traded at less than 6 times its earnings over the past 12 months before rising on the merger news.
Triton isn't the only supply chain stock that's attractively priced right now. Some of those businesses will inevitably see their prospects deteriorate if economic conditions worsen, but Brookfield's move shows that there's still an opportunity for value investors to identify great opportunities like Triton.
Flexjet calls off its SPAC deal with Horizon
Shares of Horizon Acquisition Corp. II were up 12% in premarket trading. The move came on what might have seemed like negative news for the special purpose acquisition company (SPAC).
Horizon had planned to merge with private jet operator Flexjet in a deal that the two parties signed in October 2022. However, the two companies agreed to terminate their planned merger late Tuesday.
Neither company offered much of an explanation as to why they chose to terminate the deal. However, Flexjet made it clear that it intends to keep moving forward with its plans for further growth, simply arguing that terminating the SPAC merger is in the best interests of its stakeholders.
Calling off mergers often causes a stock's price to fall, but in the case of Horizon, there's a silver lining. Flexjet's deal with Horizon called for a termination payment of about $30 million. Because Horizon has very little time left to pursue an alternative merger candidate, the SPAC decided simply to take the additional money and liquidate. It anticipates paying shareholders $11.33 per share in its liquidation, which is well above the roughly $10 per share at which its stock traded recently.
Multiple private jet operators sought SPAC mergers in late 2022, but higher interest rates have made the business tougher. It will be interesting to see what happens next with Flexjet, but Horizon shareholders seem to be quite pleased with the result.