What happened
Container leasing specialist Triton International (TRTN +0.00%) has agreed to be acquired by Brookfield Infrastructure Partners (BIP 1.89%) (BIPC +0.00%) in a deal valued at $13.3 billion including debt. It's a big premium to where Triton shares traded yesterday, and the stock is up more than 30% as a result.
So what
Triton is the world's largest lessor of intermodal freight containers, those large, rectangular boxes that are designed to be moved easily among ships, rail, and trucks. The company has a fleet of more than 7 million containers, providing supply chain liquidity to large customers who are constantly trying to optimize their capacity.
On Wednesday, Brookfield announced plans to acquire Triton in a cash and stock deal that values the target at $85 per share, including $68.50 in cash and $16.50 in Brookfield shares. The purchase price is a premium of 35% to Triton's closing price on April 11.
The deal is a good outcome for anyone with Triton shares, but long-term holders have to feel particularly good. If the deal closes as planned, investors who have held Triton since the company was formed via a 2016 merger will have a total return of about 700%.
"We believe this transaction provides an excellent outcome for all of Triton's stakeholders," Triton CEO Brian M. Sondey said in a statement. "For our customers and employees, Brookfield Infrastructure's significant resources and long-term investment horizon will support Triton's franchise, underpin our commitment to providing unrivaled service, and support continued investment in our growing business."
NYSE: TRTN
Key Data Points
Now what
Triton has always been an intriguing investment because the company occupies a vital part of the global shipping industry. But it is a cyclical business that comes with the danger of holding too much inventory when times are tight or not enough capacity when containers are in demand.
With that in mind, there is a lot of logic to the company joining forces with Brookfield's ample financial resources. From Brookfield's perspective, Triton offers stable cash flows, predictable margins, and a history of strong returns.
Barring any unexpected surprises, the deal is expected to close before year's end.
